DENVER — There is no doubt that Mitt Romney wiped the floor with Barack Obama during last night’s presidential debate. The Republican presidential nominee was prepared, confident, and persuasive, and he offered the most detailed vision of his policies that we have seen so far from his presidential campaign.These new details have raised new questions about Romney’s policies, however, in particular about his plan to cut income taxes across the board by 20 per cent.
The cuts would come out to about a $5 trillion loss in revenue, which Romney claims will be offset by eliminating tax deductions and loopholes, thus making his plan revenue-neutral. But despite relentless badgering, Romney has been unwilling to identify what deductions he would eliminate, so it is unclear how, or even if, Romney’s plan could work.
Which brings us to last night’s debate. Obama, refusing to acknowledge that there would be any offsets to Romney’s tax cuts, accused his opponent of wanting to add $5 trillion to the federal deficit. Romney flatly denied the charge, though he still wouldn’t name any deductions.
But Romney did make several comments that give us more insight into how his plan works. Here’s a breakdown of what he said — and what he meant:
“In order for us not to lose revenue, have the government run out of money, I also lower deductions and credits and exemptions, so that we keep taking in the same money when you also account for growth.”
Here, Romney may have actually explained how he plans to pay for his tax plan — and it’s not through deductions. Basically, Romney is assuming that cutting income taxes will lead to enough economic growth to pay for those cuts.
He elaborated on this later, saying that under his policies, “the revenue I get is by more people working, getting higher pay, paying more taxes. That’s how we get growth and how we balance the budget.”
Romney has never directly said that his plan relies on economic growth to make the tax cuts revenue-neutral. But in the debate spin room Wednesday night, his campaign surrogates seem to take this as a fait accompli.
Here’s how Florida Senator Marco Rubio explained it:
“The way jobs are created, the way you strengthen the middle class, is by growing the private sector. And what government can do is give them a predicable, reasonable, affordable tax code, give them regulations that are reasonable and easy to understand, and let the private sector go out and create businesses. That gets people jobs, that gets people raises, that’s how you get the economy growing again. And by the way, that’s how you generate the revenue that government is going to need to pay for the things government should be doing, and to lower this debt.”
Bottom line: The reason why Romney hasn’t identified any deductions to eliminate is because they probably don’t exist — and they’ve never really mattered to the plan anyway.
“My No. 1 principle is there will be no tax cut that adds to the deficit. I want to underline that: No tax cut that adds to the deficit.”
This interesting emphasis suggests that maybe Romney isn’t really that attached to his tax plan, and would be willing give up on the full 20 per cent income tax cuts rather than add to the deficit. (Wonk Blog reported last month that one of Romney’s campaign advisors, Kevin Hassett, has already hinted at this option.)
“What I’ve said is that there 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 plan.”
The circularity of this argument is mindboggling. Basically, Romney is saying “My plan works because I say so.”
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