Last night was the second debate between Senators Barack Obama and John McCain, and as usual there were numerous misrepresentations of the facts. Thanks to The Tax Foundation Blog, who have reviewed the CNN transcript, below are the tax related errors from both candidates.
Obama's Errors
Early in the debate, Sen. Obama took a shot at the fiscal policies of President Bush:
But I think it's important just to remember a little bit of history. When George Bush came into office, we had surpluses. And now we have half-a-trillion-dollar deficit annually.
When George Bush came into office, our debt -- national debt was around $5 trillion. It's now over $10 trillion. We've almost doubled it.
And so while it's true that nobody's completely innocent here, we have had over the last eight years the biggest increases in deficit spending and national debt in our history. And Sen. McCain voted for four out of five of those George Bush budgets.
First, on the issue of a surplus when Bush came into office, it's somewhat unfair to say that he inherited a surplus situation given that a recession began the month he took office. (The deficits of the recent years are another story.) Regarding the claim that we have had $500 billion deficits annually under Pres. Bush, that is not entirely true. The deficit for the fiscal year that was just completed (Sept. 30) was estimated to be $438 billion. However, the highest deficit of the seven years previous was $413 billion in FY 2004. The average deficit in that eight year period was $248 billion (which includes a surplus year of FY 2001) and the average deficit of the past four years has been $292 billion.
It is true that for FY 2009, the deficit will likely be astronomical and higher than $500 billion, but we have not had "half-a-trillion dollar deficits annually" under Pres. Bush. As for the debt rising from $5 trillion to $10 trillion, the starting point is closer to $6 trillion than $5 trillion (5.7) when Bush assumed office.
As for the claim that Sen. McCain voted for Bush's budgets, there are many parts of the budget that are voted upon each year. And actually, Sen. McCain voted against two of the major provisions that added to the national debt: the 2001 and 2003 tax cuts. (More on this later.)
On the issue of Sen. McCain's tax cuts, Obama said this about who would benefit:
Now, when Sen. McCain is proposing tax cuts that would give the average Fortune 500 CEO an additional $700,000 in tax cuts, that's not sharing a burden.
The $700,000 figure is only an "additional" tax cut for those CEOs if you do not count the Bush tax cuts that have already been put in place. Since those tax cuts are set to expire, that's a technically valid point. But this is somewhat misleading voters when he says "additional tax cuts" because it can be interpreted by many that those CEOs would be getting that much in tax cuts on top of the tax cuts they have received from the Bush tax cuts, which are set to expire on Jan. 1, 2011.
Responding to Sen. McCain's comments about tax policy, Sen. Obama made many claims about his tax plan and that of his opponent in rapid succession in this portion of the debate:
So let's be clear about my tax plan and Sen. McCain's, because we're not going to be able to deal with entitlements unless we understand the revenues coming in. I want to provide a tax cut for 95 percent of Americans, 95 percent.
If you make less than a quarter of a million dollars a year, you will not see a single dime of your taxes go up. If you make $200,000 a year or less, your taxes will go down.
Now, Sen. McCain talks about small businesses. Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.
And we provide a 50 percent tax credit so that they can buy health insurance for their workers, because there are an awful lot of small businesses that I meet across America that want to do right by their workers but they just can't afford it. Some small business owners, a lot of them, can't even afford health insurance for themselves.
Now, in contrast, Sen. McCain wants to give a $300 billion tax cut, $200 billion of it to the largest corporations and a hundred thousand of it -- a hundred billion of it going to people like CEOs on Wall Street.
He wants to give average Fortune 500 CEO an additional $700,000 in tax cuts. That is not fair. And it doesn't work.
Sen. McCain's Errors
Like Sen. Obama, Sen. McCain repeated many of the same misleading statements on tax policy that he has made on the campaign trail throughout the campaign season
Early in the debate, Sen. McCain made it a point to complain about the $10 trillion national debt:
We obviously have to stop this spending spree that's going on in Washington. Do you know that we've laid a $10 trillion debt on these young Americans who are here with us tonight, $500 billion of it we owe to China?
If Sen. McCain is concerned with the national debt, his tax proposals do not show it. That's because over the next ten years, according to the Tax Policy Center, Sen. McCain's tax proposals would grow the national debt by over $4 trillion. He can't cut that much spending by just going after earmarks. (Sen. Obama also doesn't balance the budget under his tax plans and likely spending over the next ten years, according to TPC.)
On the issue of tax history, McCain made this statement to attack Obama's tax plan:
But he wants to raise taxes. My friends, the last president to raise taxes during tough economic times was Herbert Hoover, and he practiced protectionism as well, which I'm sure we'll get to at some point.
My friends, that depends upon your definition of "tough economic times." Pres. George H.W. Bush raised taxes in 1990, a period of stagnant economic growth. And FDR, who followed Hoover (take note, Joe Biden, if you are reading) in 1933, raised taxes throughout the 1930s and 1940s.
