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Is Obama’s tax plan just like what worked under the Clinton Administration?


Welcome to VoteFacts.  In today's video, you can watch President Obama as he says:

"I'm also gonna ask anyone making over $250,000 dollars a year to go back to the tax rates they were paying under Bill Clinton.  Back when our economy created 23 million new jobs, the biggest budget surplus in history and everybody did well.  Just like we tried their plan, we tried our plan and it worked."

(View the video in its entirety by dragging the start button backward)

President Obama appears to be drawing a parallel between his tax (and spending) plan for our nation and what we had in the 1990's during the Clinton Administration, when we ended up with a federal budget surplus and the economy was booming.  But are the two tax plans actually the same?   Have we actually tried the Obama plan, allowing us to view it is an example that worked, as the president tells us? 

We think the claim by President Obama warrants a close focus on facts relating to the Clinton years and the Obama plan for our future.  For that, we will look to the Office of Management and Budget (OMB), and the Congressional Budget Office (CBO).

First, let's start by looking at the Clinton and Obama approaches to income tax rates.  Barack Obama wants to leave the 2001 and 2003 Bush tax cuts in place for the majority of Americans, while returning rates for upper earners to what they were during the Clinton years.   That means the Obama and Clinton approach to taxes are quite different.  This chart shows the income tax rates under Clinton as well as the Obama plan:





So, to start, their income tax rates are not the same.  But let's keep moving.

Now let's compare the Clinton plan with the Obama plan through the prism of spending and revenues.  Here is data from the OMB and CBO so you can get a look at both president's when it comes to spending and federal revenues for America.

Spending and revenue with Clinton during the 1990's:  (OMB Table)

















Next, spending and revenue under the Obama Administration.  This chart includes actual spending and revenue so far during the Obama Administration, as well as what the OMB estimates for future years based on current laws not changing:  (note, (e) is for estimate)   (OMB Table)









 



Again, quite a difference between Obama and what we had under Clinton.  Now let's move on and compare spending and revenue projections under the Obama budget proposals, so we can compare them with what we had under Clinton.  This chart represents spending and revenue projections after 10 years for each budget, according to the CBO.  You can see spending and revenue projections for each year with all 4 of President Obama's budget proposals in the links shared below:











According to CBO projections, the lowest level of spending under an Obama budget presented during his first term would be 22.8%, and the highest revenue would be 19.8% by 2022.  

Of course, those projections could end up higher or lower in reality (and they often are).  But the spending and revenue differences between what we had during the Clinton years and what we have had thus far under the Obama Administration and what the CBO projected under all of President Obama's first term budget proposals are quite far apart.  Even if the CBO is a bit high with spending projections, it is important to consider that we may very well end up far from what we had during the Clinton years, and likely continue with the gap between spending and revenue (a.k.a., a deficit).

Also, what did lead to such a booming economy in the 1990's?  There seems to be a few opinions out there on that.  However, here are some points from Congressional Budget Office reports from 2000 about the booming economy of the late '90's.

• The miracle of U. S. economic performance in the late 1990s was a source of pride at home, of envy abroad, and of puzzlement among economists and policymakers. The Federal Reserve presided over quarter after quarter of output growth so rapid as to break any speed limit believed to be feasible as recently as 1997.  CBO, Page 1

• Those who look carefully at the numbers have determined that most if not all the upturn in trend growth is due to phenomenal productivity growth in the machinery sector of manufacturing, primarily computers.  CBO, Page 2

• Both the use of information technology and the production of computers and embedded semiconductors have contributed importantly to the pickup in productivity growth in the second half of the 1990s.  CBO, Page 4

• There can be little doubt that we are at an extremely favorable business cycle situation. The unemployment rate is low and the utilization of our potential output is high. It is almost certain that growth over the next decade will be somewhat slower than our potential.  CBO, Page 5

 

Lastly, here are the CBO projections when it comes to the economy and President Obama's budgetary proposal before he made this statement in the campaign. 

• By CBO's estimate, under the President's proposals, the nation's real economic output during the 2013-2017 period would be, on average, between 0.2 percent lower than the amount under current law and 1.4 percent higher than under current law. For the 2018-2022 period, CBO estimates that the President's proposals would reduce real output, on average, by between 0.5 percent and 2.2 percent compared with what would occur under current law.   CBO, Para 6

  So what do you think - Fact or Fiction - The Obama plan is the same as what worked under Clinton.  Vote now!  



  Special Note:

We have noticed that some people are inclined to say that the actual budget outcomes under the Obama Administration are due to the budget problems he inherited from the prior administration.  To speak to that possibility, here is a chart that shows the CBO budget projections that were made on January 8, 2009, just days before President Obama took office.  In other words, these are the budget projections that he inherited:





 *As always, we encourage you to open the resource links and verify data in full context*

VoteFacts original post date:  September 6, 2012

UPDATE:   Statutory tax rates are the seven tax rate brackets  and they are currently 10, 15, 25, 28, 33, 35, 39.6.  Click here for single and joint filing income groups as well as to verify those rates.  Marginal tax rates are the percentage of an additional dollar of income that he or she pays in taxes, taking into account all aspects of tax law. 

Resources Links



CBO Report from January 8, 2009, Page 16

  Obama 1st Budget, CBO, Page 4

  Obama 2nd Budget, CBO, Page 5



Obama 3rd Budget, CBO, Page 4

  Obama 4th Budget, CBO, Page 3

 
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Is the Obama plan the same as what worked during the Clinton Administration?
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Fact = 100% - 92% True
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