If the Republicans’ proposed budget reduces the deficit, the country’s ultra-wealthy won’t have anything to do with it, said Sen. Bernie Sanders, I-Vt.
Sanders, who is an Independent but caucuses with Democrats, tweeted a meme March 23 that said, "From 2013-2015, the richest 14 Americans increased their net wealth by more than $157 billion, yet the Republican budget would not require these Americans to contribute one penny to deficit reduction."
Both the House and the Senate have passed Republican budget proposals for Fiscal Year 2016, and they're working on reaching a final deal. We wondered if the 14 wealthiest Americans really had made $157 billion in just two years. and whether these individuals would contribute to deficit reduction under the budget proposal.
The $157 billion
The first part of Sanders’ claim is on point. His staff made the calculation using the Forbes 400 list, which tracks net wealth of the world’s richest people. We won’t recreate the whole list here, but the top-14 includes the likes of Microsoft founder Bill Gates, investor Warren Buffett and members of the Walton family, who founded Wal-Mart.
One minor thing -- Sanders’ list accidentally left out Alice Walton, ranked No. 8, but included Google co-founder Sergey Brin, ranked No. 15. We calculated it both ways (with Walton and without Brin, and vice versa), and the difference was negligible, so we won’t take issue with that minor discrepancy.
Forbes data shows that the 14 wealthiest Americans were collectively worth $450.3 billion in March 2013. As of March 2015, they are worth $607.4 billion. That’s a difference of $157.1 billion.
The biggest leap was that of Facebook founder Mark Zuckerberg, who went from a net worth of $13.3 billion in 2013 to $33.4 billion today. That’s a $20.1 billion change.
Does their wealth go untouched by the Republican budget? It’s really hard to say.
The Republican budget
The first question is whether the Republican budget proposals -- one out of the House, another out of the Senate -- reduce the deficit. The Congressional Budget Office, a nonpartisan government research agency, says they would.
In a recent report, CBO found that the Senate Republican proposal would reduce the deficit by $4.9 trillion over 10 years, compared to the baseline. (The baseline assumes current law continues without any change.) Another report found that the House Republican proposal -- which passed the chamber -- would reduce the deficit by $5.3 trillion over 10 years.
In broad strokes, the proposals say they accomplish deficit reduction through a combination of spending cuts (such as repealing the Affordable Care Act) of about $5 trillion and closing tax loopholes. The proposals also say they will not raise taxes on anyone at any income level -- they assume that revenue over the next 10 years will be about what it is expected to be under current law.
"Along with lower rates, we propose broadening the tax base by closing special interest loopholes that distort economic activity," the House proposal reads, without getting any more specific.
There’s nothing in either the Senate or House proposal that specifically addresses the ultra-wealthy. The ultra-wealthy could, though, contribute to the deficit reduction by either paying more taxes or taking some sort of hit in the spending cuts.
The problem here is that a federal budget resolution is not a line-item appropriation bill. Rather, it is a list of spending targets and policy priorities. To pass the spending outlined in the budget requires additional legislation. This means that we have no idea how different spending targets will be reached, nor do we know the specifics of the tax reforms.
"The only thing budget resolutions really do is say how much or little we will be spending in each area of government," said Marc Goldwein, senior vice president of the nonpartisan think tank Committee for a Responsible Federal Budget.
"From that perspective, no budget resolution can specifically ask anything from the wealthy for deficit reduction – it’s just not how they are designed," Goldwein added.
We posed Sanders’ statement to the Senate Budget Committee staff, and they told us that it is up to the authorizing committees to determine how the spending cuts and tax reforms are enacted.
So we don’t know who or what will specifically cause the deficit reduction. The CBO says outright that it cannot determine the effect on how the budget would impact individuals’ taxes without knowing the particulars.
The top 1 percent of earners currently pay a median income tax rate of about 30 percent. But there’s nothing to suggest they would be contributing above and beyond current levels.
A spokesman for the Democratic members of the Senate Budget Committee (which includes Sanders) told us that because the budgets don't increase revenue or taxes, the ultra-wealthy are not required to contribute to deficit reduction.
The flip side of that coin is that no one at any income level is required to contribute extra to deficit reduction.
It’s likely that broad-based spending cuts suggested in the proposals would likely have some sort of impact on individuals at every level of wealth, meaning even the ultra-wealthy would have to sacrifice something as part of Republicans’ plan to reduce the deficit, Goldwein added. But again, without knowing the specifics, it’s impossible to know with certainty.
Curtis Dubay, a tax policy fellow at the conservative Heritage Foundation, pointed out an issue of words: Sanders’ claim talks about net wealth, when the government does not tax wealth directly (except for the estate tax) -- it taxes income.
"It would be more germane if he cited how much income the richest Americans earned, but that would be a different list since income and wealth are different," Dubay said.
Sanders said, "From 2013-2015, the richest 14 Americans increased their net wealth by more than $157 billion, yet the Republican budget would not require these Americans to contribute one penny to deficit reduction."
The 14 richest Americans’ net wealth did go up by about $157 billion between 2013 and 2015. The proposed Republican budget does not ask anything specific of the ultra-wealthy. It does not raise taxes, but it says it intends to streamline the tax code. However, these are broad strokes -- not specific legislation. So we don’t know how lawmakers would specifically handle these proposals, and we don’t know how they would impact the ultra-wealthy.
Sanders’ statement is partially accurate but leaves out important context, so we rate it Half True.