Mitt Romney and the Fantasy Budget
If elected president, Mitt Romney has promised he will create 12 million jobs, replace Obamacare and the Dodd-Frank financial reforms, slash corporate tax rates, preserve the Bush income tax cuts, and then cut an additional 20 percent to boot. And, oh yes—balance the budget. How does Romney propose to pull off this feat of budgetary magic? He isn’t saying.
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 essentially selling a fantasy that depends on voters’ faith that he’ll be able to keep all these vows once elected. Polls suggest voters aren’t buying it. Since the party conventions, President Obama has opened up a six-point lead in Gallup’s daily tracking poll. Republicans “have the tactics down,” says John Weaver, who ran John McCain’s 2000 presidential campaign. “God knows, 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.”
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 post-convention bounce already apparent, Romney 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 Obamacare provision—the rule forbidding insurers from denying coverage for pre-existing conditions. But 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.
The risk in providing more clarity about his proposals is that Romney, already reeling from negative ads about his Bain Capital tenure and 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 it collects ($1 trillion). The costliest ones are also the most popular with the middle class: charitable giving ($47 billion), mortgage interest ($89 billion), retirement savings ($118 billion), and employer-provided health insurance ($131 billion).
On the other hand, Romney’s painstaking 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. 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. But 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 everybody 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 has not 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 conservative 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. “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 but 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 gonna trust that?”