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When Mitt Romney was in Rhode Island last week as part of his campaign for the Republican presidential nomination, GOP Senate candidate Benjamin "Barry" Hinckley III asked him a question about the Obama administration’s effort to raise taxes on the wealthy.
Hinckley -- who is challenging Democratic U.S. Sen. Sheldon Whitehouse, the lead sponsor of the so-called "Buffet Rule" legislation -- asked how Romney would respond to the tax plan.
As part of his introduction to the question, Hinckley dismissed the bill as part of the "politics of envy" and described it as "a plan that is so obviously political because it raises virtually no money, maybe a day and a half of our borrowing per year."
The bill, which is officially known as the Paying a Fair Share Act, would increase the income tax rate on those who earn more than $1 million annually to 30 percent. It was inspired by billionaire investor Warren Buffett, who has said it is unfair that he is able to use tax loopholes to pay a lower effective rate than his secretary. The Senate is set to vote on the bill Monday.
Other opponents of the legislation have questioned how much money it would actually raise and whether it would make a dent in the national debt. But does the amount really correspond to just "a day and a half" of what the United States borrows annually?
Hinckley’s statement relies on two numbers -- how much the nation borrows on a daily basis and how much the Buffet rule would raise per year.
While we waited to hear back from Hinckley’s campaign, we started researching the issue, starting with what the federal government borrows to cover the national debt, a subject we have explored before. PolitiFact Florida and PolitiFact Georgia also have all written pieces on the national debt and what it works out to per day.
We’ll use the same rationale as those items from 2011 but update the numbers. The national debt is the total amount of money owed by the federal government to creditors who have loaned the government money.
That debt has grown by an average of $4.2 billion per day since January 2009. The rate has slowed down more recently. Since January 2012, the average daily increase has been about $3.9 billion. The total debt stood at $15.6 trillion as of April 11, according to the U.S. Department of the Treasury.
As Politifact Florida made clear, the government does not borrow money every day to stay afloat. Rather, it does so by periodically auctioning bonds. But the logic of calculating the borrowing per day is reasonable. For our purposes, we’ll use a rate of borrowing of $3.9 billion per day.
The second part of Hinckley’s statement -- how much the Buffett rule would raise -- is based on a projection from Congress’ Joint Committee on Taxation, according to Whitehouse spokesman Seth Larson. The committee estimated that increasing the tax rate paid by the wealthiest Americans would raise $47 billion over 10 years, or $4.7 billion a year.
But that estimate is based on a comparison to the "current law baseline," which assumes the full expiration of the Bush tax cuts.
If the Bush tax cuts are extended -- a distinct possibility with a Republican-controlled House -- then the Buffet rule would raise $160 billion over 10 years, or $16 billion a year.
Both are valid estimates.
"They’re two separate projections based on two different scenarios," said Larson.
A spokesman for Hinckley said that the candidate used the $4.7 billion figure and a range of estimates for borrowing that, at the high end, is nearly identical to our number. So if we divide $4.7 billion by $3.9 billion, we get 1.2, or the equivalent of 1 day and about 5 hours. That’s actually less than a day and a half.
If we use the $16 billion figure, we calculated the Buffet rule would raise the equivalent of about four days of the nation’s borrowing.
Senate candidate Barry Hinckley says the Buffett rule would annually raise only "a day and a half" of what the federal government borrows every year.
Our calculations yield a number closer to a day and a quarter, which would actually bolster Hinckley’s point that the tax plan raises "virtually no money."
In relative terms, he may have a point, but $4.7 billion is not a small amount of money. (Rhode Island’s total budget is $7.7 billion.) Moreover, by another estimate, increasing taxes on the wealthy could raise $16 billion a year, or the equivalent of four days of the nation’s borrowing.
Because of that issue and others related to calculating the national debt per day, Hinckley’s is not a perfect comparison. Because the statement needs clarification, we rate it Mostly True.
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PolitiFact.com, "Senators ring alarm about "$4 billion" daily debt," PolitiFact Georgia, published April 11, 2011, accessed April 12, 2012
PolitiFact.com, "Sen. Marco Rubio says leaders borrowing $4 billion a day to grow government," PolitiFact Florida, published April 15, 2011, accessed April 12, 2012
PolitiFact.com, "GOP Congressional Committee says U.S. borrows $4 billion a day for spending," PolitiFact Rhode Island, published May 4, 2011, accessed April 12, 2012
TreasuryDirect.gov, "The Debt to the Penny and Who Holds It," U.S. Department of the Treasury, Bureau of the Public Debt, updated April 11, 2012, accessed April 13, 2012
Interview, Seth Larson, spokesman for U.S. Sen. Sheldon Whitehouse, April 13, 2012
Online.WSJ.com, "Revenue Estimate of S. 2059 -- The Paying a Fair Share Act of 2012," Joint Committee on Taxation, March 20, 2012, accessed April 13, 2012
AmericanProgress.org, "What the Buffett Rule Will and Won’t Do," Center for American Progress, April 13, 2012, accessed April 13, 2012
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