An analysis by former Bush National Economic Council Director Keith Hennessey of the bipartisan Senate “Gang of Six” proposal finds that the plan would raise taxes by $2.3 trillion over ten years.
The proposal is one of the main deficit reduction strategies being considered as Obama and Republicans try to reach some kind of a deal in time to raise the debt ceiling before it is breached Aug. 2.
Sure, Hennessey is biased, though he’s a straight shooter and you’ll notice his analysis is clinical and non-strident. But you don’t have to trust Hennessey. Trust yourself, because the math is very straightforward.
Hennessey notes that according to CBO, current tax law – which includes the scheduled expiration of the Bush tax cuts and the application of the alternative minimum tax to more and more taxpayers – will cause taxes to increase by $3.8 trillion over ten years.
The authors of the Gang of Six Plan themselves state that CBO would score the plan as reducing taxes by $1.5 trillion. “If CBO scored this plan, it would find net tax relief of approximately $1.5 trillion,” the Gang states.
According to Hennessey, this is a carefully worded phrase, because CBO scores relative to current law.
So, subtract the $1.5 trillion reduction from $3.8 trillion – the tax increase scheduled under current law – and you get $2.3 trillion in tax increases still set to go in effect over ten years under current law if the Gang’s plan is passed.
It’s not complicated. Forget which provisions stay or which go – whether some of the Bush tax cuts remain or if the rate brackets get altered. THIS IS THE BOTTOM LINE: $2.3 trillion in new taxes, however you slice it.
Earlier this week, I projected the Gang of Six plan would increase taxes by $2 trillion over ten years. But I was only using the sunsetting of the Bush tax cuts and the growing AMT in my calculation, which totals about $3.5 trillion in tax increases set under current law. The CBO figure of $3.8 trillion includes all of the tax increases that will occur if current law is not changed.
The Gang of Six are Sens. Richard Durbin (D-Ill.); Mark Warner (D-Va.); Kent Conrad (D-N.D.); Saxby Chambliss (R-Ga.); Mike Crapo (R-Idaho); and Tom Coburn (R-Okla.).