Speaking at a Sunday fundraiser in Palm Beach, Florida, Mitt Romney stopped being polite and started getting specific.
"I'm going to probably eliminate for high income people the second home mortgage deduction," he continued, adding that he would also support eliminating deductions for state income and property taxes.
Till now, Romney has been very specific about his intention to be very vague. Back in March, he told the conservative Weekly Standard, "one of the things I found in a short campaign against Ted Kennedy was that when I said, for instance, that I wanted to eliminate the Department of Education, that was used to suggest I don’t care about education...So will there be some that get eliminated or combined? The answer is yes, but I’m not going to give you a list right now."
Sunday's comments, however, were "overheard by reporters on a sidewalk below." Romney thought he was speaking privately to a group of conservative donors. And so they offer, in theory, a look behind the curtain. The only problem is there's not much there.
Romney's tax plan -- which extends all the Bush tax cuts and then cuts taxes even further -- will cost the Treasury trillions of dollars in lost revenue. You can't make that up by capping a few deductions for high-income taxpayers. And while it sounds very tough to talk about closing agencies, it doesn't save you much money unless you're also willing to cut the services they provide.
To make his numbers add up, Romney needs to close the largest and most popular deductions in the tax code and cut huge swaths of government social spending. And as of now, he's not willing to talk about doing that. Not even in private.
1) Mitt Romney, speaking at a private fundraiser, offered some unexpected details on tax deductions he would cut and the agencies he would close. "Mitt Romney, speaking at a private fundraising event on Sunday, offered the first details of deductions he would eliminate or limit in order to offset the income tax cut he has proposed for all taxpayers. Mr. Romney, the presumptive Republican nominee for president, said he would eliminate or limit for high-earners the mortgage interest deduction for second homes, and likely would do the same for the state income tax deduction and state property tax deduction. He also said he would look to the Department of Education and the Department of Housing and Urban Development for budget cuts...Mr. Romney has pledged a 20% cut to income tax rates for taxpayers in all income brackets but has offered few details for how he would pay for the proposal. Mr. Romney also has vowed to bring federal spending under control, while offering few details on which programs he would cut." Sara Murray in The Wall Street Journal.
Wonkbook real talk: If all Romney is thinking of doing is limiting some deduction for high-income Americans, there's no way he can pay for his tax plan.
2) House Republicans are set to fill in the details on their budget. "House Republicans return from spring recess next week to face the difficult -- some say impossible -- task of filling the gaping holes in the House-passed budget, including figuring out how to slash income tax rates without costing the government any money and finding nearly $3 trillion in savings from entitlement programs over the next decade...Now the real work begins. Representative Dave Camp of Michigan, the House Ways and Means chairman, will hold meetings with Republican the rank and file next week to map out an overhaul of the tax code that strips it down to just two personal income tax rates -- 25 percent and 10 percent -- and a 25 percent corporate income tax rate, and to pay for it by curtailing or ending tax deductions and credits. A half-dozen committees will begin drafting legislation to meet a budget-mandated $261 billion in savings over the next decade to stave off scheduled across-the-board cuts to the military in January." Jonathan Weisman in The New York Times.
3) Congress will take two big tax votes this week. "With the glare of the public spotlight trained on Tax Day, Congress is readying for a political fight with dueling tax votes this week that will define each party’s priorities in this election year. In one corner are Republicans, who are touting a tax cut to help boost the bottom line for small businesses. In another corner are Democrats who want to make sure the wealthy are paying their fair share -- as a matter of tax fairness and to relieve the burden on the middle class...The Senate moves first with a procedural vote Monday on the Buffett rule, which would ensure that millionaires pay an effective 30 percent tax rate on their income. The House follows suit Thursday with a vote on the small business tax cut, which would allow qualifying companies to take a 20 percent tax break that Republican lawmakers say will spur more hiring and investment." Seung Min Kim in Politico.
4) Banks are concerned that the FHFA may allow principal reductions. "The banking industry is concerned that Edward DeMarco, the nation’s chief housing regulator, is moving toward a plan that would allow some homeowners to walk away from their mortgages...DeMarco, the acting director of the Federal Housing Finance Agency (FHFA), has come under pressure from Democrats and the Treasury Department to reduce mortgage principal. They argue the move would help struggling homeowners and save the government money in the long run. But even with new data that backs up those claims, DeMarco remains skeptical about the effects of implementing the program at Fannie Mae and Freddie Mac, the mortgage giants that the government has spent $150 billion keeping afloat. Bankers argue that principal reductions through Fannie and Freddie would increase the liability for taxpayers and raise the cost of credit by creating incentives for borrowers to stop paying on their loans." Vicki Needham in The Hill.
Pairing suggestion: You'll want to read Sheila Bair's op-ed -- just scroll down a bit -- after reading this.
5) Stay at home motherhood isn't a luxury for most. "America, where 65 percent of married women who stay home with children under 18 years old live in households that earn less than $75,000 a year, according to the most recent data from the United States Census Bureau...Stay-at-home mothers are younger, less educated and more likely to be Hispanic than they were in previous generations, and perhaps have a more traditional view of family and more limited job skills than other women these days, according to a Census Bureau report...Eighteen percent of stay-at-home mothers lack a high school degree, compared with 7 percent of women in the work force. And black women were about half as likely as white women to be stay-at-home mothers. Across the country, 70 percent of married women over the age of 25 with children work outside the home. The median income of those households is about $87,700, compared with $64,000 for households where the mother stays at home." Susan Saulny in The New York Times.
@joshgreenman: After all this, do we agree that neither Republicans nor Democrats are doing anything substantive to help or hurt moms who stay at home?
ROMNEY FLASHBACK: "Even if you have a child two years of age, you need to go to work...I want the individuals to have the dignity of work.’” More.
6) Medicare is beginning its effort to link doctors' pay to quality and cost of care. "Twenty-thousand physicians in four Midwest states received a glimpse into their financial future last month. Landing in their e-mail inboxes were links to reports from Medicare showing the amount their patients cost on average as well as the quality of the care they provided. The reports also showed how Medicare spending on each doctor’s patients compared with their peers in Kansas, Iowa, Missouri and Nebraska. The 'resource use' reports, which Medicare plans to eventually provide to doctors nationwide, are one of the most visible phases of the government’s effort to figure out how to enact a complex, delicate and little-noticed provision of the 2010 health-care law: paying more to doctors who provide quality care at lower cost to Medicare, and reducing payments to physicians who run up Medicare’s costs without better results." Jordan Rau in The Washington Post.
1) BAIR: What if the Fed treated ordinary Americans like banks? "For several years now, the Fed has been making money available to the financial sector at near-zero interest rates. Big banks and hedge funds, among others, have taken this cheap money and invested it in securities with high yields. This type of profit-making, called the “carry trade,” has been enormously profitable for them. So why not let everyone participate? Under my plan, each American household could borrow $10 million from the Fed at zero interest. The more conservative among us can take that money and buy 10-year Treasury bonds. At the current 2 percent annual interest rate, we can pocket a nice $200,000 a year to live on. The more adventuresome can buy 10-year Greek debt at 21 percent, for an annual income of $2.1 million. Or if Greece is a little too risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a year. (No sense in getting greedy.)" Sheila Bair in the Washington Post .
2) LUCE: Housing policy is holding back the recovery. "In the coming weeks, Washington will discover whether Edward DeMarco, acting regulator of the Federal Housing Finance Agency, is susceptible to political pressure. Most Americans have not heard of Mr DeMarco. But millions of homeowners will be affected by what he decides...Just as the US labour market is conditioned by the millions who have dropped out of it, so house prices are anchored by the 11m or so Americans whose homes remain 'underwater' (ie houses that are worth less than their mortgages). Until this huge backlog of potential foreclosures is cleared, which could take four more years at the current rate, America is unlikely to see a robust housing recovery. This means the economy would be unlikely to exceed its trend growth rate (nowadays estimated at 2 per cent to 2.5 per cent). That in turn means joblessness would be unlikely to fall much further. Without a full US housing recovery, the overall one is unlikely to hit escape velocity." Edward Luce in The Financial Times.
3) KRUGMAN: European leaders are driving their economy off a cliff. "Just a few months ago I was feeling some hope about Europe. You may recall that late last fall Europe appeared to be on the verge of financial meltdown; but the European Central Bank, Europe’s counterpart to the Fed, came to the Continent’s rescue. It offered Europe’s banks open-ended credit lines as long as they put up the bonds of European governments as collateral; this directly supported the banks and indirectly supported the governments, and put an end to the panic. The question then was whether this brave and effective action would be the start of a broader rethink, whether European leaders would use the breathing space the bank had created to reconsider the policies that brought matters to a head in the first place. But they didn’t. Instead, they doubled down on their failed policies and ideas. And it’s getting harder and harder to believe that anything will get them to change course." Paul Krugman in The New York Times.
4) PEARLSTEIN: Community banks have a promising new business model. "With their balance sheet weighed down by under-performing real estate loans and underwater securities, community banks find themselves in something of a pickle. New regulations that limit the fees they can charge depositors for things such as debit card transactions, overdrafts and ATM withdrawals threaten to dramatically reduce their fee income...And although they still have money to lend, many now find they have lost the expertise, risk appetite and customer relationships to make to small- and medium-size firms in sectors other than real estate. A couple of Washington financiers have come up with a clever answer to their prayers...Their new venture, BancAlliance, is a cooperative of community banks that aims to make loans to mid-sized and large businesses that none of its members has the size, expertise or risk appetite to make on their own." Steven Pearlstein in The Washington Post.
5) MANKIW: Competition is good for governments. "Should governments -- of nations, states and towns -- compete like business rivals? The question is simpler to ask than to answer. But it reflects why conservatives and liberals disagree on many big issues facing the nation. Most everyone agrees that competition is vital to a well-functioning market economy. Since the days of Adam Smith, economists have understood that the invisible hand of the marketplace works only if producers of goods and services vie with one another. Competition keeps prices low and provides an incentive to improve and innovate...For much the same reason, competition among governments leads to better governance. In choosing where to live, people can compare public services and taxes. They are attracted to towns that use tax dollars wisely. Competition keeps town managers alert. It prevents governments from exerting substantial monopoly power over residents. If people feel that their taxes exceed the value of their public services, they can go elsewhere." Gregory Mankiw in The New York Times.
Top long reads
Brad Plumer profiles World Bank presidential candidate Ngozi Okonjo-Iweala: "The first time Ngozi Okonjo-Iweala ever had to convince Barack Obama of anything was back in 2005. At the time, Obama was an ambitious young senator from Illinois with a keen interest in foreign affairs. Okonjo-Iweala was Nigeria’s blunt-speaking finance minister, traversing the globe to convince the world’s wealthiest nations that they should ease her country’s debt burden. 'Everybody was saying that this could never be done . . . that it would never happen,' Okonjo-Iweala recounted at an April event in Washington. 'We went up to the Hill and there was a certain senator, Barack Obama' -- long deadpan pause -- 'who was among those who were skeptical.' Eventually, Obama -- and the rest of the world -- would agree with her...Seven years later, that young senator is president, and Okonjo-Iweala, now 57, is using her powers on an even more far-fetched idea. She’s making a bid to lead the World Bank."
Jill Lepore on Trayvon Martin and the history of gun laws in America: "The United States is the country with the highest rate of civilian gun ownership in the world. (The second highest is Yemen, where the rate is nevertheless only half that of the U.S.) No civilian population is more powerfully armed. Most Americans do not, however, own guns, because three-quarters of people with guns own two or more. According to the General Social Survey, conducted by the National Policy Opinion Center at the University of Chicago, the prevalence of gun ownership has declined steadily in the past few decades. In 1973, there were guns in roughly one in two households in the United States; in 2010, one in three. In 1980, nearly one in three Americans owned a gun; in 2010, that figure had dropped to one in five...Although rates of gun ownership, like rates of violent crime, are falling, the power of the gun lobby is not. Since 1980, forty-four states have passed some form of law that allows gun owners to carry concealed weapons outside their homes for personal protection."
Kip Hawley looks at the problems with airport security and what to do about them: "Airport security in America is broken. I should know. For 3½ years--from my confirmation in July 2005 to President Barack Obama's inauguration in January 2009--I served as the head of the Transportation Security Administration. You know the TSA. We're the ones who make you take off your shoes before padding through a metal detector in your socks (hopefully without holes in them). We're the ones who make you throw out your water bottles. We're the ones who end up on the evening news when someone's grandma gets patted down or a child's toy gets confiscated as a security risk. If you're a frequent traveler, you probably hate us...The crux of the problem, as I learned in my years at the helm, is our wrongheaded approach to risk. In attempting to eliminate all risk from flying, we have made air travel an unending nightmare for U.S. passengers and visitors from overseas, while at the same time creating a security system that is brittle where it needs to be supple."
Bluegrass interlude: Kelly McFarling plays "Atlanta" live in San Francisco.
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Still to come: A free trade pact is set to go into effect; a boost in pay for Medicaid's doctors; NLRB's union election rule faces Congress; electric cars have varied impacts; and the new sport of 1923.
Weak jobs data is putting pressure on the Fed for new stimulus. "Disappointing jobs data is driving fresh speculation over whether the Federal Reserve might take extra moves to boost the economy. If recent reports are an indication that the economy may be losing steam, the central bank could feel compelled to act with another policy move that could boost markets but also expose it and its chairman, Ben Bernanke, to even more political scrutiny...Even as the economy enjoyed a run of strong reports at the beginning of the year, the Fed sought to bring the figures back down to earth, warning that the recent gains had outpaced economic growth, suggesting the torrid pace would not keep up -- a cautionary tone that appears to be confirmed by the new data...Following the disappointing reports, a number of top Fed officials hit the public speaking circuit, with some hinting that the Fed was open to new moves if a weak economy merits them." Peter Schroeder in The Hill.
@djfxtrader: ...Fed not planning QE3 cuz Sack, who administers Op Twist at NY Fed, is Bernanke's 'favorite economist' & Ben would have him stay for QE3.
Consumer prices rose in March. "Consumer prices rose 2.7% in March from a year ago, presenting a quandary for Federal Reserve officials who say their mission is to keep the inflation rate lower...The Labor Department reported Friday its consumer price index rose 0.3% in March from February and has advanced at a 3.7% annual rate in the past three months after slowing late last year. Rising energy prices were a primary factor, with gasoline costs up 9% in March from a year earlier. Inflation has slowed from higher levels--as the Fed predicted last year--and other measures of inflation are a bit tamer. For example, the Fed's preferred yardstick, the Commerce Department's personal consumption expenditure price index, was up 2.3% in February from a year earlier. Moreover, measures that exclude food and energy are lower...Nationwide, rental costs were up 2.5% from a year earlier in March, the Labor Department said Friday." Jon Hilsenrath and Conor Dougherty in The Wall Street Journal.
Colombia has met our conditions for the U.S.-Colombia free trade deal to go into effect. "U.S. officials said Sunday that a free-trade agreement with Colombia will go into effect on May 15, boosting the prospect of U.S. exports to this Andean nation. 'Colombia has passed those laws and regulations necessary in order for the free-trade agreement to enter into force,' said U.S. Trade Representative Ron Kirk. 'This is a significant milestone.' The agreement had been pending for several years before the Obama administration submitted it to Congress, which ratified it last year...In order to complete the agreement, the Colombians were required to pass several pieces of legislation, and lawmakers were scrambling to do so in order to announce the agreement while U.S. President Barack Obama was here for the summit. Colombia also had to take certain steps to protect workers' rights and guard against violence toward labor-union leaders. U.S. officials said those conditions had been met." Laura Meckler in The Wall Street Journal.
@grossdm: I propose the Buffet Rule. At weddings, bar mitzvahs, barbecues, people who make more than a million go through the line last
Star Wars interlude: "Plastic Galaxy," a documentary about Star Wars toys.
Advocates want a different definition of affordability for healthcare subsidies. "At issue is a section of the law that outlines when low- and moderate-income employees can opt out of their employer’s coverage and instead get federal subsidies to buy insurance through new state-based marketplaces, called exchanges...A proposed Treasury Department rule says workers and their families cannot qualify for those subsidies unless their employer’s plan is unaffordable because it exceeds 9.5 percent of their household income. Consumer advocates oppose the rule because it bases affordability on how much employees would pay to cover themselves, not on the cost of covering their entire family. As a result, they say, many workers will be unable to afford family coverage, yet their spouses and children will be ineligible to get help to buy insurance. An estimated 3.9 million dependents would be affected, according to one estimate." Julie Appleby in The Washington Post.
Medicaid's doctors may get a boost in pay. "The success of the healthcare reform law's massive Medicaid expansion could hinge on new regulations that are expected as early as next week...Medicaid, however, is already straining to care for the more than 58 million already in the program because it doesn't pay doctors enough to participate...To alleviate some of the pressure ahead of the law's expansion, House Democrats included in their version of the bill a provision requiring states to pay primary care physicians no less than 100 percent of Medicare payment rates in 2013 and 2014 for primary care services. The temporary increase would be fully funded by the federal government...The provision could end up costing more than that if the upcoming federal regulation broadens the definition of primary care, however. While congressional intent clearly focused on internists and general practitioners...other doctors are lobbying the Department of Health and Human Services to also be covered by the regulation." Julian Pecquet in The Hill.
Cybersecurity legislation no longer looks like a sure thing. "A growing backlash from online activists has posed a threat to bipartisan House cybersecurity legislation that lawmakers thought was a slam dunk only a month ago...The 19-page bill, the Cyber Intelligence Sharing and Protection Act (CISPA), is sponsored by House Intelligence Committee Chairman Mike Rogers (R-Mich.) and Rep. Dutch Ruppersberger (D-Md.), the panel’s ranking member. It passed out of the Intelligence Committee in December by a vote of 17 to 1. GOP leaders plan to pass the legislation through the House the week of April 23, which they have dubbed 'Cybersecurity Week.' It would allow the government to share classified intelligence with private companies to give them the information they need to protect themselves from cyber-attacks. Proponents say major U.S. companies lose valuable secrets to competitors in Russia and China through these attacks. But critics say the bill as drafted is over-broad." Alexander Bolton in The Hill.
Vintage sports interlude: Cycle skating -- the new sport of 1923!
Electric cars' environmental impact depends on location. "According to a report that the Union of Concerned Scientists plans to release on Monday, there would be a considerable difference in the amount of greenhouse gases -- primarily carbon dioxide -- that result from charging the cars’ battery packs. By trapping heat, greenhouse gases contribute to climate change...Put another way, for 45 percent of the United States population, an E.V. will generate lower levels of greenhouse gases than a gasoline-engine vehicle capable of 50 m.p.g. in combined city-highway driving...Here’s another way to look at it: if one region were completely dependent on coal for power, its electric cars would be responsible for full-cycle global-warming emissions equivalent to a car capable of 30 m.p.g. in mixed driving. In a region totally reliant on natural gas, an electric would be equivalent to a 50 m.p.g. gasoline-engine car." Paul Stenquist in The New York Times.
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.