Mitt Romney’s budget is a fantasy, Part II

August 16, 2012
Photo: Win McNamee / Getty Images

In an interview with Fortune earlier this month, Mitt Romney responded to the Tax Policy Center's analysis of his tax plan:

I indicated as I announced my tax plan that the key principles included the following. First, that high-income people would continue to pay the same share of the tax burden that they do today. And second, that there would be a reduction in taxes paid by middle-income taxpayers. Those are the key principles of my plan that the Tax Policy Center chose to ignore.

No, the Tax Policy Center didn't "ignore" those principles. It tried to test them. And the principles failed.

What's more, they failed for a comically simple reason. "The total value of the available tax expenditures (once tax expenditures for capital income are excluded) going to high-income taxpayers is smaller than the tax cuts that would accrue to high-income taxpayers, high-income taxpayers must necessarily face a lower net tax burden."

That is to say, the tax cuts Romney is promising the rich are larger than the available storehouse of tax breaks Romney can close to pay for them. As such, if the plan is going to be revenue neutral, as Romney has pledged, it is mathematically impossible for it to do anything but shift the tax burden away from the rich.

Note that Romney's response to this plan is, quite literally, that the Tax Policy Center refused to believe that he would do this impossible thing. Romney has a lot of economists and policy thinkers around him. If any one of them had come up with a better argument, my guess is that Romney would have used it.

Romney continues:

Instead they made various assumptions about what they thought I would do which are not in fact accurate. They made an assumption that I would reduce the home mortgage-interest deduction. I will not do that for middle-income taxpayers, as I have already indicated.

So let me get this straight. Mitt Romney, who has refused to officially name even one offset for his tax cut, has taken the bulk of the mortgage-interest deduction off the table. In his 10-year deficit-reduction plan, he has refused to name the spending cuts necessary to hit his targets, but he has taken Social Security, Medicare and defense off the table for cuts.

Tell me again why I'm supposed to believe that this presidential candidate who is systematically ruling out cuts to the most popular spending programs and tax breaks is going to be able to make incredibly unpopular spending cuts and tax changes once in office?

As I wrote the other day: Romney's budget plan is a fantasy, and it will never happen.

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Dylan Matthews | August 16, 2012