The Economic Report of the President came out yesterday. (I was too busy digging out to notice.) I’ll have more to say on it over the weekend, but if you check out Chapter 5, “Addressing the Long-Run Fiscal Challenge,” you’ll see the Council of Economic Advisers was very careful to stick to script on tax policy in the following ways:

1. Deficit-financed Bush Administration policies are largely to blame. The Bush tax cuts (and AMT relief), the Medicare prescription drug benefit, and the wars were all deficit financed and account for about half of the long-run fiscal gap. (Too bad most of those policies and their deficit financing are continued under the Obama budget.)
2. The Obama Administration asserts it will stick to the President’s campaign promise of not raising taxes on households with incomes under $250,000. This is the policy prescription referred to as “restoring balance to the tax code”–the CEA writes that (emphasis added): “The President has consistently maintained that the tax cuts went too far in cutting taxes for people making more than $250,000 per year and that the country could not afford the tax breaks given to that group over the past eight years.”
3. Even with those high-income tax increases, taxes will still be very low. There are several pages (pp. 152-155) written just to convince us that although the Bush Administration went too far in cutting taxes and although the Clinton Administration’s tax rates weren’t too high, the Obama Administration’s taxes will still be very low–closer to Bush taxes than Clinton taxes.
4. The fiscal commission will be needed to take the necessary “further steps…to close the gap between noninterest expenditures and tax revenues.” The commission will be needed to get the gap down to 3 percent of GDP, because the Administration’s proposals only get to about 4. They refer to the remaining gap without being clear that the only feasible way to close it is to close it from both sides.

More later this weekend in between more digging out!