Ahead of tonight’s debate, Mitt Romney and other Republicans have busted out a new talking point on the national debt and taxes, arguing that a new study from the American Enterprise Institute shows that President Obama’s policies would make it necessary to raise taxes by $2,400 on middle class families in order to service the debt that will be accrued over the next decade. Adding in the debt from the past four years would push that number up to $4,000 a year, according to the report.
The first problem with Romney’s talking point, of course, is that much of the debt accrued over the past four years is due to tax cuts, wars, and a recession that weren’t “Obama’s policies.”
The real problem, though, is that Romney and AEI’s Jim Pethokoukis, who originally pushed the report in a blog post yesterday, have their math wrong on the debt that will be accrued over the next 10 years, as the following two charts from the report illustrate. The first, Table 5, details the amount of each person’s taxes that would go toward debt reduction under current policy — that is, all of the policies, including the full Bush tax cuts, current spending levels, and all war spending. Pethokoukis left this chart out of his post, but it’s the one that debunks his entire theory. Under current policy, each person in the $100,000 to $200,000 bracket Romney cites would pay $3,742.62 out of their taxes to service the debt:
The second chart is the one Pethokoukis used in his post and the one Romney cited to say that Obama would raise taxes on the middle class to service the debt. But look: it shows that under the Obama budget, families in the $100,000 to $200,000 tax bracket would pay $2,452.73 toward servicing the debt:
In short, that means that rather than raise taxes to pay down the debt, the Obama administration’s policies — those contained directly in his budget — would reduce the share of taxes that go toward servicing the debt by $1,289.89 per taxpayer in the $100,000 to $200,000 range. And that fact remains the same under all three scenarios detailed in those charts. The report proves that relative to current policy, the Obama budget substantially reduces the debt. So, no, the report doesn’t show a tax increase; in fact, it shows that Obama’s policies would cause the share of taxes devoted to servicing the debt to go down.
That Romney messed up the math from this report isn’t surprising, given that the math from his tax plan doesn’t begin to add up. An independent analysis by the Tax Policy Center found Romney’s plan would either raise taxes on the middle class or add trillions to the federal debt, since it’s impossible to reconcile both his promise to balance the budget and provide huge tax cuts.