White House website skews deficit numbers ahead of national tour

Neil Munro White House Correspondent
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White House officials have unveiled a taxpayers’ “Federal Tax Receipt” website to goose publicity for a week of presidential speeches on the deficit, but the online receipt hides the president’s deficit spending and conceals the growing national debt.

But interest payments actually cost the nation $414 billion in 2010, according to the Treasury Department. That’s roughly $1,380 per person, or $4,140 for a family of three, or 218 times more than the White House website shows.

This week, “the president will be heading across the country talking directly about his vision for how we reduce our deficit, create jobs and grow the economy,” Dan Pfeiffer, the White House’s communications director, said in a Friday press conference to announce the website and speeches

The plan for the week’s campaign includes interviews with regional media, town-hall events in northern Virginia on Tuesday and in Nevada on Thursday, plus a moderated question-and-answer session on Wednesday from Facebook’s California headquarters. The Facebook event is expected to reach many younger voters, whose support for Obama has recently plunged to 29 percent, according to a recent Pew poll. Virginia and Nevada are swing states that are important to the president’s 2012 reelection campaign.

The town-hall events, Pfeiffer said, will be headlined, “Shared Responsibility, Shared Prosperity.”

The webpage, at whitehouse.gov/taxreceipt, allows people to plug in their tax payments to see how their income taxes are spent among up to 34 accounts, such as “health care,” housing assistance” or “atomic energy defense activities.”

The site obscures President Obama’s use of borrowed funds, which amounted to $1,293 billion in 2010. That federal deficit was a third of the $3,552 billion spent by the federal government, and about 50 percent more than was paid in taxes.

The webpage hides the deficit by allocating Social Security and Medicare taxes entirely to those entitlement programs. In practice, those taxes are commingled with income, corporate and excise taxes, and are used to pay entitlement programs and the various discretionary programs, such as defense and education. The separation “is a little misleading,” said Roberton Williams, a senior fellow at the Tax Policy Center, a left-of-center advocacy group. “They are [separate] in law; they are not in fact,” he said.

The choice to separate the taxes skews the numbers. For example, the website offers the example of a family with one child and $50,000 in income. The family pays $3,100 in Social Security taxes, $725 in Medicare taxes and only $260 in income taxes, the website says. The site reserves the Social Security and Medicare for those two entitlements, and then uses the family’s incomes taxes of $260 to pay for the federal government’s other 34 spending categories. For example, according to the website, national security got 26 percent of the family’s income-tax dollars in 2010. and NASA got 0.7 percent.

The site “doesn’t give you a true sense of government’s cost … [because income] taxes don’t cover the cost,” said Nick Kasprak, an tax analyst at the Tax Foundation, a right-of-center advocacy group. The full cost isn’t even covered by all three types of taxes because the government is borrowing more than $1,000 billion a year, he said.

When asked about these choices, Brian Deese, the deputy director of the National Economic Council, said interest payments are shown on one of the final lines. “The net interest figure on the receipt reflects … what is borrowed,” he said, adding “I don’t think there was any effort to avoid that reality.”

The second-to-last line of the online receipt does show 7.4 percent of the family’s income taxes, or $19, being used to pay the interest on existing debts owed by the federal government.

But in 2010, $414 billion was paid out as interest to debt-holders using funds from Social Security taxes, Medicare taxes and income taxes. That’s roughly $1,380 per person.

The site also shows a family with two kids and an income of $80,000 paying $285 on federal interest payments, and a single parent with one child and an income of $35,000 paying $39 on interest payments. In reality, the two-child family’s share of national interest payments is 19 times larger than shown, and the single parent’s share is 71 times larger than the site acknowledges.

Interest payments are expected to rise sharply in the next few years in step with interest rates and the growing national debt, now $14,300 billion. “Once interest rates come back, these costs will go up, a lot,” said Williams.

Deese did not answer when asked if White House officials would upgrade the site to show more information.

A White House press release announcing the new website contained a statement from the president declaring that “The American people deserve to know exactly how and where their tax dollars are being spent. The first official taxpayer receipt will give American families the ability to see exactly where their tax dollars are going. This new tool reflects our commitment to changing the way Washington works and making government more accountable to America’s families.”

The website include a small link, titled “Behind the Numbers,” which does a little clarification, including the 2010 deficit of $1,293 billion. “Federal government spending has exceeded the revenue it collects since 2002. This shortfall between revenues and spending is known as the budget deficit, and in 2010 it was $1.293 trillion. Learn more about President Obama’s plan to reduce the budget deficit at WhiteHouse.gov.”

Officials unveiled the website to raise publicity for a series of fiscal-policy events by the president next week, which were timed to come after his Wednesday deficit speed at George Washington University. During the speech, he slammed the GOP’s deficit-cutting plan, authored by Wisconsin Republican Rep. Paul Ryan, and touted his own framework for cutting spending by $2,000 billion and raising taxes by $1,000 billion over the next 12 years.

Under current projections, the federal government will spend up to $60,000 billion over the next 12 years, of which up to$13,000 billion will be borrowed funds. When the new debt is added to existing debt, it will amount to roughly $87,000 per person.

White House officials say the high spending will spur the economy, but Republicans argue that younger voters will have an undue responsibility to pay for the debt used to spur the hoped-for prosperity. The president’s speech was applauded by most Democratic activists, and criticized by most Republicans as inadequate. The speech, Ryan said, “was excessively partisan, dramatically inaccurate, and hopelessly inadequate to address our countries fiscal challenges.”