Goldman Sachs: More than half of Obama plan increased taxes

Courtesy of James Pethokoukis at Reuters, here’s your chart of the day, provided in this instance from Goldman Sachs.  The investment house undertook the rather Herculean task of committing Obama’s ambiguities on Wednesday into some coherent economic policy in order to score the deficit reduction “plan” against those offered by others in Washington, including Paul Ryan.  Pay close attention to where the Obama plan makes up the deficit:

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First, it should be noted that Goldman Sachs did its scoring over the traditional 1o-year period, not the gimmicky 12 years the President used in the speech.  That allowed the firm to score the five plans on an apples-to-apples basis, and as readers can see for themselves, the plan comes in either third or fourth on savings out of the five.  The note on the score shows that Obama’s savings could be up to 1% of GDP less than stated if one moves away from the rosy economic projections coming out of the White House.  Obama’s plan only beats that of, er, Obama’s actual budget proposal for FY2012.

Even at the rosy level, though, the 1.9%  of GDP of deficit “savings” come in enhanced revenue — ie, taxes. That’s far higher than another other plan on the table; even Simpson-Bowles only hikes taxes by 1.4% of GDP, reducing discretionary spending by more than they tax at 1.7% of GDP.  Obama envisions an 0.8% of GDP imbalance the other direction, cutting more out of taxpayers’ pockets than he does out of government bureaucracies.  He also barely dents healthcare spending despite the fact that most of the deficit problems we face come from Medicare and Medicaid spending, trimming only 0.3% GDP over 10 years even with ObamaCare in place.  In contrast, Ryan reduces that spending by 1.3% of GDP, a full percentage point more than Obama, while limiting tax increases to 0.2% of GDP in the same period — and using the less-rosy economic predictions from the CBO to boot.

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If anything encapsulates the relative seriousness in which the authors of these plans have approached the issue, it’s this chart.

Update: I originally had screwed up the terms, thinking it represented trillions of dollars rather than percentage of GDP.  My apologies for the error; I’ve corrected it in the text above.

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