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Mr. Vague

Obama's plans on taxes, spending lack specifics, experts say

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October 11, 2012

President Obama’s reelection campaign has settled on two primary criticisms of Republican challenger Mitt Romney: His policy proposals are too vague and he is lying about the details he puts forward.

However, experts insist that it is the president who suffers from a lack of policy details and has failed to offer a clear agenda for a possible second term.

When it comes to contentious issues such as tax reform and deficit reduction, President Obama has failed to provide a detailed view of what he hopes to accomplish in a second term.

"I don't think we've seen anybody run for president with less of a clear plan for what he would do if reelected," said Yuval Levin, a fellow at the Ethics and Public Policy Center. "I haven’t seen anything that I’d call a second-term agenda, or a piece of legislation he says he wants to pass."

"He’s basically going around saying ‘Hey, I killed Osama bin Laden, let me do stuff,’" said Grover Norquist, president of Americans for Tax Reform.

Despite a growing bipartisan consensus surrounding the urgent need for comprehensive tax reform that lowers rates by eliminating loopholes and deductions, the president has made no serious effort on this front during his first four years in office.

He disavowed his own deficit commission, which had put forward a framework for comprehensive tax reform, along with numerous proposals to reduce federal spending.

Obama did introduce a framework for corporate tax reform in February, which would lower rates and close loopholes. But the president only identified five loopholes he would eliminate to pay for his plan. That is enough to cover about 10 percent of the projected cost.

When pushed to identify specific deductions the president would keep or eliminate—such as the charitable tax credit—the White House has declined to elaborate.

"Obama basically does what he accuses Romney of doing: says we should lower rates, broaden the base, but we'll figure it out later," Levin said.

The president and his campaign advisers have attacked Romney repeatedly for a lack of specificity on taxes.

"Romney has never explained how he would pay for his massive new tax cut for the wealthiest," Obama deputy campaign manager Stephanie Cutter said in an October 3 memo. (She recently had to disavow the campaign’s claim that Romney was proposing a "$5 trillion tax cut.")

"We don't know the details" of Romney’s tax plan, the president said during last week’s debate in Denver. "He won’t tell us."

However, the president's tax plan is considerably vague. His plan for "taxes and the budget," as outlined on his campaign’s website, consists of two nebulous components—"Asking millionaires and billionaires to pay their fair share" (raising taxes) and "Investing in the middle class" (more stimulus spending)—as well as a third ("Reducing the deficit by more than $4 trillion over the next decade") that has been roundly dismissed as inaccurate.

Independent experts estimate the real savings Obama has proposed amount to little more than $2 trillion over 10 years—the vast majority of which is achieved through tax increases.

The president has often stated his desire to raise taxes by letting current rates expire on individuals and small business earning at least $200,000 a year. Doing so is projected to raise about $700 billion in new revenue over the next decade.

President Obama has been far less clear, however, as to where the additional $1.2 trillion in proposed deficit reduction would come from. The Obama campaign website says the president’s deficit plan would raise more than $1.9 trillion by "closing corporate loopholes and tax increases on high income earners."

Obama’s plan to further increase taxes on upper-income individuals and small businesses is as vague as his corporate tax proposal. The so-called Buffett Rule, named after Nebraska billionaire and Obama donor Warren Buffett, is a "principal of tax fairness" the president introduced last year (but did not include in his budget), and is prominently featured on the Obama campaign website.

The Obama administration has not specified how the rule would be implemented. However, tax experts have estimated it would raise just $4.7 billion per year over the next decade, or enough to cover about 0.4 percent of the projected budget deficit in 2012.

The Democratic-led Senate failed to advance Buffett Rule legislation in April.

Norquist said Obama’s lack of a clear fiscal agenda is perfectly summed up by the fact that not a single Democratic lawmaker voted for his most recent budget proposals.

"It's not Republicans saying his budget is garbage, it's Democrats," he told the Washington Free Beacon. "You'd think they'd vote for it just out of party loyalty."

Obama’s 2013 budget was panned by independent experts for failing to rein in the burgeoning federal debt, which has increased from about $10 trillion when Obama took office to its current level of more than $16 trillion.

According to the White House’s own projections, the country’s "fiscal position gradually deteriorates" after 2022 under the president’s plan.

Treasury secretary Timothy Geithner has admitted that the Obama administration does not have a plan to address the nation’s long-term fiscal problem.

"We’re not coming before you today to say we have a definitive solution to that long-term problem," he told House Budget Committee chairman and GOP vice presidential nominee Paul Ryan in February. "What we do know is, we don’t like yours."

Despite pledging the cut the federal budget deficit in half by the end of his first term—a pledge reiterated as recently as February 2011—the president has not come close to meeting that goal.

"His budget plan hasn't really changed in four years," said Douglas Holtz-Eakin, former director of the Congressional Budget Office (CBO). "The American people are not super fond of policies they've seen coming out of this administration, so you'd think the president would make some effort to change course, but he hasn’t."

Obama did not formally introduce a deficit reduction plan until late 2011. Before that, the White House said the president’s plan had been laid out in an April 2011 speech at George Washington University—prompting an amusing response from current CBO director Douglas Elmendorf, who noted that budget analysts "don’t estimate speeches."

"We need much more specificity than was provided in that speech for us to do our analysis," Elmendorf told the House Budget Committee in June 2011.

With respect to federal entitlement programs, by far the biggest drivers of the national debt and deficit, the president has been vague and noncommittal, promising "modest adjustments" to Medicare. What he has actually proposed is to direct an appointed board of experts to cut the program’s growth at a slightly more vigorous rate.

"You get the sense that he just don't care that much [about the deficit]," Holtz-Eakin said.

The reason Democrats have refused to put forward a viable long-term plan, Norquist argued, is that they do not believe the American people would support the large tax increases required to fund their desired level of federal spending.

"The size of the tax increase Obama and Democrats want is so big that they won't get reelected if they actually voted for it," he said. "Republicans have actually all voted for the Ryan plan, which is an actual budget."

Given the tremendous uncertainty surrounding his policy proposals, it is unclear what Obama would seek to accomplish in a second term—or what he would be able to accomplish in the likely scenario that Republicans hold the House and pick up seats in the Senate.

Confronted with such concerns, Obama has suggested that Republicans will be more accepting of his policies if he is reelected.

"If Obama's reelected, it's a status quo election, which is essentially just waiting for the next election," Levin said.

Obama’s agenda, whatever that might be, will be further handicapped in a second term due to the fact that roughly a dozen Democratic senators from red states such as Alaska, Arkansas, Louisiana, Montana, North Carolina, and South Dakota are up for reelection in 2014.

"Good luck asking them to support a giant tax hike," Norquist said. "Look, Obama's specifics going forward are about as lacking as the last time he ran for office. He ran on a secret in 2008, and he’s trying to do it again."