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Thursday, 04 October 2012 00:00

Romney-Obama Debate: Deficit Math Doesn’t Add Up for Either Candidate

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The first presidential debate of the 2012 post-primary election season revealed that both Democratic incumbent President Obama and Republican challenger Mitt Romney, a former governor of Massachusetts, would increase the national budget deficit more than advertised.

Both candidates claim to have put forward tax and spending plans that would bring the federal budget closer to balance. However, according to the independent analysis of the Congressional Budget Office, both candidates' plans would actually increase the $1 trillion deficits the federal government is expected to run next year.

President Obama criticized Governor Romney's tax proposal, charging that he would increase deficits through a “$5 trillion tax cut” and a $2 trillion increase in military spending. “It's math,” Obama charged, echoing the words of former President Bill Clinton at the Democratic National Convention. “It's arithmetic.”

But the math applied by Obama was based on Romney's proposed cumulative tax cuts and military spending increases over the next 10 years. The 10-year figures are deliberately exaggerated figures since much of the money involved would be in the final few years of the 10-year period, when Romney wouldn't even be eligible to serve as president even if elected to two terms. Romney countered that “I'm not looking for a $5 trillion tax cut. What I've said is I would not put in place a tax cut that adds to the deficit.” Romney outlined five goals he'd seek if elected as president, the fourth of which is to “get us to a balanced budget.”

Despite Obama's deceptive exaggerations, Romney's proposals would not only fail to get the federal government to a balanced budget, it would increase the federal deficit immensely. Romney has failed to propose spending cuts that would match his substantial tax cut proposal (which includes cutting income tax rates 20 percent across the board) and proposed increases in military spending (some $200 billion in 2016 alone).

But Obama's deficit “arithmetic” didn't add up either. Obama told the debate audience, moderated by PBS' Jim Lehrer: "When I walked into the Oval Office, I had more than a trillion dollar deficit greeting me. And we know where it came from: Two wars that were paid for on a credit card. Two tax cuts that were not paid for and a whole bunch of programs that were not paid for and a massive economic crisis.”

Obama's policies have been — as the wars end and the economic recovery began — not to pay for those programs but instead to continue $1 trillion-plus annual budget deficits through his first term. The Congressional Budget Office noted that the federal government racked up another $1.1 trillion deficit in 2012 and projects it will rack up still another trillion dollar deficit in 2013. So much for Obama's criticism of the (legitimate) profligacy of his GOP predecessors.

Obama told the debate audience that “I put forward a specific $4 trillion deficit reduction plan. It's on a website. You can look at all the numbers.” But Obama's numbers didn't square with arithmetic reality. Despite the massive tax increases of ObamaCare — Obama would increase the deficit by an additional $3.5 billion over current law (which already includes massive deficits), not cut deficits. According to Politifact.com, “The Congressional Budget Office, the nonpartisan analytic arm of Congress, looked at the president’s 2013 budget and concluded that it would increase the cumulative deficit by $3.5 trillion over its baseline between now and 2022. That greatly undercuts Obama’s argument that he is saving money.”

Photo of former governor Mitt Romney and President Barack Obama at Oct. 3 presidential debate: AP Images

Related article:

Obama v. Romney: Their Core Beliefs

2 comments

  • Comment Link Wayne Leach Friday, 05 October 2012 00:56 posted by Wayne Leach

    Who would make the "capital investment loans" available to the majority of people who are not current owners of stock? Would the loans come from a bankrupt government purse, or from the corporations? Secondly, it sounds like another "ponzi scheme" to me, simply mandating an anticipated affluent society that will never cease growing to pay for past societal largess, only to more extreme measures than we have in our current "class" structure. Maybe I just missed something, but I'd like clarification. It sounds almost too good to be true.

  • Comment Link Gary Reber Thursday, 04 October 2012 18:55 posted by Gary Reber

    The problem is that none of the presidential and vice presidential candidates, or for that matter Senate and Congressional candidates––NO ONE––is understanding that we will never rid ourselves of deficits and mounting national debt until we understand that the value of labor as a factor in the making of products and delivering of services is being devalued and destroyed by tectonic shifts in the technologies of production. Because full employment is not an objective of businesses and because companies strive to keep labor input and other costs at a minimum, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Without income there can be no customers and without income deficits and national debt, as well as income redistribution via taxation, is necessary to prop up the economy by creating make-work boondoggle job creation and welfare support, open and concealed.
    Businesses will only invest if they determine that they will have customers to purchase their products and services. With tectonic shifts in the technologies of production destroying and degrading jobs, fewer and fewer customers are supported. Tax policy should be used to encourage business corporations to pay out fully 100 percent of their earnings as dividends (rather than practice retained earnings and debt financing, neither of which creates any new owners) and finance future growth through the issuance and sale of new stock. Capital investment loans should be made available to EVERY American to purchase this new stock and pay for their acquisition out of the future earnings of the investments.

    To create conditions under which everyone will have a better chance to be successful in today's "digital machine" age means that EVERY American must have access to ownership of future income-producing productive capital. Tax policy can be one means to provide that opportunity.

    Economist John Maynard Keynes, whose Keynesian model is widely taught, falsely presumed that the only way to balance mass productive power with mass purchasing power is through a wage system––ignoring the possibility of democratizing future ownership of labor-displacing productive capital technologies and rising ownership incomes as a market-generated means of eliminating wage slavery, welfare slavery, debt slavery and charity slavery for the 99 percent of humanity. Binary economist Louis Kelso argued that the Keynesian model fails to recognize that “when capital workers (owners) replace labor workers as the major suppliers of goods and services, labor employment alone becomes inadequate because labor’s share of the income arising from production cannot provide the progressively better standard of living that technology is making possible. Labor produces subsistence at best. Capital can produce affluence. To enjoy affluence, all households must engage to an increasing extent in capital work”It is imperative that leaders seeking new solutions cease the opportunity presented by the 2012 presidential election to implement effective programs for expanded ownership of productive capital, and address the problem of education on this subject.
    At one point in 1976, the discussion led to The Joint Economic Committee of Congress endorsing the two-factor policy to broaden capital ownership as an economic goal for America. The 1976 Joint Economic Report stated: “To provide a realistic opportunity for more U.S. citizens to become owners of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership. Congress also should request from the Administration a quadrennial report on the ownership of wealth in this country, which would assist in evaluating how successfully the base of wealth was being broadened over time.” Unfortunately the Congress has never paid any attention to this policy, and the goal has subsequently been unacknowledged and unheeded by our plutocratic political leaders.


    I am not at all impressed with Romney's conventional Republican top-down pitch for reversing the course of our economy nor that of Obama's top-down statist stance.

    Compare both elitist approaches with The Capital Homestead Act (http://ww
    w.cesj.org/homestead/summary-cha.htm)
    The proposed reforms that I and others are advocating would grow a truly just and free enterprise economy, creating millions of private sector jobs and turning this country into a nation where every child, woman and man could become a capital owner, without redistributing property from current owners. See Louis Kelso and Mortimer Adler's 1958 book The Capitalist Manifesto and their 1961 book The New Capitalists: A Proposal For Freeing Economic Growth From The Slavery Of (Past) Savings (download free athttp://www.cesj.org/cesjsitemap.html).Our proposed systemic reforms to the tax, monetary, finance, inheritance, labor and welfare systems are based on the sound moral, political and economic principles espoused by Kelso and Adler and supported by the great thinkers of the past. This new vision would offer a truly genuine "Second American Revolution" of radically centrist "bottom-up" ideas based on the inherent dignity of every human person. It took a civil war to eliminate the institution of human slavery, the original sin of this great nation. Our challenge today is to eliminate wage slavery, welfare slavery and debt slavery, while minimizing charity slavery.
    Such a new strategic goal would be guided by universal principles of economic and social justice that would lift American political debates from the politics of greed (the right) or those of envy (the left). Such a new goal would restore America's moral leadership in the world. How? By uniting all Americans across today's ideological spectrum, from far right to far left, behind a "solution" that would systematically create a truly new constituency working together to build a more economically just, high tech, sustainable growth economy. Uniquely such a just free market economy could be achieved without depriving current capitalists of property rights over their existing assets and would radically reduce and eventually eliminate government redistribution of income.

    Please see my article "Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy" at http://foreconomicjustice.com/11/economic-justice/ or follow me on Facebook at http://www.facebook.com/pages/For-Economic-Justice/347893098576250 and http://www.facebook.com/editorgary

    Also follow the Center for Economic and Social Justice at http://www.cesj.org and http://capitalhomestead.org/ Join the OWN Team at http://capitalhomestead.org/group/the-on-team

    Also see The Kelso Institute at http://www.kelsoinstitute.org/

    Join the OWN Team to advocate OWNERSHIP CREATION at http://capitalhomestead.org/group/the-own-team The only commitment is to participate in the Weekly Action Point, which is usually just a Facebook post. Other activities are strictly voluntary!

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