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BRIDGE BRIEFING: The Truth About Massachusetts's Bond Rating Increase

Massachusetts Bond Rating Went Up After Closing Tax Loopholes And Fee Increases

Romney Increased Massachusetts’s Bond Rating Through “Tax Increases And The Closing Of Tax Loopholes.” According to the Wall Street Journal, “Former Gov. Mitt Romney boasted this week that when he led Massachusetts, he presided over an increase in the state’s bond rating, a contrast to President Barack Obama, who saw Standard & Poor’s downgrade U.S. debt. But Mr. Romney had an advantage that Mr. Obama sorely wanted but could not get from Congress: tax increases and the closing of tax ‘loopholes.’ Documents obtained by The Wall Street Journal Wednesday through the Freedom of Information Act show the Romney administration’s pitch to S&P in late 2004 included the boast that ‘The Commonwealth acted decisively to address the fiscal crisis’ that ensued after the terrorist attacks of 2001. Bulleted PowerPoint slides laid out the actions taken, including legislation in July 2002 to increase tax revenue by $1.1 billion to $1.2 billion in fiscal 2003 and $1.5 billion to $1.6 billion in fiscal 2004; tax ‘loophole’ legislation that added $269 million in ‘additional recurring revenue,’ and tax amnesty legislation that added $174 million. The final bullet: ‘FY04 budget increased fees to raise $271 million yearly.’” [The Wall Street Journal, 8/10/11]

S&P Increased Massachusetts’ Credit Rating Increase Because Of “Certain Actions That Have Reduced The Budget Uncertainty.” According to Politico,  “The agency was duly impressed: “Over the last few years, Massachusetts has taken certain actions that have reduced budget uncertainty, reined in spending, and prudently managed resources during a difficult national economic slowdown,” Standard & Poor’s said in the March 2005 report in which it upgraded Massachusetts to AA from AA-.” [Politico, 8/10/11]

 

But Now Romney Rejects The Approach He Used In Massachusetts

During Federal Budget Crisis, Romney Contradicted Tax Increase Approach He Took In Massachusetts. According to the Wall Street Journal, “The efforts contradict the position that Mr. Romney took during the federal government’s crisis over raising the statutory limit on federal borrowing, in which he said the debt ceiling should only be increased if federal spending was first cut, then capped, and a balanced budget amendment was passed by Congress. The Republican presidential front-runner ruled out tax increases, as Mr. Obama pressed for ‘loophole closures’ of his own.” [The Wall Street Journal, 8/10/11]

Romney Rejected The Fiscal Deal Providing $10 In Spending Cuts For $1 In New Tax Increases. According to The Hill, “Mitt Romney is doubling down on the now-infamous rejection of a fiscal policy deal that would provide $1 in new taxes for every $10 in spending cuts. During a Republican primary debate last August, all GOP candidates – including Romney – said they would reject a hypothetical proposal to trade $10 in spending cuts for $1 in tax increases. ‘I do feel that way,’ Romney said in an interview broadcast Sunday on the CBS program ‘Face the Nation’, defending that stance.” [The Hill, 6/12/12]