With the selection of Paul Ryan as Mitt Romney's companion on the Republican presidential ticket, it's clear math will play a major role in the fall campaign. Indeed, many of us dreaded the prospect of a campaign devoid of details about the serious problems facing our economy.
Both campaigns will undoubtedly assert a claim to "the truth" about what needs to be done to shore up our economy. But whose truth works? Who's got the right math?
Romney and Ryan believe that, with projected budget deficits of $13 trillion over the next ten years, we need to fundamentally restructure the federal budget and our entitlement programs. And they (especially Ryan) have put detailed plans on the table. Ryan's plan has the additional benefit of having been scrutinized by many and scored by the Congressional Budget Office.
President Obama, on the other hand, essentially defends his status quo and seems to believe that we can continue to spend at the current rate, indeed can increase spending above current levels, and can somehow pay for it all by increasing taxes on the wealthy.
But can tax increases on the wealthy provide enough funding to maintain the status quo?
The president's wish to abolish the Bush tax cuts for those making over $250,000 per year is projected to bring in only $0.7 trillion over the next decade. Remember, the deficit over that same period is $13 trillion. So that doesn't come close.
How about the so-called "Buffett Rule," which would apply a minimum tax of 30 percent on individuals making more than $1 million per year? It would, according to the Joint Committee on Taxation, raise only $46.7 billion over 10 years. Even its most adamant advocates only claim that it would bring in $0.5 trillion over ten years. With a $13 trillion deficit, that doesn't work, either.
And these are all static estimates that assume we can raise taxes on the wealthy with no harmful impact on investment and economic growth, which ignores the real-world impact of tax increases.
In other words, none of these "tax the rich" solutions makes a dent in our deficit and debt problems, because there just aren't enough rich people to soak in order to plug a budget hole this big.
New Jersey Governor Chris Christie is fond of saying that the American people are ready to hear the truth-that they know their government is out of control and living large at the expense of average American workers. With a math-infused presidential campaign in the offing, we're about to find out if Governor Christie is right.
August 15, 2012