The outline of Romney’s tax reform plan is the same as what you heard on Wednesday. And Romney backed his advisers up, promising that his plan “will not add to the deficit.” Or he appeared to. But the way it won’t add to the deficit, he said, was through “stronger economic growth, spending cuts, and base broadening will offset the reductions.” Raise your hand if you see what Romney did there.
Earlier in the week, Romney’s advisers said the plan was meant to be “revenue neutral.” That’s a technical term. It means that his tax plan raises the same amount of revenue as the current system. But that’s not what Romney is saying here. He’s saying that when you take his tax plan, add in his campaign’s assumptions about the extra growth it will generate in the economy, and then add in the spending cuts he’s proposing, his agenda does not add to the deficit.
For those keeping score at home, that suggests that independent analyses will find that the tax plan is revenue negative. Big time.
So let’s turn now to Romney’s spending cuts. Here he is on Social Security and Medicare:
A few commonsense reforms will ensure we make good on our promises to today’s seniors while saving Social Security and Medicare for future generations. Tax hikes are off the table, and there will be no change for those at or near retirement. But younger generations will enter a system strengthened for the 21st century.
When it comes to Social Security, we will slowly raise the retirement age. We will slow the growth in benefits for higher-income retirees.
When it comes to Medicare, tomorrow’s seniors will have a choice among insurance providers, including traditional Medicare. As with Medicare Part D today, the private sector will compete to offer insurance coverage at the lowest possible price. Seniors will then receive government support to ensure they can afford that coverage. And with Medicare, like with Social Security, lower-income seniors will receive the most generous benefits.
Starting in 2022, new retirees will participate in this new system. We will gradually increase the Medicare eligibility age by one month each year. In the long run, the eligibility ages for both programs will be indexed to longevity so that they increase only as fast as life expectancy.
Romney is very clear: Nothing is going to change for anyone anytime soon. Romney is less clear about what will change in the future: His Medicare plan still omits any information on how fast his vouchers will grow, which means we can’t say how much money his plan will save, or what it will mean for tomorrow’s seniors. But put that aside for a minute. We have enough detail to say that Romney’s cuts in the next 10 years have to come from outside Social Security and Medicare. Here’s Romney again:
My administration will also make the hundreds of billions of dollars in cuts necessary to reduce spending to 20 percent of GDP by the end of my first term. I will cap it there. And then, without sacrificing our military superiority, I will balance the budget.
There are three ways I’ll get this done. First, I’ll cut programs. I will look at every government program and ask this question: Is this so critical that it’s worth borrowing money from China to pay for it?
Of course, we’ll start with the easiest cut of all: Obamacare, a trillion-dollar entitlement we don’t want and can’t afford. It’s bad medicine, bad policy, and when I’m president, the bad news of Obamacare will be over.
We’ll also cut things like subsidies to Amtrak and funding for Planned Parenthood. We’ll repeal the union giveaway called the Davis-Bacon Act to save taxpayers over $10 billion per year.
Second, we will return federal programs to the states. I will send Medicaid back to the states and cap that program’s rate of growth. And I will do the same for other programs, like food stamps, housing subsidies and job training.
States are better equipped to perform all these functions. Once the economy is really growing again, I believe that we should return spending on these programs to pre-recession levels, cap their rate of growth and give the states flexibility and control. Taxpayers would save money, and those in need would benefit from programs that are more effective, efficient and responsive.
Welfare reform showed us how well a state-led approach can work. Let’s extend that conservative, small-government philosophy across the entire social safety net.
Finally, government itself must be made more efficient. I will shrink the size of the federal workforce by 10 percent and link the pay and benefits of federal employees to those of their peers in the private sector. Public servants should not make more than the Americans who pay their salaries.
Cutting subsidies from Amtrak and Planned Parenthood is the equivalent of President Obama promising to close loopholes for corporate jet owners. It’s red meat for the base, but a rounding error in context of the budget.
Romney’s real savings come in the next section. He’ll “send Medicaid back to the states and cap that program’s rate of growth,” and then “do the same for other programs, like food stamps, housing subsidies and job training.”
Sending the programs back to the states is a red herring. The key bit for deficit reduction is capping their rates of growth. Which is to say, cutting their rates of growth. Which is to say, cutting them.
What Romney is essentially proposing to do is finance a massive tax cut by cutting Medicaid, food stamps, housing subsidies and job training. In other words, the neediest Americans — and, to a lesser degree, federal workers — will be financing a massive tax cut.
I don’t know whether independent analysts will say the numbers add up to make the rest of Romney’s plan deficit neutral. My guess is they won’t. But even if they did, Romney’s priorities are clear: In order to cut taxes and raise defense spending, he’ll cut the programs that support the poorest Americans.
In 2000, George W. Bush ran for president saying “I don’t think they ought to be balancing their budget on the backs of the poor.” In 2012, amidst a much worse economy, Romney is running for president saying exactly the opposite.
Perhaps that’s why the stadium is empty.