Obama’s debt reduction plan is not equal to Simpson-Bowles

By Editorial Board, Published: September 10The Washington Post

THE SIMPSON-BOWLES commission recommended that the federal government undertake $4 trillion in debt reduction. So did President Obama. Mr. Obama’s advocates want to make it appear that the two $4 trillion figures are equivalent.

“He has offered a reasonable plan of $4 trillion in debt reduction over a decade,” former president Bill Clinton said last week in his Democratic convention speech. “That’s the kind of balanced approach proposed by the Simpson-Bowles commission, a bipartisan commission.”

“He put forward a budget . . . that would get to the $4 trillion goal that came from Bowles-Simpson,” Obama economic adviser Austan Goolsbee said on “Fox News Sunday.”

Not exactly. First of all, the Simpson-Bowles plan envisioned $4 trillion in debt reduction over nine years; the president’s plan would spread the cuts over 10 years — a difference that matters because the value of the savings piles up at the end of the window. For instance, the Simpson-Bowles report shows $817 billion in deficit reduction in 2020 alone. Another year makes a huge difference.

Second, Simpson-Bowles assumed the expiration of the Bush tax cuts for the wealthiest Americans before laying out its $4 trillion in reductions. In budget-speak, that was built into the base line. The Obama plan counts as “savings” allowing the top-end Bush tax cuts to expire ($849 billion from 2013 to 2022) along with keeping the estate tax at its 2009 level ($119 billion over the same 10 years). Again, another huge difference.

Lastly, Simpson-Bowles assumed lower spending on the wars in Iraq and Afghanistan. The president’s plan pads his debt reduction with “savings” in comparison to the wars continuing at the same pace for a decade. This amounts to an $800 billion difference.

When the president released his budget in February, the Committee for a Responsible Federal Budget assessed its savings to be “far below those” of Simpson-Bowles. After aligning assumptions, the nonpartisan committee found Mr. Obama’s $4.3 trillion to be comparable to $6.6 trillion of Simpson-Bowles savings. That’s a difference of $2.3 trillion, or more than 50 percent.

The best measure of whether the country is on a sustainable fiscal path is where federal debt would stand as a share of gross domestic product. At the end of a decade, the Obama plan would have debt at an unhealthy 76 percent of GDP, according to the Congressional Budget Office. The comparable ratio from Simpson-Bowles: 69 percent, still high but less troubling. At least as important, the president’s plan would leave the debt stuck at that level. Simpson-Bowles would put it on a downward path.

Mr. Obama can claim to have outlined an initial plan to tackle the debt, one that follows the Simpson-Bowles approach of combining revenue increases with spending cuts. He can claim that his plan, unlike Mitt Romney’s, has detailed proposals behind the numbers. He can claim to have achieved $1 trillion of the promised savings already, through spending cuts.

But Mr. Obama cannot claim to be seeking anywhere near as much in debt reduction as his appointed commission said was needed to preserve the nation’s fiscal health.

Bill Clinton’s Stunning Jobs Claim At DNC Actually True

The Huffington Post |                                                                                                

By Bonnie Kavoussi

Bill Clinton said at the Democratic National Convention on Wednesday that Democratic presidents have overseen the creation of nearly twice as many jobs as Republican presidents. This is true.

Former U.S. President Bill Clinton highlighted a stunning fact during his speech at the Democratic National Convention on Wednesday: Democratic presidents have overseen the creation of nearly twice as many jobs as Republican presidents since 1961.

“What’s the job score? Republicans, 24 million; Democrats, 42 [million],” Clinton said to cheers and applause.

Bloomberg Government first reported these figures in May, after analyzing growth in private-sector jobs since 1961.

On Wednesday, Clinton used the figure to justify Democratic policies.

“It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics,” Clinton said. “Why? Because poverty, discrimination and ignorance restrict growth. When you stifle human potential, when you don’t invest in new ideas, it doesn’t just cut off the people who are affected; it hurts us all.”

That said, Democratic presidents may not be able to take all the credit for the private-sector jobs created during their tenure. After all, the economy saw a big boost under Clinton in part because of the technology boom and stock market bubble that resulted — Clinton arguably was just in the right place at the right time.

Presidents’ economic policies clearly play some role in the job growth that results while they’re in power, however. And on that measure, both President George W. Bush and President Barack Obama have performed very poorly. An average of 63,500 jobs were created per month during Bush’s tenure, according to Labor Department data. Under Obama, an average 62,500 jobs have been created per month when taking into account job losses at the beginning of his tenure.

Presidents of both parties have implemented policies that may have stifled job growth for future presidents. For example, it was Clinton who repealed the Glass-Steagall Act, which had separated investment banking from consumer banking. Some say the repeal of Glass-Steagall played a major role in the financial crisis, since it helped allow banks to become too big to fail.

The subsequent financial crisis also happened on Bush’s watch, and Obama has been saddled with much of the job wreckage that resulted.