So how much does President Obama’s deficit reduction plan save? For some reason he’s chosen a 12-year timeframe, and here’s how things add up:
- Domestic discretionary: $770 billion
- Defense: $400 billion
- Healthcare: $480 billion
- Mandatory spending: $360 billion
- Tax expenditures: $300 billion?
- Bush tax cuts for the wealthy: $820 billion. (Note: this is based on estimated savings of $690 billion over 10 years.)
- Lower interest costs: $1 trillion
Obama claims this adds up to “three dollars of spending cuts and interest savings for every one dollar from tax reform,” but that’s an odd way of looking at things. Who cares where the interest savings come from? (And that $1 trillion number looks dodgy anyway.) This is basically a 2:1 ratio of spending cuts to tax increases.
Which is unfortunate. It might be politically wise, but it probably ought to be more like 2:1 in the other direction. Eventually it will be once everyone wakes up and realizes we don’t have any other choices left, but it’s going to take a while and Obama apparently isn’t going to be the guy to push us in that direction.