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BRIDGE BRIEFING: Romney And Debt

Massachusetts Had The Highest Debt Per Capita Debt Of Any State Under Romney

Under Governor Romney, Massachusetts Had The Highest Per Capita Debt Of Any State. According to Think Progress, “According to data from the U.S. Census Bureau and the Bureau of Economic Analysis (compiled by Connecticut’s chief analyst in 2009), Massachusetts had $10,504 in per capita bond debt in 2007, the highest total in the nation. No other state had more than $10,000 in per capita debt, and only one had more than $8,000. Massachusetts ranked second, behind only Alaska, in per capita debt as a percent of personal income, with debt making up more than 21 percent of each resident’s income.” [Think Progress, 5/16/12]

Under Romney, Massachusetts’ Long-Term Debt Increased By 16.4 Percent Or $2.6 Billion. According to the Massachusetts Office of the Treasurer, Massachusetts had $16,063,162,000 in long-term debt as of January 1, 2003. As of October 1, 2006, shortly before Romney left the Governor’s Office, Massachusetts had $18,697,240,000 in long-term debt. This was an increase of $2,634,078,000 or 16.4%. [Massachusetts Office Of The Treasurer, p. A-22 , 2/28/03; Massachusetts Office Of The Treasurer, p. A-24, 11/10/06]

Romney Refuses To Outline Enough Specific Cuts To Balance The Budget

Romney Had Not Yet Released What Cuts He Would Make For His Deficit Reduction Plan Requiting $500 Billion In Spending Cuts. According to The Washington Post’s Ezra Klein, “On deficit reduction, Romney’s plan ‘requires spending cuts of approximately $500 billion per year in 2016.’ He has not released spending cuts that come anywhere close to that goal. He does have some nice words to say about the Ryan budget, but Romney advisers have told the media that their candidate disagrees with large parts of it, including the Medicare cuts. The comparison to Obama is, again, instructive. Pages 23 through 37 of Obama’s budget detail dozens of spending cuts and tell you how much money they’ll save. You might not like those spending cuts, or you might want to see more. But at least you know the specifics of the president’s plan.” [The Washington Post, Ezra Klein, 8/6/12]

Romney Said He Would Reduce Spending To 20 Percent Of GDP, But Did Not Explain What He Would Cut. According to Bloomberg, during an economic speech in Des Moines, Iowa, “Romney didn’t explain where he’d cut. But he said he’d get overall federal spending to about 20 percent of gross domestic product within four years — in line with House Budget Chairman Paul Ryan’s plan and down from today’s figure of about 24 percent.” [Bloomberg, 5/15/12]

Romney Would Have To Cut Domestic Programs By More Than 20 Percent To Achieve His Budget Goals. According to the Washington Post, Romney would “have to slash domestic programs by more than 20 percent — far more than the 5 percent in immediate cuts he has proposed. It is nearly unthinkable that Congress would approve the evisceration of basic federal functions such as food inspection, air traffic control, the Border Patrol, FBI, grants to local governments, health research, housing and heating aid for the poor, food aid for pregnant women, national parks and much more.” [Washington Post, 5/15/12]

Romney Did Not Offer Details On How He Would Reduce Government Spending, While Also Planning To Reduce Income Tax Rates By 20 Percent. According to the Los Angeles Times, “Though Romney touted his plans to reduce government spending to 20% of GDP over four years (a drop from its current level of 24.3%) in part by capping increases in benefits for higher income retirees, he did not offer any greater detail on how he would achieve those spending cuts while advancing his plan to reduce individual income tax rates by 20% — a fact that was noted by the Obama campaign.” [Los Angeles Times, 5/15/12]

Washington Post: Romney’s Tax And Spending Plans Did Not Support His Pledge To Reduce Debt And Spending. According to the Washington Post, “Romney: ‘I will lead us out of this debt and spending inferno. We will stop borrowing unfathomable sums of money we can’t even imagine, from foreign countries we’ll never even visit. I will bring us together to put out the fire.’ The Facts: Romney’s tax and spending plans don’t support his vow to dampen the debt fire. He proposes to cut taxes and expand the armed forces, putting yet more stress on the budget, and his promise to slash domestic spending isn’t backed by the big specifics. Romney’s tax plan would cut the top income tax rate to 28 percent from 35 percent and other rates by 20 percent each. He says he’d broaden the tax base and eliminate many deductions in the process, but details are missing.” [Washington Post, 5/15/12]

Committee For A Responsible Federal Budget Found That Romney’s Fiscal Plan Could Worsen The Deficits Considerably. According to the Washington Post, “A study by the nonpartisan Committee for a Responsible Federal Budget concluded earlier this year that Romney’s plans would not make a dent in deficits, and could worsen them considerably. That study was done before Romney upped his tax cuts, inviting even deeper debt.” [Washington Post, 5/15/12]

To Meet Romney’s Budget Goals, Domestic Agency Budgets Would Face Cuts By More Than 20 Percent. According to the Boston Globe, “If Social Security is mostly off the table and current Medicare beneficiaries are protected, domestic Cabinet agency budgets would take a major hit in ways that could fundamentally alter government. The future growth of those discretionary programs funded through annual appropriations bills was already cut greatly in last year’s deal to raise the government’s borrowing limit. At issue are these programs, just to name a few: health research; NASA; transportation; homeland security; education; food inspection; housing and heating subsidies for the poor; food aid for pregnant women; the FBI; grants to local governments; national parks; and veterans’ health care. Romney promises to immediately cut them by 5 percent. But they would have to be cut more than 20 percent to meet his overall budget goals, assuming veterans’ health care is exempted. Among the few specific cuts listed in Romney’s campaign literature are proposals to cut the federal workforce by 10 percent through attrition, eliminate federal family planning money, privatize the money-losing Amtrak system and trim foreign aid.” [Boston Globe, 04/22/12]

Romney’s Federal Funding Cuts Did Not Add Up To His “Headline Goal” Of A 20 Percent GDP Cap. According to CNN Money, “And while the Department of Education might be ‘a heck of a lot smaller’ under a Romney administration, the candidate said he was ‘not going to get rid of it entirely,’ the Journal reported. Even with these additional details, much remains a mystery. On spending, Romney has said he would cap spending at 20% of GDP, immediately reduce non-security discretionary accounts by 5% and pursue a balanced budget amendment. With federal spending currently at around 24% of GDP, that means huge cuts. On the campaign trail, Romney most often says he wants to cut funding for relatively small programs like Amtrak, the National Endowment for the Arts, foreign aid, the Corporation for Public Broadcasting and Title X family planning. He does detail a few bigger ticket items, like a 10% reduction in the size of the federal workforce and modification to Medicaid that would turn it into a block grant program. But those cuts don’t add up to anything near his headline goal. The result, at the moment, is an economic policy plan with significant gaps.” [CNN Money, 4/16/12]

New York Times: Romney “Never Tells Voters The Full Cost Of His Plan To Balance The Budget” Would Be Cuts To Popular Programs. The New York Times Editorial, “The biggest whopper in Mitt Romney’s fiscal plan comes right at the beginning of the description on his Web site: ‘We will level with the American people about what it will take to truly cut spending and balance our budget.’ Actually, Mr. Romney never tells voters the full cost of his plan to balance the budget while cutting taxes: popular programs would be slashed or eliminated, vital state and local services would disappear, misery would be inflicted on the poor and the working class.”  [The New York Times Editorial, 12/6/11]

Bloomberg: Romney’s Budget Cuts “Total Less Than $320 Billion.”  According to Bloomberg, “On Nov. 4, Romney said he would cut $500 billion in annual spending by the end of his first term in 2016 and then “put us on a path to a balanced budget and a constitutional amendment that requires government to spend only what it earns.”  The proposals he has offered — including turning the Medicaid health-insurance program for the poor over to the states, reducing government workers’ pay and cutting waste — total less than $320 billion, according to data compiled by Bloomberg.   Balancing the budget would be made harder by his plan to reduce taxes and reverse the Obama administration’s scheduled defense-spending cuts of $450 billion over the next 10 years.”  [Bloomberg, 11/14/11]

 

Romney’s Tax Plan Would Add To the Deficit

Romney’s Tax Plan Would Increase Federal Budget Deficit And Was More “Fiscally Irresponsible” Than Bush Tax Cuts. According to Center for American Progress Action Fund, “His tax plan is ‘George W. Bush’s plan on steroids,’ in the words of Pulitzer Prize-winning tax reporter David Cay Johnston. Vastly more fiscally irresponsible than the Bush tax cuts, Gov. Romney’s tax cuts would explode federal budget deficits. The Republican presidential candidate’s stated goal is to maintain ‘revenue neutrality’ with current tax policies, a level of revenue that is already unsustainably low. But Gov. Romney’s tax cuts would make it nearly impossible to reach even that low level of revenue.” [Center for American Progress Action Fund, 7/2012]

Brookings Tax Policy Center: Romney Tax Cuts Would Cost $4.9 Trillion Over 10 Years. According to the Center on Budget And Policy Priorities, “…estimates from the Urban Institute-Brookings Tax Policy Center indicate that the Romney tax cuts would cost about $4.9 trillion over ten years. Securing tax-expenditure savings equal to half that amount — about $2.4 trillion — would be extremely difficult, especially since Governor Romney has said he would not increase the low tax rate on capital gains and dividend income and would not cut heavily into tax expenditures for the middle class. Analysts at the Congressional Research Service recently concluded that securing savings of more than $100 or $150 billion a year from tax expenditures is likely to be difficult to achieve.” [Center on Budget And Policy Priorities, 05/21/12]

Christopher A. Preble, Vice President Of The Cato Institute, Said Romney’s Promise To Increase Military Spending To 4 Percent Of GDP Would Raise The Federal Deficit. According to the Associated Press, “Christopher A. Preble, a vice president for the libertarian Cato Institute, said Romney’s promise to push military spending to 4 percent of the national economy would require dramatic increases that would raise, not lower, the federal deficit. Citing ‘the absurdity of Romney’s plan,’ Preble wrote recently that the candidate ‘hasn’t said what other spending he will cut, or what taxes he would increase.’ ‘Until he does,’ Preble wrote, ‘it is logical to conclude that he plans to pile on more debt.’” [Associated Press, Philadelphia Inquirer, 04/30/12]

The Economist: Romney Tax Plan Would Increase Add $500 Billion To The Deficit By 2015 And Send The National Debt Up To 96 Percent Of GDP. According to The Economist, “Mr. Romney claims that this plan would be neutral in terms of both revenue and distribution, meaning it would not change the level of tax take or the relative position of rich and poor. That is hard to believe. The Tax Policy Centre, a research group, reckons Mr. Romney’s original plan would have added $180 billion to the deficit in 2015, while the new one adds a whopping $500 billion. The Committee for a Responsible Federal Budget, giving Mr. Romney some credit for his promised spending cuts, says his plan would send the national debt up to 96% of GDP by 2021 from 73% this year; it would reach only 76% under Mr. Obama’s latest budget. Neither group gives Mr. Romney credit for his promise to pay for the cuts by closing loopholes, because he has specified none, though he has reportedly told donors he might eliminate deductions for rich people’s second mortgages and for state and local taxes.” [The Economist, 04/21/12]

Economist Joe Barro: Romney’s Tax Plan Would Cost $5 Trillion Over A Decade. According to Forbes, Joe Barro, a fellow at the Manhattan Institute, wrote, ”Before base broadening, the plan could be expected to cut federal revenues by about $5 trillion over a 10-year period, compared to a policy of extending 2012 tax policy (except the payroll tax holiday) into the future. On a static basis Romney’s corporate tax cuts would cost about $1 trillion, a 20 percent across-the-board cut in personal income tax rates would run about $3 trillion, and then sundry other proposals (most notably, abolishing the AMT and giving capital gains tax relief to lower- and middle-income households) would cost about another $1 trillion.” [Forbes, 2/22/12]

Center On Budget And Policy Priorities: Romney’s Tax Plan Would Result In A $4.9 Trillion Revenue Loss Over A Decade, Which Means It Is “Not ‘Revenue Neutral’ But, Instead, A Significant Revenue Loser.” According to the Center On Budget and Policy Priorities, “Now, a new TPC analysis (issued March 1) backs up the skepticism with hard facts. It finds that, absent base broadeners, the Romney plan would cut taxes by $481 billion in 2015 alone, translating into a $4.9 trillion revenue loss over the coming decade. Most tax experts believe that’s far more than any conceivable set of base-broadeners (i.e., reductions in tax expenditures) could generate, leaving the Romney plan as not ‘revenue neutral’ but, instead, a significant revenue loser.” [Center on Budget and Policy Priorities, 3/2/12]

Committee For A Responsible Federal Budget: Romney’s Tax Plan Would Add $2.6 Trillion To Federal Deficit. According to TheStreet, “A study finds that the Republican candidate’s plan on the whole would increase the national debt by about $2.6 trillion, according to the nonpartisan Committee for a Responsible Federal Budget. ‘Estimated roughly, ignoring interactions and microdynamic effects, we find that without offsets Governor Romney’s plan on the whole would increase the debt by about $2.6 trillion,’ the committee said. The Romney campaign has said that its plan would pull from a broad enough tax base to make the plan deficit-neutral, but the budget group said his policies on the whole would have no measurable effect on the debt by 2021.” [TheStreet, 02/24/12]

Romney Said His Economic Plan Would Protect The Middle Class From Large Tax Burdens. According to Fox News, “Mitt Romney defended his economic policy on Sunday from criticisms on both the right and left, saying he is not using the language of class warfare in defending the progressive tax code and he is not destroying the poor’s safety net by cutting federal programs driving up the deficit. […] ‘I want to get these rates down so we get American workers back into jobs again,’ he said, adding that he wants to maintain the progressivity of the tax code while lowering the marginal rate across the board. ‘What I’m trying to do is to make sure that under no circumstances is the middle class going to end up with a larger share of the tax burden,’ he said.” [Fox News, 02/26/12]

Tax Cuts In Romney’s Tax Plan Would Be “Impossible To Pay For” Through Other Tax Break Reductions. According to Center for American Progress Action Fund, “Gov. Romney claims that he would pay for these tax cuts by reducing tax breaks that primarily benefit the wealthy—tax breaks that he has yet to identify. As we discuss later, this is a smokescreen. The magnitude of his tax cuts for the rich and corporations make it impossible to pay for them with reductions in other tax breaks.” [Center for American Progress Action Fund, 7/2012]

Washington Post: Portman Suggested Limiting Taxpayer Deductions Without Eliminating Specific Deductions. According to The Washington Post Editorial Board, “Unfortunately, there is no way to broaden the individual income tax base without going after the biggest tax deductions and preferences, which are widely used, wildly popular and defended by tenacious lobbies. They privilege employer-provided health insurance, mortgage interest, charitable deductions and state and local income tax payments… Mr. Portman, one of the Republicans’ leading budget experts and an advocate of bipartisan fiscal reform, was more forthcoming at a forum sponsored by the Post and Bloomberg News. He suggested that one way to lower rates and yet not see revenue fall off a cliff would be to limit the total that any taxpayer could deduct, without eliminating any specific deduction. ‘And if you choose to give more to charities and want your charitable deduction, that’s fine,’ Mr. Portman said. ‘But then maybe your second home, you can’t get a mortgage deduction.’” [The Washington Post, Editorial, 8/28/12]

Romney’s Tax Plan Might Be Mathematically Possible, If Taxes Increased Sharply On Those Making Between $100,000 And $200,000 And Assuming Some Deductions Are Eliminated. According to The Washington Post’s Ezra Klein, “After running all the numbers under conditions that were very, very favorable to Mitt Romney’s tax plan, the nonpartisan Tax Policy Center concluded that there was simply no mathematical way for Romney to fulfill all his promises simultaneously. But more recently, Harvard economist Martin Feldstein has said they’re wrong. Feldstein leans to the right — he chaired President Ronald Reagan’s Council of Economic Advisers — but he’s a very respected, very honest economist. No one should dismiss his work. So, how did he get to such a different conclusion? The short answer is he made some very different assumptions than did the Tax Policy Center. The long answer is that his conclusion may not be as different as you think… So here’s where we are: It might be mathematically possible to make Romney’s plan work by sharply increasing taxes on people making between $100,000 and $200,000 so you could cut them on very rich taxpayers. It’s not possible to make the numbers add up if you refuse to raise taxes on people making less than $200,000. It’s also worth remembering that ‘mathematically possible’ is not nearly the same thing as ‘politically realistic’ or ‘good idea.’ Feldstein, for instance, assumes the elimination of the charitable deduction for these taxpayers. That’s something the Republican National Platform expressly promises Republicans will never do.” [The Washington Post, Ezra Klein, 9/10/11]