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On the Economy

Arguing about taxes

CEOs accuse the president of raising too much tax revenue. Here's why they're wrong.

By Jared BernsteinGuest blogger / September 23, 2011

President Obama addresses the 66th session of the United Nations General Assembly. Some business experts are blaming Obama for the stock market plunge, but the author argues that it is more a failure of growth than of leadership.

Richard Drew/AP

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One reason to have a blog is so you can follow up frustrating TV debates with facts that were abused in the segment. I was arguing with a couple of CEOs on Larry Kudlow’s show last night on CNBC about why the stock market tanked today. They said it was a failure of leadership, I said it was a failure of growth.

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Neither side convinced the other (I’ll get the link up tomorrow).

But here’s mistake they made: the CEOs argued that a) President Obama’s plan raised too much in tax revenue, and b) Bowles/Simpson plan was much better and Obama made a big mistake not adopting it.

What I kept trying to tell them—and all three, including Larry the K got this wrong—was that Bowles/Simpson raises more revenue than Obama.

In fairness, it’s an easy mistake to make. As shown in their Table 3 here, Bowles/Simpson raises about $1 trillion in new revenue. But that’s above the revenue you get from allowing the highend Bush tax cuts to sunset, which, unlike the President, they assume in their baseline. Adding those revenues back in, and updating to be comparable with the President’s proposal, gets B/S up to about $2 trillion, as shown in Table 4 here from the Committee for a Responsible Budget.

The President’s plan counts the highend Bush revenues in its $1.5 trillion total. So B/S raise about half a trillion more in revenue than the President.

If you want to make sense, you can’t critique the President for both raising too much revenue in his plan and not enacting Bowles/Simpson. If you don’t want to make sense, well…then you can say anything.

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