August 26, 2012
Mitt Romney has been remarkably successful in not committing himself to specific policy proposals that might offend certain voters, especially with respect to the economy. As a result, until now, he has been able to position himself primarily as Not Obama, even though the policy proposals he has made actually haven't been much different from Obama's.
But given that the economy is the single most important issue for this country right now, voters deserve to know exactly what Mitt Romney wants to do with respect to the economy. And, hopefully, at the Republican convention this week, Romney will lay out the specifics of his latest plan.
One thing that is becoming clear, though, is that Romney's economic plan has changed considerably from the original plan he unveiled last fall, especially with respect to taxes and the deficit.
In that original plan, you may recall, Romney laid out a tax plan in which he proposed to:
• Maintain current income tax rates, which he described as "low"
• Eliminate loopholes and deductions
These tax changes, he suggested, would be "revenue neutral"--meaning that they would not change the government's total tax take. Romney's tax changes, therefore, would not have had an adverse impact on the budget deficit, reducing which the Republicans at that time regarded as a high priority.
Earlier this year, though, the Tax Policy Center analyzed Romney's tax plan and discovered that it would result in the highest-income Americans getting a big tax cut relative to current law (which calls for taxes to go up next year), while the lowest-income Americans would actually get a tax increase. The tax increase on poorer citizens was primarily the result of Romney proposing to eliminate loopholes and deductions that disproportionately helped middle and lower-income Americans.
Romney's campaign did not like the Tax Policy Center's conclusion, blasting it as partisan. But the campaign did not offer alternative scenarios that showed the plan maintaining revenue neutrality while also giving the wealthiest Americans a tax cut.
Regardless, in the last few weeks, it has become clear that Romney has changed his tax plan. He also now appears to be significantly less concerned with near-term debt reduction than he was a year ago.
Romney's new tax plan, according to MittRomney.com, calls for the following:
• Make permanent, across-the-board 20 percent cut in marginal rates
There is also no more mention of eliminating loopholes or deductions.
It's possible that Romney still plans to eliminate some loopholes or deductions, but so far he has refused to specify a single loophole or deduction that he wants to kill. And given that many of these deductions are very popular--the mortgage-interest deduction, for example--it seems unlikely that he will ever support eliminating them. (If Romney does plan to try to kill the mortgage-interest deduction, which there are sound logical reasons to do, Americans absolutely deserve to know about that in advance. Many Americans depend on this deduction, and it artificially props up house prices.)
In any event, in the absence of specific proposals to kill specific deductions, the safe assumption is that Romney actually does not plan to eliminate many loopholes or deductions.
And that means that there is almost no scenario in which his new tax plan could be revenue neutral.
Last week, moreover, Romney proposed a moratorium on the tax and government spending laws that will result in the "fiscal cliff" hitting early next year. The new President, Romney said, should be given time to formulate his own tax and spending plan without subjecting the economy to changes that the CBO says will throw it back into recession.
This plan seems wise economically--Obama has proposed a similar plan on the tax side of the ledger--but it will also lead to the deficit being vastly larger next year than it would be if Romney allowed current law to take effect.
So, it also seems safe to conclude that, at least over the near-term, Romney's new plan is much less concerned with deficit reduction than his old plan was.
Hopefully, we will get more details about the new Romney plan this week.
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