Romney Avoids Explanations of How to Pay for Campaign Promises

Mitt Romney promised that if elected president he’d create 12 million jobs, replace Barack Obama’s health-care law and the Dodd-Frank financial overhaul, slash corporate tax rates, keep George W. Bush’s income-tax cuts and then cut an added 20 percent while balancing the budget.

The Republican presidential nominee isn’t saying how he’d pull off this feat of budgetary magic.

All presidential hopefuls paint rosy scenarios and rely on a few questionable assumptions. Yet with less than two months to go until Election Day, Romney’s campaign has distinguished itself by the chasm between what’s been promised and what’s been revealed. Absent details, he’s depending on voters’ faith that he’ll be able to keep all these vows once elected, Bloomberg Businessweek reports in its Sept. 17 issue.

Polls suggest voters aren’t buying it. Since the party conventions, President Obama has opened a 6-point lead in Gallup’s daily tracking poll.

Republicans “have the tactics down,” says John Weaver, who ran Arizona Senator John McCain’s 2000 presidential campaign. “Between the campaign and its super-PAC allies, they have the negative advertising down. What’s missing are the details about where he’ll lead the country and how he’ll do it.”

Courting Voters

Romney’s reluctance to lay out specifics is no accident. From the outset, this ambiguity was designed to attract the broadest possible segment of the electorate. The economy is so bad, his advisers say, that voters will jettison the president given an acceptable alternative.

Romney has clung to this strategy, even in the face of evidence to the contrary. On Sept. 9, with Obama’s polling bounce after the Democrats’ nominating convention in Charlotte, North Carolina last week, the former Massachusetts governor appeared on NBC’s “Meet the Press” to reiterate his intention to pay for tax cuts by closing loopholes, and refused to name a single one.

He also pledged to keep a popular Obama health-care provision -- the rule forbidding insurers from denying coverage for pre-existing conditions.

Still, keeping this won’t square with Romney’s other commitments to repeal the individual mandate and hold down insurance rates. Without a mandate to broaden the risk pool, economists expect rates will rise anywhere from 2 percent to 40 percent. That’s why Romney’s Massachusetts health-care law included one.

Negative Ads

The risk in providing more clarity about his proposals is that Romney, already reeling from negative ads about his tenure at the Boston-based private-equity firm Bain Capital LLC and his tax returns, will open himself up to further attacks.

Take tax deductions, an obvious source of savings. The government gives up more in deductions, about $1.1 trillion, than the $1 trillion it collects. The costliest ones are also the most popular with the middle class: charitable giving, at $47 billion; mortgage interest at $89 billion; retirement savings at $118 billion; and employer-provided health insurance at $131 billion.

On the other hand, Romney’s effort to avoid specifying such cuts hasn’t spared him from the implications of his proposals. An August study by the Brookings Institution and the Tax Policy Center found that his assorted promises are impossible to reconcile with his claim that he won’t raise middle-class taxes.

Recouping Revenue

Cutting ordinary income rates by 20 percent for the wealthy as Romney has pledged would cost the government $251 billion. Romney says he would recoup that lost revenue by eliminating deductions. Yet the study’s authors note that wealthy taxpayers account for only $165 billion in deductions. So the $86 billion shortfall would have to be borne by everyone else.

Voters, too, don’t seem prepared to reconcile themselves to Romney’s vagueness. A Sept. 11 Washington Post-ABC News poll showed that by more than a 2-1 margin they think Romney hasn’t offered enough details about the policies he’d pursue as president.

“Voters like a sense that someone has thought through his policies,” says William Kristol, editor of the Weekly Standard and a veteran of the George H.W. Bush White House. It’s also wrong, he says, to assume that offering more specifics would hurt Romney’s embattled candidacy.

‘We Hammered Him’

“In the 1992 campaign, we saw how Bill Clinton was helped a lot by having specific policies that were well worked through, and some were not the conventional liberal policies of the day,” says Kristol. “He was a flawed candidate with huge personal vulnerabilities. We hammered him. But he was really helped by having a big agenda he could fall back on. He could say what he wanted to do on health-care reform, on welfare. The voters listened.”

The same lesson holds for Republican victories. In 1980, Ronald Reagan’s theory of supply-side economics was controversial yet clear in its implications.

In 1994 the Republicans’ “Contract with America” outlined the steps the party would take if put in power. In 2000, George W. Bush offered detailed tax and education plans, which helped him put those policies into place once he was elected. A growing chorus of Republicans believes that Romney will need to do something similar.

“Everybody already knows what’s wrong with Obama,” says Weaver. “What they don’t know is what Romney is going to do about it. His economic plan is a bunch of bumper sticker quotes. You can’t have a secret plan to cut taxes. Who’s going to trust that?”

To contact the reporter on this story: Joshua Green in Washington at jgreen120@bloomberg.net

To contact the editor responsible for this story: Wes Kosova in Washington at wkosova@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.