As of last week, Mitt Romney had already released plans to cut taxes and a larger plan for economic recovery. But last week Romney was continuing to slip behind Rick Santorum in national polls, despite his small victories at the Conservative Political Action Conference and the Maine caucus.
Apparently Romney panicked and reacted by offering to trade the whole country’s fiscal future for a few more conservative votes. On Wednesday, Romney released a new tax plan. He already had pledged to cut $2 trillion in tax revenues over the next ten years. Now he wants to take another $3 trillion more.
Romney makes fiscal responsibility and balanced budgets the center of his platform and biography. He boasts of having balanced budgets and assails his opponents for having voted to raise the debt limit while they served in Congress. Here’s what he said in Wednesday night’s CNN debate in Arizona:
I’m a guy who has lived in the world of business. If you don’t balance your budget in business, you go out of business. So I’ve lived balancing budgets. I also served in the Olympics, balanced a budget there. And—and served in the states. And all four years I was governor, we balanced the budget.
But he wouldn’t balance the budget as president. And his new tax plan would cause the federal deficit to increase dramatically. As University of Connecticut Professor James Kwak explained Thursday in The Atlantic:
According to yesterday’s bullet points, Romney wants to cut all tax rates by 20 percent, meaning that the top income tax rate, which is currently scheduled to rise from 35 percent (George W. Bush, 2001) to 39.6 percent (Bill Clinton, 1993), would instead fall to 28 percent.
There are several things about this plan that are either loony or deeply misleading. One is the claim that it would "address the debt crisis" because it will be paid for by $500 billion in spending cuts by 2016. But the only proposals mentioned would (a) repeal the Affordable Care Act (increasing deficits, since the ACA has been scored as deficit-reducing); (b) convert Medicaid to a block grant (no deficit impact); (c) increase government efficiency (yawn); and (d) cut Social Security and Medicare benefits for "younger generations" (no impact until well after 2016). In other words, it’s a complete fantasy.
I disagree with Kwak on point B. Converting Medicaid to a block grant program could, in fact, save money over time because the federal government could refuse to increase the size of the block grant when need rises. That’s how block grants can be cheaper than entitlement programs. The problem? Those savings come at terrible social cost. Refuse to raise the value of a Medicaid block grant when times are tough and the poor and disabled will suffer a devastating cut in social services.
It’s a shame that Romney wants to take from the poor to give to the rich. And it’s especially perverse that he pledges fiscal responsibility while promising to increase defense spending. As a senior Obama campaign official mentioned in a Thursday conference call, “Romney has pledged to increase defense spending to 4 percent of GDP. That’s an arbitrary figure untethered to any assessment of national security needs.”
While Americans are concerned about unemployment and underwater mortgages, Romney is only coming up with more ways to reward his rich contributors. As the Obama official said, “[Romney previously] rolled out a 59 point economic plan earlier in the campaign and not one restores middle class security or creates jobs now.” Adding marginal rate reductions won’t do those things either.
What’s especially disappointing about Romney’s plan is not just its ideological extremism but also its total lack of intellectual seriousness or honesty. He says he will increase tax revenues through closing loopholes in the tax code, but he doesn’t specify which loopholes. It’s safe to assume that Congress, filled with the representatives of the various interests that have won those advantages, isn’t going to do this hard work for Romney. Without bold presidential leadership, it won’t happen.
The Committee for a Responsible Budget (CRFB) released a study scoring the Republican candidates’ budget plans. As Ezra Klein reported, “CRFB estimates that if the plan isn’t paid for at all, it will add $2.6 trillion to the deficit, leaving Romney’s debt-to-GDP at 96 percent.” The only nice thing you can say about Romney’s plan is that Rick Santorum’s and Newt Gingrich’s proposals are even more irresponsible.
When pundits speculate that a strong challenge to Romney will pull him rightward in the primary and hurt him in the general election, this is what they’re talking about. As the Obama official gleefully noted, “[Romney] has now embraced very large tax cuts, which is going to make it difficult for him to talk about fiscal responsibility with any credibility.”