Portman: Bush tax cuts for rich played small role in rising deficits

Upper-income tax cuts ushered in by President George W. Bush are responsible for just 1/25th of the shift from projected budget surpluses to deficits over the last decade, according to Sen. Rob Portman (R-Ohio).

Portman, a former budget director under Bush now seen as a possible running mate for Mitt Romney, argued Thursday that the Bush-era tax rates played a relatively small role in turning projected surpluses into deficits.

He argued new spending and net interest on the debt were far more responsible for record deficits.

Portman, who cited Congressional Budget Office statistics, made his argument as President Obama calls on Congress to end the Bush tax rates on families with income above $250,000.

Portman said in a release that Bush’s tax record only accounted for one-sixth of the swing between a projected 2001 surplus and the actual 10-year deficit that followed. 



“While I doubt these new studies will cause President Obama to change his tune, because too often, with this president, politics trumps good policy, yet another of his straw men has fallen flat,” Portman said in a statement. “As the nation careens toward a fiscal cliff, real leadership, not more rhetoric and finger pointing, is necessary to reform our tax code and address Washington’s out of control spending.”

In his release, Portman cites a CBO study from June that laid out how a $5.6 trillion surplus over 10 years, as projected in January 2001, actually became $6.1 trillion in added debt.


In all, Portman says that the 2001 tax cuts on income, the 2003 tax cuts on capital gains and dividends, the 2010 extension of those rates and other policies from the Bush era account for roughly $1.85 trillion in red ink – or around 16 percent of the $11.7 trillion turnaround.



According to the Ohio senator, that also means that only around 4 percent of the swing was due to the tax cuts at the highest level. Around a quarter of the Bush cuts went to higher earners, Portman said. 



For comparison’s sake, Portman found that more than a third of the deficit swing came from new spending.



Finally, Portman noted that CBO said the highest-earning 20 percent of taxpayers saw their share of the income tax burden rise to 94 percent in 2009, another point he said chipped away at what he called Obama’s “class warfare argument.”



Portman’s release also comes amid the broader fight between Republicans and Democrats over how to best rein in runaway deficits, with Democrats calling for what they call a “balanced approach” that includes fresh revenues. 



Practically all Republicans, meanwhile, are opposed to tax increases of any kind, instead making the case that the federal government has a spending problem that needs to be solved. 



After Obama again called for allowing the high-end tax rates to expire, Democrats have noted that proposal could save hundreds of billions of dollars in revenue. 



Some Democrats had previously called for setting the cut-off for extending the Bush rates at $1 million, but now party leaders have noted the $250,000 threshold would bring in extra revenue to help fight deficits.



“Republicans are trying to gloss over a basic fact: Extending the high-income tax cuts for 10 years would cost $850 billion,” Rep. Sandy Levin Mich.), the ranking Democrat on the House Ways and Means Committee said in a statement responding to Portman’s assertions.



“Holding tax cuts for middle-income families hostage to tax breaks for the very wealthy is bad for tax fairness, bad for deficit reduction and bad for economic growth.”



In his Thursday statement, Portman also noted that CBO did not take into account economic growth from the tax cuts into its latest figures, which he said could mean the high-income tax rates played an even smaller role in the deficit turnaround. 


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