President Barack Obama’s deficit reduction plan, released last week, is variously described as “partisan,” “[giving] his liberal critics exactly what they wanted,” and “a direct appeal to his often-disgruntled base.”
It seems like the driving force behind these descriptions is the fact that the president’s plan calls for about $1.5 trillion in new revenue over the next 10 years. But the president’s plan actually contains significantly less revenue than every major bipartisan deficit reduction plan, including the Bowles-Simpson plan, the Gang of Six plan, and the Bipartisan Policy Center’s plan.
All three of those deficit plans share some common elements. They all received significant support either from current or former Republican members of Congress, and they all rely on more revenue than does the president’s plan.
The president’s revenue proposals do raise around $1.5 trillion over the next 10 years above what the tax system would generate if we extend most current tax policies—most significantly all of the Bush tax cuts. In terms of overall federal revenue as a share of gross domestic product—the standard measurement of the total federal tax burden—the president’s plan would bring revenue levels up to about 19.3 percent of GDP by 2021, compared to 18.4 percent of GDP if we maintain our current tax policies. That $1.5 trillion certainly sounds like a lot, and it would certainly make a substantial dent in our deficit. But it’s quite a bit less than other bipartisan proposals to cut the deficit.
The chairmen of the 2010 fiscal commission, Erskine Bowles and Alan Simpson, offered a plan that included about $2.3 trillion in new revenue, as compared to the same baseline. That plan garnered the votes of all three Republican senators on the commission, as well as the votes from the two nonelected Republicans on the commission. It would bring revenue up to more than 20 percent of GDP by 2021.
The so-called Gang of Six, made up of three Democratic senators and three Republican senators, proposed their own plan in July, which was built on the foundation of the Bowles-Simpson proposal. It calls for about $2.1 trillion in new revenue, and it gets revenue up to 19.9 percent of GDP by 2021.
The budget plan that came out of the Bipartisan Policy Center’s Debt Reduction Task Force last year calls for $3.9 trillion in additional revenue over the next 10 years and a 2021 revenue level of 21.4 percent of GDP. That task force was co-chaired by Republican former senator Pete Domenici of New Mexico.
Each of these plans generates their new revenues in different ways. Bowles-Simpson and the Gang of Six offer a revenue target and a broad outline for tax reform. The BPC plan includes a new value-added tax. The president’s proposals are targeted mainly at tax expenditures that benefit the wealthy. But what they all share is the agreement that new revenue must be part of the budget solution. And far from “pandering” to his base, the president’s plan includes less revenue and lower tax overall levels than any of these other bipartisan options.
Now compare those plans to the budget plan passed by Republicans in the House of Representatives in May. That plan actually reduces revenue from current levels by about $500 billion over the next 10 years. If any plan is outside the mainstream, it’s that one.
One final point of comparison. In May, as part of the Peterson Foundation’s Fiscal Solutions Initiative, six different organizations from across the political spectrum offered budget plans to drastically reduce our debt and deficits over the long term. These groups included the Center for American Progress, as well as the right-wing Heritage Foundation and American Enterprise Institute. Five of the six plans relied on raising more revenue than we’d get under current tax policy. In 2021, the overall average revenue level proposed by the six plans was 20.8 percent of GDP, a full 1.5 percentage points higher than we’d have if President Obama’s proposals were enacted.
Michael Linden is the Director for Tax and Budget Policy at American Progress.