Romney’s fiscal fantasy plan
By Lawrence Summers,
Lawrence Summers, a former economic adviser to President Obama, was Treasury secretary in the Clinton administration. He writes a monthly column for The Post.
Political arithmetic is always suspect, and one should always examine carefully the claims of those seeking votes. Smart observers have learned to distinguish between the claims of political candidates and their advisers and proposals that have been evaluated by independent scorekeepers such as the Congressional Budget Office (CBO).
This principle was aptly illustrated by the “budget analysis” Mitt Romney’s chief economic adviser, Glenn Hubbard, recently put forward. In a Wall Street Journal op-ed this week, Hubbard constructs a budget plan that he imagines President Obama might propose someday, engages in a set of his own extrapolations and then makes assertions about it. He does not discuss the actual Obama plan or how it has been evaluated by the CBO. Nor does Hubbard invest his credibility in defending the claims that Romney has made about his own fiscal plans. He simply states that “Yes, President Obama and Mitt Romney have budgets with competing visions. But Gov. Romney’s budget makes tough choices” — without delving into the specifics or trade-offs that Romney’s “tough choices” entail.
The president put forward a planthis year that would reduce deficits by more than $4 trillion over the next decade. It would bring federal discretionary spending to its lowest levels since the 1960s. It includes $2.50 in spending cuts for every $1 in additional revenue. It also asks everyone to pay his or her fair share of taxes, repealing the Bush tax cuts for families making more than $250,000 a year and closing loopholes and shelters such as preferences for private jets, hedge fund managers and offshore investments.
The independent CBO confirms that the Obama budget would stabilize the debt as a share of the economy — returning us to a tenable fiscal path. It would do that while allowing increased investments in education, research and infrastructure that are critical to stronger, shared economic growth in the years to come. By focusing on building a strong economy, the budget expands the tax base and reduces pressures for future tax increases.
Rather than criticize this approach, Hubbard ignores it — and instead chooses to invent assumptions that bear no relationship to the president’s actual policies. His figures are not explained, but they apparently arbitrarily assume that the president must raise taxes to pay for spending above a level of Hubbard’s choosing.
Rather than filling imaginary gaps in the president’s budget, which has been spelled out in sufficient detail to permit evaluation by independent experts, Hubbard should perhaps address some of the many gaps in Romney’s plans.
Start with the taxes. The Romney campaign has been very clear about what the former governor is promising: $5 trillion in tax cuts on top of extending the Bush tax cuts, with those benefits heavily weighted toward the country’s wealthiest taxpayers. Romney himself has acknowledged the lack of details, stating in reference to his tax plan that “frankly, it can’t be scored.” I have been party for many years to searches for “high-income tax shelters” that can feasibly be closed. I know of no reputable expert in either political party who would find that there is anything even approaching $5 trillion in potential revenue to be generated from this source.
Romney has also proposed a massive defense buildup, even while he says he will cut spending deeply enough to balance the budget. I think it’s clear why he won’t tell voters which cuts he would make: In the past, disclosing his planned budget cuts was politically damaging.
We have seen this movie before. When President Bill Clinton left office, our country was paying down its debt on a substantial scale. I was privileged as secretary of the Treasury to be buying back federal debt. George W. Bush campaigned on a program of tax cuts supported by economic advisers who were not subject to the rigors of official budget scorekeeping. The results — trillions of dollars of budget deficits — speak for themselves.
This is a consequential presidential election. As the country continues to recover from the largest economic crisis in generations, we need to strengthen the job market, address big fiscal challenges and build an economy that is based on sustainable, shared economic growth. Voters should have a chance to choose between clear alternatives. Obama — consistent with his obligations as president — has laid out a multiyear budget embodying his vision for the future, and it has been evaluated by independent experts. It is time for Romney to do the same.