James Pethokoukis writes, "Goldman Sachs drops this H-bomb on the Obama campaign:
We have lowered our forecast for US real GDP growth further and now expect real GDP to grow just 2%-2½% through the end of 2012. Our forecast for annual average GDP growth has fallen to 1.7% in 2011 (from 1.8%) and to 2.1% in 2012 (from 3.0%). Since this pace is slightly below the US economy’s potential, we now expect the unemployment rate to be at 9¼% by the end of 2012, slightly above the current level.
Even our new forecast is subject to meaningful downside risk.
So, we got that goin’ for us.
Goldman Sachs attempted an apples to apples comparison of all the deficit and debt reduction proposals out there and found some unsurprising things about the Obama proposal:
Note too that the assessment is done over 10 years, not the 12 that Obama tried to use.
James Pethokoukis points out:
So of the 3.4 percentage points of savings, more than half — 1.9 points — comes from taxes. That’s 56 percent, not the one-third or one-quarter that Obama was talking about. And I am assuming that Goldman is using the White House’s rosier economic forecasts when evaluating Obama’s plan. (Ryan uses the gloomier ones from the Congressional Budget Office.) I think the Republicans will be pointing this out.
He further updates it with this:
UPDATE: Here is one more key bit from the Goldman Report:
Measured against the CBO alternative scenario, the President’s proposal relies more heavily on increased revenue than the other proposals. It assumes that the $1 trillion in proposed revenue increase (over 12 years) does not include the additional $700bn (over ten years) from allowing the upper-income tax provisions to expire; the President’s spending cut proposal is on the same general scale as the external commissions, though somewhat smaller, at around 1.5% of ten-year GDP.
To be clear, Obama is abolishing the Bush tax cuts for $250,000 and an additional $1 trillion tax hike.
You’re not going to get that $1 trillion only from the richest (who are now in the middle of figuring out how to avoid higher taxation and will, should this be enacted, be in shape to legally avoid more taxes).
But, it should come as no surprise whatsoever that a Democratic president is again proposing to raise taxes to pay for his and his Democratic Congress’ profligacy. You know that “shared responsibility” bit. They’re responsible for spending it and you, dear taxpayer are responsible for coughing up the money when they spend way too much.
Again, it is possible at some point in the future that we may actually have to discuss an increase in taxes. But we’re nowhere near that point right now. The taxpayers should demand that not a single penny in increased taxes be levied until they as a whole are satisfied that every single spending cut possible has been made, waste, fraud and abuse have been ruthlessly rooted out, government has been downsized and streamlined and wasteful programs, bureaucracies and departments have been trimmed, shut down or eliminated.
We haven’t even begun that process yet. So it is much to early in this process to be talking about tax increases. Show us the progress – real progress, visible progress – and the reduced budgets with a real plan to balance the budget and pay down the debt and then and only then will we listen to any talk about tax increases (and may still reject them out of hand).