In the recent debates, and on many of his talk show appearance, I keep hearing Obama using a catchy little phrase "It's Just Math" when he refers to any question about his economic plan. In fact that is his defense when anyone else tries to offer a plan. In the debates we have heard this explanation, and rebuttal on quite a few occasions. As I listen to the debates, and here the LARGE numbers thrown around, and I even find myself not being able a follow the trillion this, and billion that dialogue. I fear that many people feel the same way. Both candidates use the large scary number approach that sounds impressive, but if you really got down to it most people don't even understand what a trillion dollars is. This link might help you visualize the numbers the politicians throw around.
However that doesn't really get to the topic I am trying to hit on. He uses the "It's just math" statement to make it seem so easy that you might be scared to question it as you will appear stupid. I say if it was just math then how has Obama manage to rack up 4.7 trillion in debt in under 4 years? The debt when he took office was 10.6 trillion. Now we know that in the eight years that Bush was in office that he put 4.9 trillion of debt on the books. There we go big numbers that might not be easy to follow. I will show you the "It's just math" response.
From the first President to the 42nd President the USA accumulated 5.7 trillion dollars in debt. That number doesn't include either George W. Bush, or Obama. Here is the "Math"
15.3t (debt as of Jan 2012) - 4.7t (Obama's debt) - 4.9t (Bush's Debt) = 5.7t (the debt of Presidents 1 - 42)
Easy enough. So that explains that.
What about the whole "that's un-patriotic" comment that Obama made about that 4.9 trillion Bush spent. Since we have two whole numbers to compare the 4.7t of Obama, and the 4.9t of Bush we have to make it apples to apples. They only way to do that is look at it on a yearly basis.
4.9t divided by 8 years is .61 trillion per year.
4.7t divided by 3 years (as the we are using Jan 2012 numbers) is 1.56 trillion a year.
Yes folks that is more than double the Evil George W. Bush's yearly debt accumulations. "It's Just Math".
However here is the one we are really all concerned about, hear all the talk about, and the one that I feel is the most vague. TAXES.
We hear the terminology the 99%, the evil 1%, Fair Share, the 47% that don't pay, Food Stamps, unemployment, ect... Well I want to do a simple math breakdown of Obama's plan verse Romney's, and see if this makes it easier to visualize, and hopefully come November 6th make a more informed choice.
Let's use 100 people to demonstrate today's tax revenue and structure. I will refer back to this the base line.
We will use a $1000.00 dollars to represent the revenue generated by taxes.
We will use 2009 tax percentage to make them as non biases as possible. Here is my reference.
So for our 100 people and $1000.00 this is how it would break down. 100% of the revenue paid by 50% of the people. ( the bottom 50% when it comes to household income actually pays approx 2.25%, but for simplicity purposes we will roll that number into the top 50%)
1 top person would pay 367.30 dollars. The next top 4 people would pay $54.82 dollars a piece. The next 5 people would pay $23.62 a piece. That all together equals $704.40 paid by the top 10 people. Now the remaining 40 people will evenly share the the remaining 295.60. That equals $7.39 a piece.
So that being our baseline let's look at what Obama wants to do.
- Cut taxes on the middle class which he defines as not the top 1% or household incomes over $250,000.00
- Raise taxes on the Top 1% (millionaires and billionaires.)
1 top person would pay $422.39 dollars. The next top 4 people would pay $52.07 dollars a piece. The next 5 people would pay $22.43 a piece. That all together equals $742.82 paid by the top 10 people. Now the remaining 40 $7.02 a piece or $280.80.
Under this plan we would have a tax revenue of $1023.62
Using our base line let's look at what Romney wants to do.
- Cut taxes on the middle class which he defines as not the top 5%
- Keep top 5% paying their same percent of the tax burden.
- Romney's plan create 12m jobs as apposed to the the 23m less workers.
1 top person would pay 359.68 dollars. The next top 4 people would pay $53.69 dollars a piece. The next 5 people would pay $22.43 a piece. That all together equals $686.59 paid by the top 10 people. Now the remaining 40 $7.02 a piece or $280.80.
Under this plan we would have a tax revenue of $967.39.
But Wait! That is what Obama is saying we have to raise more money. Here is the variables that Barry doesn't talk about. During his term 23m people are now out of work that were working. The current population of working age adults between the age of 18 and 65 is 181.9 million. That means we are paying on average $386.00 dollars a week to 12.6% more people now then we were when Obama took office. That is an expense in fiscal terms.with a price tag of 8.87 billion dollars.
Let's do the math using our base line. 12.6% of 100 is 12.6 people. Since you can't have a 6th of a person we will round down to 12. Now These people would be the the bottom 25% of wage earners so we will say that instead of tax gain we are spending tax dollars. So with Obama's model let's figure in 12 people at the lowest bracket as an expense. The math is $7.02 times 12 which equals $84.24 dollars. Put that into his $1023.62 revenue numbers. The math would be $1023.62 - $84.24 which equals $939.40. That is a loss of $60.60 per year.
To be fair let's do the same math for Romney. His plan moves the 23m people out of work to 12m. The math 23m - 12m which equals 11m people still not working. This would mean on an average we are paying 6.04% the $386.00 dollars per week with a price tag of 42.4 billion dollars. Still a pretty hefty price. However we have to also consider that we have a gain of people now paying taxes verse the current economic situation. From the 12.6% to the 6.04% is a 6.56% swing. We will make the math easy a spilt it in half.
Let's do the math using our base line. 6% of 100 is 6 people who we are paying the $7.02 a piece to as an expense. However we have 6 more people now paying the $7.02 in taxes as they are now working. The math is $7.02 times 6 which equals $42.12 as an expense dollars, but this is offset by the people coming back into the workforce, and now contributing to the revenue of $42.12 Put that into his $967.39 plus $42.12 which equals $1009.51. You then have to back out the 42.12 again, and leaves you with $967.39.
So "It's Just Math" answer would be. Romney's plan would cut taxes, but offset expenses, and would require spending cuts of 3.3% to just break even. Obama's plan would cut taxes for some, and dramatically raise them others. However since there is no plan for covering the expense he would have to cut spending by 6.1%. If you use his record as a indicator of his spending habits that just doesn't add up.