I can describe Mitt Romney’s tax-policy promises in two words: mathematically impossible.
Those aren’t my words. They’re the words of the nonpartisan Tax Policy Center, which has conducted the most comprehensive analysis to date of Romney’s tax plan and which bent over backward to make his promises add up. They’re perhaps the two most important words that have been written during this U.S. presidential campaign.
Ezra Klein
Ezra Klein is the editor of Wonkblog and a columnist at the Washington Post, as well as a contributor to MSNBC and Bloomberg. His work focuses on domestic and economic policymaking, as well as the political system that’s constantly screwing it up. He really likes graphs, and is on Twitter, Google+ and Facebook. E-mail him here.
If you were to distill the presumptive Republican nominee’s campaign to a few sentences, you could hardly do better than this statement from the speech Romney delivered in Detroit, outlining his plan for the economy: “I believe the American people are ready for real leadership. I believe they deserve a bold, conservative plan for reform and economic growth. Unlike President Obama, I actually have one — and I’m not afraid to put it on the table.”
The truth is that Romney is afraid to put his plan on the table. He has promised to reduce the deficit, but has refused to identify the spending he would cut. He has promised to reform the tax code, but has refused to identify the deductions and loopholes he would eliminate. The only thing he has put on the table is dessert: a promise to cut marginal tax rates by 20 percent across the board and to do so without raising the deficit or reducing the taxes paid by the top 1 percent.
The Tax Policy Center took Romney at his word. They also did what he hasn’t done: They put his plan on the table.
To help Romney, the center did so under the most favorable conditions, which also happen to be wildly unrealistic. The analysts assumed that any cuts to deductions or loopholes would begin with top earners, and that no one earning less than $200,000 a year would have their deductions reduced until all those earning more than $200,000 had lost all of their deductions and tax preferences. They assumed, as Romney has promised, that the reforms would spare the portions of the tax code that reward saving and investment. They even ran a simulation in which they used a model developed, in part, by N. Gregory Mankiw, one of Romney’s economic advisers, that posits “implausibly large growth effects” from tax cuts.
The numbers never worked out. No matter how hard the Tax Policy Center labored to make Romney’s promises add up, every simulation ended the same way: with a tax increase on the middle class. The tax cuts Romney is offering to the rich are simply larger than the size of the (non-investment) deductions and loopholes that exist for the rich. That’s why it’s “mathematically impossible” for Romney’s plan to produce anything but a tax increase on the middle class.
The Romney campaign offered two responses to the Tax Policy Center’s analysis, one more misleading than the other.
First, the campaign called the analysis “just another biased study from a former Obama staffer.” That jab refers to Adam Looney, one of the study’s three co-authors, who served in a staff role on the White House Council of Economic Advisers under Obama. But the Tax Policy Center is directed by Donald Marron, who was one of the principals on George W. Bush’s Council of Economic Advisers. Calling the Tax Policy Center biased simply isn’t credible — a point underscored by the fact that the Romney campaign referred to the group’s work as “objective, third-party analysis” during the primary campaign.
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