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President Barack Obama speaks at a campaign event in Texas (Eric Gay/AP)
The White House hit back hard late Tuesday at a study by accounting firm Ernst and Young that charged President Barack Obama's signature tax proposal could cost 710,000 jobs, claiming it's chock full of "major flaws, errors and misleading statements."
Obama has called for extending Bush-era tax cuts on income up to $250,000, a move that chiefly would benefit the middle class, while letting lower tax rates on upper brackets expire on schedule come January 1. (The richest Americans would still get tax cuts on their first $250,000 of income.) The president has said that the country cannot afford the Republican plan to extend all of the tax cuts, and warned that doing so would force cuts to popular government programs.
On the official White House blog, senior Obama economic policy aide Jason Furman ripped the new study. Among his complaints:
- The report, funded by pro-business groups generally hostile to Obama's agenda, assumes that none of the revenue generated by raising taxes on the richest Americans goes to deficit reduction. Instead, it assumes the money would go to expanding government spending. But the president has called for the money to go to reducing the federal deficit and national debt.
- The report omits Obama's push for new tax cuts to spur private-sector hiring and investment. By ignoring the predicted impact on jobs growth, Furman argued, the study distorts the impact of the president's agenda.
Furman, whose title is Principal Deputy Director of the National Economic Council, also charged that the study's conclusions are "dramatically out-of-line with estimates by other analysts" like the Congressional Budget Office (CBO), the non-partisan standard for judging the economic impact of federal legislation. And he underlines that Obama's tax proposal would let rates climb back to where they were under President Bill Clinton — when the economy created millions of jobs.
