Obama says Romney's plan is a $5 trillion tax cut

Early in the first presidential debate, President Barack Obama attacked Mitt Romney’s tax plan as unbalanced and devastating for the middle class. He charged that Romney’s plan "calls for a $5 trillion tax cut," and challenged him to defend it.

The candidates repeatedly disagreed about that number. Four times the president spoke of Romney’s $5 trillion tax cut, and four times the governor rejected it.

Obama said: "Governor Romney's proposal that he has been promoting for 18 months calls for a $5 trillion tax cut, on top of $2 trillion of additional spending for our military. And he is saying that he is going to pay for it by closing loopholes and deductions. The problem is that he's been asked over 100 times how you would close those deductions and loopholes, and he hasn't been able to identify them."

Later, Romney countered: "I'm not looking for a $5 trillion tax cut. What I've said is I won't put in place a tax cut that adds to the deficit. That's part one. So there's no economist that can say Mitt Romney's tax plan adds $5 trillion if I say I will not add to the deficit with my tax plan."

Obama has talked about the $5 trillion tax cut for months. We have looked at this claim before and found it lacked important context. Here’s why.

The claim is based on a study done by the Tax Policy Center, a nonpartisan group that has analyzed the tax plans of the candidates. The center examined Romney’s proposals for a 20 percent reduction in all federal income tax rates, eliminating the Alternative Minimum Tax, eliminating the estate tax and other tax reductions.

The center estimated that altogether, the lost revenues would total $480 billion by 2015. The Obama campaign adds up the cost over a decade and winds up with $4.8 trillion, which it then rounds up to $5 trillion.

The conclusion is accurate but misleading. Yes, the cuts would total that amount, but as Obama himself noted as he continued speaking, Romney hopes to offset the lost revenues by closing loopholes and deductions. The reductions in tax breaks are as much a part of Romney’s plan as the tax cuts.

But Obama is right in pointing out that Romney has yet to specify what tax breaks he would change. The most Romney has personally said is that he might cap deductions at $17,000, but that is a broad figure and does not describe how the number would be achieved.

The impact of changing deductions on the scale needed to offset the tax cuts would be great. The largest deductions include interest on home mortgages, state and local taxes and the tax free treatment of health benefits. These are real pocketbook issues for most households and tinkering with them could have significant effects on large sectors of the economy.

Romney offers key details on the taxes he would cut. But in explaining how to pay for them, he has essentially said only that he would keep the overall tax burden the same across all income groups by changing unnamed tax breaks.

Our ruling

President Obama said Mitt Romney seeks a $5 trillion tax cut.

The $5 trillion figure accounts for only half of Romney’s plan -- and it's cumulative over 10 years. The governor says he will offset those lost revenues by reducing tax deductions and eliminating loopholes. However, he has never said what those changes would be.

The president made a misleading statement about an incomplete plan, but he did describe what the plan was missing and Romney would not fill in the gaps.

We rate the statement Half True.