The tax and spending plans of the leading Republican presidential candidates would add to the U.S. debt, according to a nonpartisan report.
The plans of Newt Gingrich, Rick Santorum and Mitt Romney would each add trillions of dollars to the debt over the next decade, according to an analysis released today by the Committee for a Responsible Federal Budget in Washington. The Republican contenders criticize President Barack Obama for spending programs that contributed to a trillion-dollar budget deficit.
Ron Paul is the only major candidate whose policies would reduce U.S. debt, according to the report.
The primary reason is tax cuts. Each candidate, except for Paul, has proposed breaks that would drain far more revenue from the treasury than the candidates propose to save through spending cuts, the report said.
It is the first independent analysis of what the candidates’ campaign promises would mean for the government’s $15.4 trillion debt.
Former House Speaker Gingrich would add the most, with tax- and-spending policies that would increase the debt by $7 trillion by 2021, the report said. The proposals of Santorum, a former U.S. senator from Pennsylvania, would add $4.5 trillion, the analysis said. Both would push the debt to more than 100 percent of the U.S. gross domestic product.
Former Massachusetts Governor Romney’s plan would add $2.6 trillion, the group said, though it noted the estimate is less certain because many of the details of his tax proposals are vague.
Only Representative Paul’s plan would more than cover the cost of his tax cuts with spending reductions, the group said. Paul has proposed $5.2 trillion in tax cuts over the next decade, and $7.5 trillion in reduced spending, which would cut the debt by 2012 by more than $2 trillion.
“As we enter the thick of the campaign season, no one can ignore the debt issues,” said Maya MacGuineas, head of the group. “This report is designed to inform the public on the fiscal policies put forward by each of the Republican candidates and stimulate debate on this crucial topic.”
The group didn’t analyze Obama’s budget proposal released earlier this month though it said it plans to release a separate report on the effects of his tax and spending policies.
Gingrich would reduce the government’s income the most with his proposal to create a new 15 percent flat tax. That would cost the treasury about $3.4 trillion, according to the analysis.
His calls to cut the top corporate income tax rate to 12.5 percent from 35 percent, eliminate capital-gains taxes and end the estate tax would cost trillions more. His biggest spending cut, a proposal to reduce funding for more than 100 programs benefiting the poor, would save an estimated $2.4 trillion.
By contrast, Paul’s tax-and-spending plans would improve the budget outlook by marrying tax cuts with even larger spending reductions. He would cut defense spending, including immediately ending military operations in Afghanistan. He also proposed eliminating five cabinet agencies and rolling back spending on Medicaid (USBOMDCA), food stamps and other programs for the poor to 2006 levels.
The impact of Romney’s proposals is uncertain, the group said, because his campaign has not spelled out how it would finance his call for a 20 percent reduction in individual income taxes.
His campaign has said the plan would not add to the deficit because it would replace the lost revenue by clamping down on individual tax preferences.
It hasn’t identified which breaks would have to go though, the report said, and his plan could require “substantial” changes in popular breaks such as one allowing homeowners to write off the interest on their mortgages. Absent those offsetting savings, the report said, the plan would add $2.6 trillion to the debt.
Santorum’s plan would add to the deficit by reducing the number of individual income tax brackets to two from six, with rates set at 28 percent and 10 percent. He would also eliminate the corporate income tax for manufacturers while cutting it to 17.5 percent for other businesses. Those proposals would together divert more than $5 trillion in revenue from the treasury, according to the report.
To contact the editor responsible for this story: Jodi Schneider in Washington at Jschneider50@bloomberg.net