Great leadership profiles of Mitt Romney
Just say what you stand for, Mitt
The Final Word on Mitt Romney’s Tax Plan
By Josh Barro Oct 12, 2012 12:34 PM ET
Mitt Romney‘s campaign says I’m full of it. I said Romney’s tax plan is mathematically impossible: he can’t simultaneously keep his pledges to cut tax rates 20 percent and repeal the estate tax and alternative minimum tax; broaden the tax base enough to avoid growing the deficit; and not raise taxes on the middle class. They say they have six independent studies — six! — that “have confirmed the soundness of the Governor’s tax plan,” and so I should stop whining. Let’s take a tour of those studies and see how they measure up.
The Romney campaign sent over a list of the studies, but they are perhaps more accurately described as “analyses,” since four of them are blog posts or op-eds. I’m not hating — I blog for a living — but I don’t generally describe my posts as “studies.”
None of the analyses do what Romney’s campaign says: show that his tax plan is sound. I’m going to walk through them individually, but first I want to make a broad point.
The Tax Policy Center paper that sparked this discussion found that Romney’s plan couldn’t work because his tax rate cuts would provide $86 billion more in tax relief to people making over $200,000 than Romney could recoup by eliminating tax expenditures for that group. That means his plan is necessarily a tax cut for the rich, so if Romney keeps his promise not to grow the deficit, he’ll have to raise taxes on the middle class.
Various analyses have adjusted TPC’s assumptions in an effort to bring down that $86 billion deficit. But getting from $86 billion down to $0 is not enough to make Romney’s proposal work. For Romney’s math to add up, he actually needs a substantial surplus of a high-income base broadening above the cost of his high-income rate cuts.
This is for two reasons. First, TPC’s thought experiment — eliminate as many deductions as possible at the top while holding those below $200,000 harmless from tax increases — was not only exceedingly generous in granting Romney’s assumptions. It was impossibly generous. Under the terms analyzed by the TPC study, a taxpayer earning $199,999 would face a drastically higher tax bill for earning $1 more in income. That doesn’t happen in the real world.
Instead you would need to phase in restrictions in deductions on the wealthy, which would reduce the amount of revenue those restrictions generated. Harvard Professor Martin Feldstein, in one of the analyses cited by the Romney campaign, makes a rough estimate that a phase-in would cost about $15 billion. My back-of-the-envelope calculations roughly match that.
There is a second reason Romney needs a big surplus for his plan to work. When asked why he won’t lay out a specific plan to eliminate tax expenditures, Romney consistently says it’s because he can’t dictate a plan to Congress and will work with legislators from a menu of options. As he said in last week’s debate:
I’m going to work together with Congress to say, OK, what are the various ways we could bring down deductions, for instance?. . . . There are alternatives to accomplish the objective I have, which is to bring down rates, broaden the base, simplify the code and create incentives for growth.
There are only meaningful “alternatives” to discuss with Congress if Romney can pick and choose from a pool of tax preferences for the wealthy that far exceeds the $250 billion annual cost of his rate cuts for them. If the pool of available base broadeners is just large enough to finance his tax cuts, then Romney actually is dictating a plan to Congress: if they don’t eliminate exactly the set of preferences he proposes, his plan will either have to raise taxes on the middle class or grow the deficit.
TPC finds that Romney’s rate cuts, plus elimination of the estate tax and Alternative Minimum Tax, would cost the Treasury about $250 billion in revenue from high earners. If he could somehow find, say, $300 billion in base broadeners from the wealthy, $15 billion of which would have to go to a phaseout, that wouldn’t leave a lot of “alternatives” on the table. Yet there aren’t enough base broadeners for Romney to reach the $300 billion level, let alone exceed it.
Now, on to the six studies.
1. The strongest of the six analyses is actually one of the shortest: An October 1 blog post from American Enterprise Institute. Brill chips away at the $86 billion figure by raising three objections to the TPC study.
TPC included in its baseline Obamacare taxes, which Romney did not say he would offset ($29 billion), and did not account for the possibility of eliminating favorable tax treatment of municipal bonds ($25 billion) and life insurance ($20 billion).
I think these objections are correct with regard to life insurance and Obamacare taxes, but mostly wrong with regard to municipal bond interest, which should be counted at just $5 billion. This is because the CBO estimates that only about 20 percent of the tax subsidy for municipal bond interest actually accrues to bondholders; the rest goes to state and local governments because bondholders will accept low interest rates on government debt in exchange for favorable tax treatment.
If the muni bond tax preference were eliminated, high income taxpayers would pay about $25 billion more in federal income taxes. But they would be relieved of roughly $20 billion in implicit taxes they pay to state and local governments in the form of reduced interest rates on municipal debt, for only $5 billion in actual added taxes.
Depending on your assumptions, it may be that the remaining $20 billion in muni bond subsidies effectively flows back to owners of capital generally, though not to municipal bondholders specifically, by inflating the yields on non-tax advantaged investments. If the muni bond tax exemption were repealed and replaced with nothing, this would broaden the tax base.
However, it is politically unthinkable that the muni bond subsidy would be repealed without something, such as tax credit bonds, taking its place and producing similar market-wide effects. Consequently, only 20 percent of the proceeds from eliminating the muni bond subsidy should be counted as actual base broadening on high earners. Or if the muni bond subsidy were somehow repealed without offset, a key effect would be state and local governments raising taxes (mostly not on the wealthy) to pay higher interest costs.
In total, this leaves Brill about $32 billion short of closing the deficit in the TPC report. Since he also needs about $15 billion to structure a phaseout and tens of billions more to allow Romney to offer a real menu of options to Congress, Brill is well short of “confirming the soundness” of the Romney tax plan.
Finally, Brill appeals to the possibility of added economic growth, as do several of the other analyses I discuss below. Tax reform might well produce some added economic growth. But claims about growth induced by tax policy changes are often overstated — remember, the 2001 and 2003 tax cuts were also sold on the promise of higher economic growth offsetting much of the revenue loss. It didn’t happen.
2. The second analysis the Romney campaign cites is an August 9 blog post by Brill’s colleague, Matt Jensen. Jensen didn’t actually claim that Romney’s tax plan was sound, he just raised some questions about the TPC report. He previewed the municipal bond and life insurance issues that Brill discussed at greater length. He also suggested that Romney might use a lower threshold than $200,000 for “high income,” but Romney later excluded that possibility in an interview with ABC News.
As such, Jensen’s post does nothing to bolster Romney’s plan beyond the limited support it gets from Brill.
Feldstein ran the numbers and said Romney can cut tax rates by 20 percent and eliminate enough tax expenditures to balance the budget without raising taxes on the middle class. But Feldstein defines “middle class” differently than Romney does.
Feldstein allows for tax increases on people making more than $100,000. But on Sept. 14, Romney told ABC’s George Stephanopoulos that he would hold people making less than $200,000 or $250,000 harmless from tax increases.
The Romney campaign, therefore, is dishonest in saying Feldstein’s analyses “confirm the soundness” of Romney’s tax plan. Feldstein is analyzing a different tax plan, which would allow tax increases on taxpayers making between $100,000 and $200,000. That’s a large group, accounting for 24 percent of all adjusted gross income in 2009. But it’s a group Romney has pledged not to touch.
5. Next up is a paper by Curtis Dubay of the Heritage Foundation. Dubay raises the same issues as Brill on municipal bond interest, life insurance and economic growth. He adds another claim: Romney would likely change the rules about capital gains tax treatment on estates, raising additional revenue.
Currently, when you die, your heirs receive a “step-up,” with the value of your assets determined at the time of your death. Say you bought your home for $100,000, it was worth $200,000 when you died and your heir eventually sold it for $250,000. Your heir would only owe capital gains tax on a gain of $50,000; the other $100,000 of gains would go untaxed. This is often described as an offset for the estate tax.
Dubay assumes that, when repealing the estate tax, Romney would adopt “carry-over” basis, meaning your heir would assume the gains accrued during your lifetime and pay tax on the entire gain when he sells those assets. Dubay says this would raise $19 billion annually from people earning over $200,000.
But that’s wrong. Dubay is citing a report from the Office of Management and Budget that compares the current step-up basis rules to a regime in which accrued capital gains are taxed immediately upon death. Though Dubay has protested that this isn’t so, you can see it plainly in footnote 74 on page 272 of the OMB report.
I have not seen an estimate of the revenue impact of moving to carry-over basis at death, but it would surely be much less than the revenue impact of forcing the realization of capital gains at death.
6. Finally we have Princeton’s Harvey Rosen, who ran his own score of Romney’s tax plan and finds that, even if Romney sets his tax increase threshold at $200,000, he can more than eliminate the deficit identified by TPC. But there are several problems with Rosen’s analysis, as highlighted by William Gale, a co-author of the Tax Policy Center report that sparked this discussion.
Rosen calculates the revenues needed to offset Romney’s cuts to tax rates, but he does not include revenue loss due to repealing the estate tax and the Alternative Minimum Tax. And he makes very aggressive assumptions about dynamic effects, where taxpayers respond to lower tax rates by reporting more taxable income. Gale emails:
Rosen discusses and includes the effects of how taxpayers adjust their activities in response to lower tax rates (“micro behavioral” responses to tax rate cuts, which tend to reduce the revenue loss) but he neglects to include similar effects for how taxpayers respond to base-broadening measures. For example, he does not allow for the possibility that taxpayers with mortgages would likely choose to pay down their mortgages with taxable assets (and thus reduce taxable investment income) if the mortgage interest deduction were removed.
Rosen also depends on aggressive assumptions about macro-level dynamic effects, where taxes rise not because individual taxpayers report more taxable income but because the economy grows as a whole. In other words, he is depending on rosy — and not necessarily warranted — economic assumptions to make the numbers pencil.
There you have the six “studies” on which the Romney campaign has based its defense of Romney’s tax plan. Individually and collectively they fail the task.
Finally, I would note one item that the Romney campaign does not cite in support of its tax plan: Any analysis actually prepared for the campaign in preparation for announcing the plan in February. You would expect that, in advance of announcing a tax plan, the campaign would commission an analysis to make sure that all of its planks can coexist. Releasing that analysis now would be to the campaign’s advantage, helping them put down claims like mine that their math doesn’t add up.
Why don’t they release that analysis? My guess is because the analysis doesn’t exist, and the 20 percent rate cut figure was plucked out of thin air for political reasons without regard to whether it was feasible.
Mitt Romney’s tax mythology, made simple
By Jonathan Bernstein
Posted at 04:41 PM ET, 10/10/2012
The bizarre case of the Romney/Ryan position on Simpson-Bowles
By Jonathan Bernstein
Romney’s 12 million jobs promise is based on the idea that achieving energy independence will create three million jobs; tax reform will create seven million more; and that expanding trade and cracking down on China takes us to 12 million.
August 1, 2012, 7:02 p.m. ET
Glenn Hubbard: The Romney Plan for Economic Recovery
Tax cuts, spending restraint and repeal of Obama’s regulatory excesses would mean 12 million new jobs in his first term alone.
By GLENN HUBBARD
We are currently in the most anemic economic recovery in the memory of most Americans. Declining consumer sentiment and business concerns over policy uncertainty weigh on the minds of all of us. We must fix our economy’s growth and jobs machine.
We can do this. The U.S. economy has the talent, ideas, energy and capital for the robust economic growth that has characterized much of America’s experience in our lifetimes. Our standard of living and the nation’s standing as a world power depend on restoring that growth.
But to do so we must have vastly different policies aimed at stopping runaway federal spending and debt, reforming our tax code and entitlement programs, and scaling back costly regulations. Those policies cannot be found in the president’s proposals. They are, however, the core of Gov. Mitt Romney’s plan for economic recovery and renewal.
In response to the recession, the Obama administration chose to emphasize costly, short-term fixes—ineffective stimulus programs, myriad housing programs that went nowhere, and a rush to invest in “green” companies.
As a consequence, uncertainty over policy—particularly over tax and regulatory policy—slowed the recovery and limited job creation. One recent study by Scott Baker and Nicholas Bloom of Stanford University and Steven Davis of the University of Chicago found that this uncertainty reduced GDP by 1.4% in 2011 alone, and that returning to pre-crisis levels of uncertainty would add about 2.3 million jobs in just 18 months.
The Obama administration’s attempted short-term fixes, even with unprecedented monetary easing by the Federal Reserve, produced average GDP growth of just 2.2% over the past three years, and the consensus outlook appears no better for the year ahead.
Moreover, the Obama administration’s large and sustained increases in debt raise the specter of another financial crisis and large future tax increases, further chilling business investment and job creation. A recent study by Ernst & Young finds that the administration’s proposal to increase marginal tax rates on the wage, dividend and capital-gain income of upper-income Americans would reduce GDP by 1.3% (or $200 billion per year), kill 710,000 jobs, depress investment by 2.4%, and reduce wages and living standards by 1.8%. And according to the Congressional Budget Office, the large deficits codified in the president’s budget would reduce GDP during 2018-2022 by between 0.5% and 2.2% compared to what would occur under current law.
President Obama has ignored or dismissed proposals that would address our anti-competitive tax code and unsustainable trajectory of federal debt—including his own bipartisan National Commission on Fiscal Responsibility and Reform—and submitted no plan for entitlement reform. In February, Treasury Secretary Tim Geithner famously told congressional Republicans that this administration was putting forth no plan, but “we know we don’t like yours.”
Other needed reforms would emphasize opening global markets for U.S. goods and services—but the president has made no contribution to the global trade agenda, while being dragged to the support of individual trade agreements only recently.
The president’s choices cannot be ascribed to a political tug of war with Republicans in Congress. He and Democratic congressional majorities had two years to tackle any priority they chose. They chose not growth and jobs but regulatory expansion. The Patient Protection and Affordable Care Act raised taxes, unleashed significant new spending, and raised hiring costs for workers. The Dodd-Frank Act missed the mark on housing and “too-big-to-fail” financial institutions but raised financing costs for households and small and mid-size businesses.
These economic errors and policy choices have consequences—record high long-term unemployment and growing ranks of discouraged workers. Sadly, at the present rate of job creation and projected labor-force growth, the nation will never return to full employment.
It doesn’t have to be this way. The Romney economic plan would fundamentally change the direction of policy to increase GDP and job creation now and going forward. The governor’s plan puts growth and recovery first, and it stands on four main pillars:
The governor’s plan would reduce federal spending as a share of GDP to 20%—its pre-crisis average—by 2016. This would dramatically reduce policy uncertainty over the need for future tax increases, thus increasing business and consumer confidence.
The Romney plan would reduce individual marginal income tax rates across the board by 20%, while keeping current low tax rates on dividends and capital gains. The governor would also reduce the corporate income tax rate—the highest in the world—to 25%. In addition, he would broaden the tax base to ensure that tax reform is revenue-neutral.
The Romney plan would gradually reduce growth in Social Security and Medicare benefits for more affluent seniors and give more choice in Medicare programs and benefits to improve value in health-care spending. It would also block grant the Medicaid program to states to enable experimentation that might better serve recipients.
The governor’s plan would remove regulatory impediments to energy production and innovation that raise costs to consumers and limit new job creation. He would also work with Congress toward repealing and replacing the costly and burdensome Dodd–Frank legislation and the Patient Protection and Affordable Care Act. The Romney alternatives will emphasize better financial regulation and market-oriented, patient-centered health-care reform.
In contrast to the sclerosis and joblessness of the past three years, the Romney plan offers an economic U-turn in ideas and choices. When bolstered by sound trade, education, energy and monetary policy, the Romney reform program is expected by the governor’s economic advisers to increase GDP growth by between 0.5% and 1% per year over the next decade. It should also speed up the current recovery, enabling the private sector to create 200,000 to 300,000 jobs per month, or about 12 million new jobs in a Romney first term, and millions more after that due to the plan’s long-run growth effects.
But these gains aren’t just about numbers, as important as those numbers are. The Romney approach will restore confidence in America’s economic future and make America once again a place to invest and grow.
Mr. Hubbard, dean of Columbia Business School, was chairman of the Council of Economic Advisers under President George W. Bush. He is an economic adviser to Gov. Romney.
Can a businessman help the economy? For presidents, the answer has been no.
Snow Job on Jobs
Published: October 18, 2012
Mitt Romney talks a lot about jobs. But does he have a plan to create any?
You can defend President Obama’s jobs record — recovery from a severe financial crisis is always difficult, and especially so when the opposition party does its best to block every policy initiative you propose. And things have definitely improved over the past year. Still, unemployment remains high after all these years, and a candidate with a real plan to make things better could make a strong case for his election.
But Mr. Romney, it turns out, doesn’t have a plan; he’s just faking it. In saying that, I don’t mean that I disagree with his economic philosophy; I do, but that’s a separate point. I mean, instead, that Mr. Romney’s campaign is telling lies: claiming that its numbers add up when they don’t, claiming that independent studies support its position when those studies do no such thing.
Before I get there, however, let me take a minute to talk about Mr. Romney’s claim that he knows how to fix the economy because he’s been a successful businessman. That would be a dubious claim even if he were honestly representing his business career, because the skills needed to run a business and those needed to manage economic policy are very different. In any case, however, his portrait of his own experience is so misleading that it takes your breath away.
For Mr. Romney, who started as a business consultant and then moved into the heady world of private equity, insists on portraying himself as a plucky small businessman.
I am not making this up. In Tuesday’s debate, he declared, “I came through small business. I understand how hard it is to start a small business.” In his speech at the Republican convention, he declared, “When I was 37, I helped start a small company.”
Ahem. It’s true that when Bain Capital started, it had only a handful of employees. But it had $37 million in funds, raised from sources that included wealthy Europeans investing through Panamanian shell companies and Central American oligarchs living in Miami while death squads associated with their families ravaged their home nations. Hey, doesn’t every plucky little start-up have access to that kind of financing?
But back to the Romney jobs plan. As many people have noted, the plan has five points but contains no specifics. Loosely speaking, however, it calls for a return to Bushonomics: tax cuts for the wealthy plus weaker environmental protection. And Mr. Romney says that the plan would create 12 million jobs over the next four years.
Where does that number come from? When pressed, the campaign cited three studies that it claimed supported its assertions. In fact, however, those studies did no such thing.
Just for the record, one study concluded that America might gain two million jobs if China stopped infringing on U.S. patents and other intellectual property; this would be nice, but Mr. Romney hasn’t proposed anything that would bring about that outcome. Another study suggested that growth in the energy sector might add three million jobs in the next few years — but these were predicted gains under current policy, that is, they would happen no matter who wins the election, not as a consequence of the Romney plan.
Finally, a third study examined the effects of the Romney tax plan and argued (implausibly, but that’s another issue) that it would lead to a large increase in the number of Americans who want to work. But how does that help cure a situation in which there are already millions more Americans seeking work than there are jobs available? It’s irrelevant to Mr. Romney’s claims.
So when the campaign says that these three studies support its claims about jobs, it is, to use the technical term, lying — just as it is when it says that six independent studies support its claims about taxes (they don’t).
What do Mr. Romney’s economic advisers actually believe? As best as I can tell, they’re placing their faith in the confidence fairy, in the belief that their candidate’s victory would inspire an employment boom without the need for any real change in policy. In fact, in his infamous Boca Raton “47 percent” remarks, Mr. Romney himself asserted that he would give a big boost to the economy simply by being elected, “without actually doing anything.” And what about the overwhelming evidence that our weak economy isn’t about confidence, it’s about the hangover from a terrible financial crisis? Never mind.
To summarize, then, the true Romney plan is to create an economic boom through the sheer power of Mr. Romney’s personal awesomeness. But the campaign doesn’t dare say that, for fear that voters would (rightly) consider it ridiculous. So what we’re getting instead is an attempt to brazen it out with nakedly false claims. There’s no jobs plan; just a plan for a snow job on the American people.
Moderate Mitt wins conservatives’ blessings
By Dana Milbank, Wednesday, October 17, 12:01 AM
Mitt Romney etched and sketched his way to a new position on abortion last week, telling the Des Moines Register, “There’s no legislation with regards to abortion that I’m familiar with that would become part of my agenda.”
It was not terribly surprising that Romney would, on the eve of the election, toss aside the antiabortion positions he cultivated during the Republican primaries; lately, he has reversed himself more often than a parking-lot attendant.
The surprise has been the reaction from conservatives. “No alarm bells here,” the Family Research Council’s president, Tony Perkins, proclaimed to Talking Points Memo. Perkins said he had been assured by Romney’s campaign that the answer was a product of “the way the question was asked.”
Romney later clarified his remarks, stating that he remained antiabortion. Still, the green light given by a top group on the religious right to Romney’s recasting of his abortion position is typical of recent weeks. Conservatives have been sitting silently — approvingly, even — as Romney makes his late lunge for the center. For a movement that has prided itself on being ideologically pure, this is a decidedly pragmatic turn.
Necessity, it seems, is the mother of reinvention.
Key to the success of Romney’s Etch a Sketch movement has been the cooperation of conservatives, who have been unusually docile in the face of the candidate’s heresies: pledging not to enact a tax cut that adds to the deficit, promising not to decrease the share of taxes paid by the wealthy, vowing not to slash education funding, praising financial regulations, insisting that he would make health insurers cover preexisting conditions and disavowing his earlier claim that 47 percent of Americans are parasites living off of the government.
At Tuesday night’s debate, Romney continued his sprint to the center. He took pains to say he is “so different” from George W. Bush. He asserted that “every woman in America should have access to contraceptives,” and, on immigration, he said the children of illegal immigrants “should have a pathway to become a permanent resident of the United States.” After a primary battle in which GOP candidates tried to out-tough each other on immigration, Romney said that he was in agreement with President Obama and that “I’m not in favor of rounding up people.”
The conservatives’ complicity seems to be driven by two things: a belief that Romney’s moves to the middle are mere feints, shifts more in tone than in substance; and an acceptance that Romney’s rhetorical reversals are necessary if he is to deny Obama a second term.
“I hear all this as tonal,” Grover Norquist, the Republican purity enforcer and keeper of the antitax pledge, told me. Romney’s new pledge that his tax cuts wouldn’t increase the deficit, for example, could be honored simply by using an alternative accounting method, known as “dynamic scoring,” that conservatives favor. “You’re now in the general election and you’ve already convinced conservatives why they should vote for you,” Norquist said of Romney. “You’re now talking to undecided voters, who have a completely different set of issues.”
Had Romney tried to moderate his positions over the summer, conservatives still suspicious from the primaries would have called him a turncoat, which would have depressed Republican turnout. But two weeks ago, polls showed that Romney’s “severely conservative” candidacy was heading to a seemingly inevitable defeat. It was that sense of desperation that gave Romney room to make his late break for the center, because conservatives were forced to accept that even a squishy and ideologically suspect President Romney would be preferable to Obama.
For example, Chris Chocola, president of the Club for Growth, which has worked to defeat insufficiently conservative officials in Republican primaries, gave Romney room to maneuver. “ We tend to recognize the political realities,” he told Politico the day after the Denver debate, adding that “when it comes to the issues that the Club focuses on, Romney is 1,000 percent better than Obama.”
Rank-and-file Republicans seem inclined to follow the opinion makers’ lead in cutting Romney slack as he makes his late move to the middle. In Washington Post-ABC News polling, Romney’s support improved among self-identified Republicans, from 90 percent on Sept. 29 to 93 percent on Oct. 13. The number of Republicans saying they were very enthusiastic about him climbed to 59 percent from 48 percent. He suffered no attrition among self-described conservatives.
It has been a rare outbreak of common sense in the conservative movement. Romney should enjoy it while it lasts.
Romney’s facts are curious things
By Dana Milbank, Published: October17
Mitt Romney has done a heckuva job with his jobs plan.
At Tuesday night’s town-hall debate, the Republican presidential nominee replied with confidence when 20-year-old student Jeremy Epstein asked the candidates for reassurance that he’d be able to find work after graduation.
“I put out a five-point plan that gets America 12 million new jobs in four years,” Romney said. “It’s going to help Jeremy get a job when he comes out of school.”
The candidate’s statement, a version of a claim he has made for months on the stump and in a new ad, was bold, precise — and baseless.
Hours earlier, my Washington Post colleague Glenn Kessler had reported that the source the Romney campaign provided for the jobs figure was a trio of studies that either didn’t directly analyze Romney’s policies or were based on longer time horizons than four years.
Top Romney economist Glenn Hubbard acknowledged to Kessler that the three studies did “not make up the 12 million jobs in the first four years,” and the Romney campaign issued a statement minutes before the debate that expanded the jobs time frame to “the next four years and beyond.”
But the claim, though discredited, had become a key part of Romney’s message — and he went right ahead and repeated the falsehood during the debate.
Much of the burgeoning fact-check function in the news media is subjective; Romney’s tax cut claims, for example, are impossible to assess with certainty because he doesn’t say what deductions he would disallow and what other assumptions he makes. But the jobs claim is black and white: The evidence the Romney campaign furnished to support the claim did not do so.
Romney’s economists do think the economy would add 12 million jobs under his policies over the next four years, and they issued a white paper in August claiming that. But this paper is not based on Romney’s five-point plan, and elements of that plan, such as cracking down on China and consolidating job training, aren’t even mentioned in the paper. Rather, the 12 million figure is based on the economists’ assumptions that Romney’s policies would mean that “the current recovery will align with the average gains of similar past recoveries.”
This forecast is not terribly controversial, although claiming that Romney’s policies will cause this growth is equivalent to the rooster believing his crow causes the sun to rise. Several independent economists, and President Obama’s Council of Economic Advisers, project the economy will add 12 million jobs over the next four years without factoring in Romney’s policies.
More controversial is Romney’s linking of his five-point plan to the 12 million jobs. “I have a plan,” he said in a recent stump speech , “that’s going to get this economy going and create jobs, jobs and more jobs — 12 million jobs.” He often says that his tax policies would create 7 million jobs and his energy policies would generate 3.5 million to 4 million positions.
In a recent ad , Romney, speaking to the camera from a factory floor, says his “energy independence policy means more than 3 million new jobs,” his tax plan “creates 7 million more,” and “expanding trade, cracking down on China and improving job training takes us to over 12 million new jobs.”
But when Kessler asked for substantiation, the campaign referred him to a Rice University professor’s study for evidence that Romney’s tax plan would generate 7 million jobs — which turned out to be a 10-year number. The evidence for the energy policy creating 3 million jobs comes from a Citigroup Global Markets study that did not analyze Romney’s plan and was assuming an eight-year horizon. The remaining 2 million jobs, Kessler wrote, were justified by a 2011 International Trade Commission report that also didn’t analyze Romney policies.
“The big point is the 3+7+2 does not make up the 12 million jobs in the first four years (different source of growth and different time period),” Hubbard acknowledged in an e-mail to Kessler.
Kessler called Romney’s claim a bait-and-switch, a characterization Obama echoed whenhe spoke at a rally in Iowa on Wednesday afternoon. “Turns out his jobs math isn’t any better than his tax math,” Obama charged.
About the same time, Romney took the stage in Chesapeake, Va. This time, he dropped the reference to 12 million jobs. “I’m going to get this economy going,” was the extent of his vow. It wasn’t flashy, but it had the virtue of being honest.
The fiscal future? Well, that can wait.
By Robert J. Samuelson, Published: October 17
What we heard in the second presidential debate was President Obama and Mitt Romney not discussing the nation’s future. Almost every expert agrees that controlling health costs is the crux of curing chronic budget deficits. Health-care spending already exceeds a quarter of federal outlays. With Obamacare’s coverage of the uninsured starting in 2014 and retiring baby boomers flooding into Medicare, the share is headed toward a third. Neither Obama nor Romney uttered a word about how to tame health spending.
And then there’s the “fiscal cliff” — the roughly $600 billion of spending cuts and tax increases scheduled for early 2013 that, if allowed to take effect, would almost certainly plunge the economy back into recession. Not a peep from either on how to avoid the cliff: which tax increases or spending cuts should be postponed, why and for how long; and how to win congressional support from the other party.
Obama said that Romney’s budget math didn’t add up and that he had proposed spending cuts for only two programs, Big Bird (presumably public broadcasting) and Planned Parenthood. True. Romney promises to balance the budget, raise defense spending and cut taxes for some unidentified part of the middle class. All of this can’t be done without massive as-yet-unspecified — and probably politically impossible — spending cuts.
But wait. The two programs that Romney offered for cuts were actually two more than Obama suggested. And Obama’s budget never balances.
The administration’s latest projections foresee $6.4 trillion worth of deficits between 2013 and 2022; in 2022, the expected deficit is $652 billion, 2.6 percent of the economy (gross domestic product). Even these forecasts rest on fairly optimistic economic assumptions. From 2014 to 2017, GDP is projected to grow about 4 percent a year, roughly double the current rate of expansion. The forecast assumes no recession between now and 2022.
Romney did mention, almost in passing, that he would reform Social Security and Medicare. Changes could yield huge savings, because these programs cost $1.2 trillion in fiscal 2012, a third of all federal spending. But Romney didn’t specify how he would alter Social Security, and his controversial Medicare proposal wouldn’t start until 2022 — after a two-term President Romney would already have left office.
Still, Obama didn’t even mention these programs. The president has been content to imply that raising taxes on the “rich,” defined as couples with incomes exceeding $250,000, would cure most of the deficit problem. That’s not true.
Obama and Romney can evade these unpleasant and unpopular subjects now, but the victor won’t be able to avoid them after the election. How the fiscal cliff is handled (or mishandled) almost certainly represents the single most important federal policy affecting the economy’s near-term prospects. Nor will large deficits miraculously vanish even if the recovery continues and strengthens.
Americans face a rude awakening: a future that hasn’t been acknowledged and debated in the campaign.
Mr. Romney’s defense budget: It doesn’t add up
Romney Defense Spending Proposal a Return to Normal
4:35 PM, MAY 10, 2012 • BY THOMAS DONNELLY
CNNMoney has uncovered a shocking story: Mitt Romney will spend more on national defense than Barack Obama would!
Remembering that Romney has long promised to raise core military spending to 4 percent of gross domestic product, CNNMoney set out to run the numbers. Or, more precisely, they got Travis Sharp of the Center for a New American Security, the think tank founded by Kurt Campbell, current Assistant Secretary of State for East Asia, and Michele Flournoy, until recently the Undersecretary of Defense for Policy, to run the numbers. Using Pentagon budget projections–which reduce defense spending from today’s 3.5 percent of GDP to 2.5 percent of GDP in 2022–and the Congressional Budget Office’s projections of economic growth–the CBO says the American economy will expand from about $16 trillion to nearly $25 trillion per year–Sharp proves the obvious, but undeniably true, facts.
As CNNMoney puts it: “The additional spending really piles up in future years.”
To the CNNMoney headline writers, it adds up to a $2.1 trillion “spike” in defense budgets. In fact, as Sharp shows, if Romney immediately fulfilled his 4 percent pledge upon taking office, the 10-year difference with Obama plans would be $2.3 trillion.
But, alas, Sharp’s numbers disprove the CNNMoney spin and make two things clear. The first is that, even with modest economic growth, the United States can afford to spend what’s needed on its military; 4 percent of a $25 trillion economy is a lot of money. Indeed, there’s no reason we couldn’t afford more: The 50-year Cold War average for defense spending–also an era of unprecedented American prosperity–was 6.3 percent of GDP.
Sharp’s numbers also make plain Obama’s plan for American military decline. As the president proclaimed in his January defense guidance, he has walked away from the traditional “two-war” standard of military strength, the measure of U.S. capability throughout the 20th century. Indeed, his principal “national security imperative” is “deficit reduction through a lower level of defense spending.” This allows every other department of the Obama administration to advance its imperative: increase the deficit through higher levels of spending.
The Romney 4 percent Pentagon budget is no “spike”; it’s more like a return to normal, even very constrained military spending given the global mission of America’s armed forces. It’s Obama’s levels of spending that are abnormal, digging a deep hole that even now will take a decade of reinvestment to repair. That’s what is really “piling up.”
Of course, things could be worse. Obama could continue to insist on pulling the sequestration trigger that would chop another $500 billion-plus from military budgets.
Romney goes off-road with the truth
By Dana Milbank, Published: October 30
Mitt Romney spoke to supporters in the Ohio town of Defiance last week, but his words came from the twin cities of Duplicity and Deception.
“I saw a story today that one of the great manufacturers in this state, Jeep, now owned by the Italians, is thinking of moving all production to China,” the Republican presidential nominee proclaimed, referring to the automaker President Obama saved from dissolution with taxpayer funds. “I will fight for every good job in America.”
The truth, however, was roughly 180 degrees opposite Romney’s claim. Chrysler, which owns the Jeep label, has added about 7,000 jobs in North America since it emerged from bankruptcy proceedings in June 2009, and it continues to expand its U.S. workforce and to invest hundreds of millions of dollars in American plants.
Romney’s fiction was apparently based on a misreading of a Bloomberg News report a few days earlier, which said that Chrysler would resume production in China for the first time since parent Fiat SpA bought the company — in addition to Chrysler’s production in Michigan, Illinois and Ohio.
“Let’s set the record straight: Jeep has no intention of shifting production of its Jeep models out of North America to China,” Chrysler executive Gualberto Ranieri wrote in a statement, using italics for emphasis. “A careful and unbiased reading of the Bloomberg take would have saved unnecessary fantasies and extravagant comments.” Ranieri said the conclusion that it was moving all production to China was “a leap that would be difficult even for professional circus acrobats.”
But in the game of trickery, Romney is exceedingly dexterous. A couple of days later, his campaign came out with an ad in Ohio repeating the allegation in a way that tweaked the wording to make it technically true, while continuing to give the same false impression: “Obama took GM and Chrysler into bankruptcy and sold Chrysler to Italians who are going to build Jeeps in China. Mitt Romney will fight for every American job.”
Romney’s ongoing deception led Chrysler’s CEO to send a letter Tuesday to the company’s jittery employees, assuring them that “Jeep production will not be moved from the United States” and that “It is inaccurate to suggest anything different.” The restored production in China was to avoid huge tariffs on vehicles imported into China.
The fast-and-loose with Jeep points to a troubling Romney instinct: When the stakes are high, as they are for him in must-win Ohio, the truth is often the first casualty.
It’s difficult to quantify a candidate’s relationship with the facts, but The Post’s fact checker, Glenn Kessler, has calculated that, for much of the campaign, Romney and Obama were roughly even in their prevarications — until the past few months, when Romney has sharply ramped up his output of falsehoods.
Back in May, Romney’s average “Pinocchio” rating from Kessler was 1.97 on a scale of 0 to 4. Obama was at 1.91. Now, Obama is at 2.11 and Romney is at 2.40 — putting him at the level of hogwash perpetrated during the primaries by Rick Perry (2.41) and Newt Gingrich (2.44).
This doesn’t excuse Obama. The president’s own truthfulness has been tortured — notably his claim that 90 percent of the deficit came from George W. Bush and his assertion that Congress “proposed” the budget sequester, not him. In a normal campaign, Obama’s whoppers might be the story — but in this case, Romney is in a whole new category.
Recently, I wrote about Romney’s continued claim that he has a plan to create 12 million jobs — even though the studies his campaign furnished to support the claim do not in fact do so. With the Jeep attack, even the Romney campaign seems to be abashed: It began airing the ad in Ohio over the weekend without following the usual procedure of announcing the ad’s release. Apparently the campaign was hoping that people who knew better wouldn’t notice. But this is the year of the fact checkers, and Romney’s ad earned a quick challenge.
A Romney adviser said this summer that “we’re not going to let our campaign be dictated by fact-checkers” — and on Tuesday, they proved it. The Post’s Greg Sargent reported that the campaign had bought radio time for another ad in Toledo — just up the road from Defiance — where the Chrysler plant is located.
By making Jeeps in China, the ad alleged, Chrysler was breaking “the promises made to autoworkers in Toledo. . .the same hard-working men and women who were told that Obama’s auto bailout would help them.”
When it comes to the truth, Romney still lives in Defiance.
Obama’s record: Struggling to bring back jobs
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