GOP Convention Spin

We've been here before (repeatedly), but we're happy to reiterate: What Obama is proposing is indeed a substantial tax increase for some, but not for most. Overall, Obama says he would raise income, capital gains and dividend taxes only for taxpayers with family income above $250,000 or singles making more than $200,000. He would also raise corporate taxes through selective "loophole closings."

For most taxpayers rates would go down. The nonpartisan Urban-Brookings Tax Policy Center has described his plan this way:

Tax Policy Center: The Obama plan would reduce taxes for low- and moderate-income families, but raise them significantly for high-bracket taxpayers. ... By 2012, middle-income taxpayers would see their after-tax income rise by about 5 percent, or nearly $2,200 annually. Those in the top 1 percent would face a $19,000 average tax increase — a 1.5 percent reduction in after-tax income.

It's true that Obama's tax proposals overall would raise federal revenues by $627 billion over 10 years. Is that "one of the largest tax increases in American history" as Thompson claimed? And would it be a drag on the economy as he says?

When it comes to assessing the effect that a tax change will have on the economy, the single most relevant figure is the size of the increase or cut in relation to the size of the overall economy. And by that yardstick, Obama's increase is hardly a history-maker. The largest was the 1942 increase enacted as the U.S. plunged into World War II, and it amounted to 5.2 percent of the entire economy in its first year.

President Bill Clinton's 1993 tax increase, which Republicans regularly and misleadingly call the largest in history, was actually about one-tenth as large, amounting to 0.5 percent of the economy over its first two years. The TPC calculates that Obama's overall tax increase, as described by his aides and on his Web site, would be roughly 0.1 percent in its first year, and 0.3 percent on average over 10 years, compared with what people are paying now.

And how would that affect the economy? Not much. The TPC says, "Neither candidate's plan would significantly increase economic growth unless offset by spending cuts or tax increases that the campaigns have not specified." The tax plans of both Obama and McCain would leave the federal government wallowing in huge deficits for years to come, and compared with the economic drag created by deficit spending, the effects of either man's tax plan is negligible.

Troop Funding Foul Play
Lieberman also said that "colleagues like Barack Obama were voting to cut off funding for our American troops on the battlefield." That's a highly misleading claim that McCain also touted in an ad this summer. Obama has voted in favor of war-funding bills at least 10 times since becoming a senator. The McCain camp and Republicans cite one vote Obama cast against a funding bill as justification for their claim – but that vote came after President Bush had vetoed a version of the bill that included a date for withdrawal from Iraq.

In fact, most Republicans voted against that 2007 war-funding bill Obama and the Democrats supported. McCain was absent for the vote, but he urged the president to veto the bill. As we said about this subject previously, "Based on those facts, it would be literally true to say that 'McCain urged a veto of funding for our troops.' But that would be oversimplified to the point of being seriously misleading." And the same goes for Lieberman's claim at the convention.

Republished with permission from factcheck.org.

Sources
Victor, Kirk. "The Lugar Connection." National Journal, 2 Aug. 2008.

Tempalski, Jerry. "Revenue Effects of Major Tax Bills." Office of Tax Analysis, U.S. Department of the Treasury, Sept. 2006.

Williams, Roberton and Gleckman, Howard. "An Updated Analysis of the 2008 Presidential Candidates' Tax Plans." Urban-Brookings Tax Policy Center, 15 Aug 2008.

Office of U.S. Sen. John McCain. "McCain urges president to veto legislation requiring withdrawal deadline for U.S. troops." news release, 26 April 2007.

Office of U.S. Sen. Barack Obama. "Obama Votes to Demand Changed Course in Iraq." news release, 24 May 2007.

Office of U.S. Sen. John McCain. "Senator McCain Statement on Presidential Veto of Iraq Spending Legislation." news release, 1 May 2007.

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