"The nonpartisan CBO, Congressional Budget Office, has said that the No. 1 policy decision that brought us to the need to prevent the nation from defaulting on our debt for the first time in history were the Bush tax cuts in 2001 and 2003."
Debbie Wasserman Schultz on Tuesday, July 19th, 2011 in debate on the floor of the U.S. House of Representatives
Rep. Debbie Wasserman Schultz says nonpartisan CBO faults Bush tax cuts for debt crisis
If you watch TV news, you've probably seen clips of Rep. Debbie Wasserman Schultz's speech from the House floor July 19, 2011, on the Republican "cut, cap and balance" plan to slash the federal debt — it's the one that prompted fellow South Florida Rep. Allen West to call her vile and despicable.
But you may have missed a line about the 2001 and 2003 George W. Bush tax cuts that raised our curiosity.
Here's a recap.
Wasserman Schultz, chairwoman of the Democratic National Committee, argued during House debate that deep spending cuts required by the Cut, Cap and Balance Act of 2011 would "end Medicare as we know it," increasing costs for Medicare beneficiaries. She added it was "unbelievable" that West, a Republican tea-party favorite, would support it, given the number of South Florida seniors. She urged colleagues to reject the "reckless bill" for something that instead "engages us all in shared sacrifice" — for example, legislation that also targeted the Bush tax breaks.
West then fired off a name-calling e-mail, setting off a days-long public spat that echoed Washington's partisan wrangling over raising the nation's debt limit. (There's more to say about Wasserman Schultz and West's tumultuous history, but that's not our focus here.)
Many conservatives oppose any debt limit increase unless lawmakers cut spending to reduce the deficit, enact "enforceable" spending caps and pass a balanced budget amendment to the Constitution. The GOP-led House ultimately passed the Cut, Cap and Balance Act; the Democratic Senate tabled it July 22, effectively killing the plan. Officials expect the debt ceiling to be reached Aug. 2.
As negotiations continue, we were interested in Wasserman Schultz's claim on the House floor about the buildup of the federal debt:
"The nonpartisan CBO, Congressional Budget Office, has said that the No. 1 policy decision that brought us to the need to prevent the nation from defaulting on our debt for the first time in history were the Bush tax cuts in 2001 and 2003 that disproportionately benefited the wealthiest Americans."
We wondered if the Congressional Budget Office — which has a mandate to provide "objective, impartial analysis" for lawmakers and doesn't make policy recommendations — really said that?
Warning sign No. 1: When we asked Wasserman Schultz's communications director, Jonathan Beeton about her statement, he provided us not with a CBO report, but with work done by a liberal think-tank, the Center on Budget and Policy Priorities.
Warning sign No. 2: When we contacted the CBO, associate director for communications Deborah Kilroe provided us not with something that sounded like a source for Wasserman Schultz's claim, but with a table of numbers. The table — published within a May 2011 CBO report — does not include a qualitative analysis to support Wasserman Schultz's statement.
Instead, the table assigns dollar values to the major revenue and spending decisions that took the country from budget surpluses to budget deficits.
On the revenue side, the Bush tax cuts — formally the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 — were the biggest chunk of lost income: $1.5 trillion. That dwarfs all other revenue changes, including tax cuts in the 2009 stimulus. The 2001 tax cut alone is bigger than any other single change, representing $1.2 trillion from 2002-11.
On the spending side, the only item in CBO's table bigger than the 2001 tax cut — or the 2001 and 2003 tax cuts together — was lawmakers' discretionary spending. So, the impact of tax cuts in 2001 and 2003? $1.5 trillion. The impact of discretionary spending? $2.9 trillion.
Of course, discretionary spending likely represented a series of "policy decisions," individually perhaps smaller than the impact of the tax cuts. And that's exactly what Beeton of Wasserman Schultz's office argued: "The biggest legislative number is for discretionary changes. The 2001 Bush tax cut is the second-biggest," he said. "However, the discretionary number is an aggregation of several different policies enacted at different times. ... In terms of a single piece of legislation's impact on the deficit, the Bush 2001 tax cuts probably still wins the prize for generating the biggest deficit increase."
In short, the May 2011 CBO report doesn't say what Wasserman Schultz said, that "the No. 1 policy decision that brought us to the need to prevent the nation from defaulting on our debt for the first time in history were the Bush tax cuts in 2001 and 2003." But the CBO numbers back that claim up, Beeton argues.
So does an analysis from the Center on Budget and Policy Priorities, Beeton said. (The study actually widens its analysis beyond the Bush tax cuts, ascribing the bulk of recent and projected deficits to the economic downturn, the Bush tax cuts and the wars in Iraq and Afghanistan.)
"Her statement clearly has a lot of strength to it," added Bob Williams, a senior fellow with the nonpartisan Tax Policy Center. (Editor's note: We updated the description of the Tax Policy Center on July 28, 2011.)
But another think-tank that also analyzes CBO data, the business-backed Tax Foundation, interpreted the same CBO data differently. The Tax Foundation's Scott Hodge and Will McBride make spirited arguments that spending, not tax cuts, provides a more potent explanation for America's debt crisis.
The discrepancy in the analyses explains the central problem with Wasserman Schultz's claim.
The CBO provides data. Think-tank analysts provide varying interpretations of the data. Wasserman Schultz got up before fellow lawmakers, repeated a think-tank interpretation and passed it off as the objective stance of CBO. (She even slowed down to make sure we understood her source: "The nonpartisan CBO, Congressional Budget Office ...")
What does the Truth-O-Meter make of this?
Wasserman Schultz said that "the nonpartisan CBO, Congressional Budget Office, has said that the No. 1 policy decision that brought us to the need to prevent the nation from defaulting on our debt for the first time in history were the Bush tax cuts in 2001 and 2003."
The CBO never actually said that, but data from a May 2011 CBO report can reasonably support Wasserman Schultz's position. The CBO found that the 2001 and 2003 tax cuts resulted in the biggest revenue drop since 2001. Experts say the cuts were hefty enough they likely outweighed individual spending decisions. We rate her statement Half True.