Rick Santorum went first. "Here's where I differentiate myself from everybody else, including, obviously, the president," he said. "I actually have experience on tackling the toughest problems that we have in this country."
Ron Paul couldn't believe it. "He's a fake," he said, referring to Santorum. "I find it really fascinating that, when people are running for office, they're really fiscally conservative. When they're in office, they do something different."
Paul is only half right. According to a new report by the Committee for a Responsible Federal Budget, none of Paul's opponents are even running fiscally conservative campaigns. Quite the opposite, in fact.
The report takes every tax and spending policy the Republican candidates have offered and tallies them up. It does so against what the CRFB calls "a realistic baseline." That's a baseline where all the Bush tax cuts are extended, and many of the scheduled spending cuts are ignored, and debt is piling up. It's a baseline, in other words, in which Congress has made the deficit much worse. A baseline where debt is 86 percent of GDP in 2021. A baseline in which the debt is on a completely unsustainable path. And so, in theory, a baseline so bad that it should be easy for the candidates to appear responsible by comparison. But, with the exception of Paul, they don't.
Take Santorum. He has not shied away from naming large spending cuts. He would implement Paul Ryan's plan for Medicare reform on an accelerate schedule. He would convert "Medicaid, housing, education, job training, and food stamps” to capped block grants. He would cut Social Security benefits. All in all, CRFB estimates he would reduce spending by over $2 trillion between 2013 and 2021. Unfortunately, his tax cuts would increase debt by more than $6 trillion over the same period. Net impact: $4.5 trillion in new debt, for a debt-to-GDP ratio of 105 percent.
Newt Gingrich's plan is, remarkably, even worse for our finances. Like Santorum, he would block grant and cap almost everything in sight. In fact, he's promised to block grant and cap more than 100 programs. In total, CRFB estimates his spending cuts would shave $2.7 trillion off of the debt. But Gingrich would also spend $1.6 trillion dollars financing new private accounts for Social Security. And his tax cuts would cost more than $7 trillion. Net impact: $7 trillion in new debt, for a debt-to-GDP ratio of, wait for it, 114 percent.
Mitt Romney's plan is more difficult to score. He saves $1.2 trillion by block granting Medicaid and cutting the federal workforce. But his new tax plan doesn't have enough detail to say how much it costs. The campaign says it will be revenue neutral, but in part because they assume it will lead to faster economic growth, and thus higher revenues. That's an assumption that would get thrown out if he sent it to Congress. He also hasn't specified which tax breaks he'll eliminate. But if he;s sufficiently aggressive in that area, much of his tax plan could ultimately be offset. For now, however, CRFB estimates that if the plan isn't paid for at all, it will add $2.6 trillion to the deficit, leaving Romney's debt-to-GDP at 96 percent. The more deductions and loopholes he closes, the lower that number will be.
Paul is the only candidate whose plan puts him in the black. His cuts to federal spending are incredibly severe, saving $7.5 trillion. Comparatively, his tax cuts cost $5.2 trillion. And though his plan to end the Federal Reserve would rack up $400 billion in transition cost (and, if we're being real about this, untold trillions in market terror and future financial panics), put it all together and he cuts the deficit by $2.2 trillion, and brings debt-to-GDP down to 76 percent.
And remember that al these tax cut plans are coming on top of making the Bush tax cuts -- with their $4+ trillion price tag -- permanent.
All of this, in some sense, gives the GOP candidates too much credit. Their tax plans, with the possible exception of Romney's, are fantastical. Their proposed spending cuts are far beyond what's plausible. The point is that even unfettered by political reality or operational responsibility, three out of the remaining four candidate have proposed plans that take an unsustainable deficit path and make it significantly worse. And if they can't cut the deficit when they don't have to worry about Congress or the federal bureaucracy or the consequences of actually implementing their proposals, how will they do it when they are burdened by those constraints and concerns?
You might wonder, of course, where Obama's proposals fit into all this. His budget estimates that debt will be 76.5 percent of GDP in 2021. That's lower than any of the Republican candidates save Paul. Though, CRFB is quick to note that 76.5 percent of GDP is "roughly double historical debt levels" and is not sufficient "to reduce the debt relative to the economy."
1) Republican presidential candidates clashed over policy in the final primary debate, report Jeff Zeleny and Jim Rutenberg: "Mitt Romney called into question the fiscal conservative credentials of Rick Santorum in a fiercely combative debate on Wednesday evening, taking urgent steps to redefine Mr. Santorum while trying to reassert his command in the fight for the Republican presidential nomination. With the Arizona and Michigan primaries only six days away, followed quickly by a dozen more contests, Mr. Romney arrived here at the 20th debate of the race armed with a detailed indictment of Mr. Santorum’s record in Congress. Mr. Romney sought to dismantle the conservative veneer that has elevated his rival in recent weeks...The economy took a back seat to a host of topics in the wide-ranging debate, which dwelled on social issues, immigration and a detailed look at Congressional voting records. Mr. Romney played up his status as the only candidate on the stage who had never served in Washington."
@delrayser: Biggest sign that improving economic news is robbing GOP of its best anti-Obama argument: there was NOT ONE jobs Q tonight.
@amaeryllis: Little mention in tonight's debate of: jobs, unemployment, infrastructure, the Eurozone, QE3, mortgages, GSEs, Dodd-Frank. #recovery?
@stefanjbecket: Shorter everyone: "We're going to cut spending drastically, but not the things that you specifically like and/or care about."
2) The Obama administration corporate tax overhaul would boost manufacturing, reports Binyamin Appelbaum: "The Obama administration, seeking to promote domestic manufacturing without increasing the federal deficit, proposed Wednesday to offset new tax breaks for manufacturers by raising taxes on a wide range of other companies. Some of the prospective losers are familiar targets, including oil and gas companies, private equity firms and companies that move jobs overseas...The White House provided few details on Wednesday, and most concerned the proposed reductions rather than the offsetting increases, thwarting detailed analysis. The administration introduced its overhauls of financial regulation and health care in the same way. But the high-concept approach also reflects that Wednesday’s announcement was a campaign event. There is little chance that a divided Congress, its attention focused on November, will overhaul the corporate tax code this year."
@jbarro: This Obama corp tax proposal is better than I would have guessed. Not perfect, but a pretty good positive step.
REACTIONS: Experts react to Obama’s corporate tax proposal.
3) Mitt Romney offered a tax plan of his own, reports John Harwood: "Mitt Romney, seeking to kick-start his presidential campaign among recalcitrant conservatives, on Wednesday proposed cutting the top income tax for individuals to 28 percent while holding out the prospect of limiting tax deductions. Mr. Romney’s earlier economic plan called only for preserving the current top tax rate of 35 percent, while holding out the promise of lower rates later in an overhaul of the tax code...Mr. Romney’s top economic adviser, Glenn Hubbard, said the plan would cut all six current tax brackets - 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent, depending on a taxpayer’s income - by the same proportion of 20 percent. That would produce this new set of tax brackets: 8 percent, 12 percent, 20 percent, 22.4 percent, 26.4 percent, and 28 percent. 'It’s a marginal rate cut for every American,' Mr. Hubbard said."
@justinwolfers: Point is: Romney's new tax plan is massively regressive relative to current code. Most of the spoils are going to the rich.
READ IT: Mitt Romney's latest tax plan.
My take: http://wapo.st/zVpURY
4) Greece may struggle to attract private investors, reports Howard Schneider: "The private debt relief plan negotiated for Greece might make it impossible for the nation to borrow money for years to come and leave it dependent for that much longer on its neighbors or the International Monetary Fund, the IMF warns in an analysis of the new rescue program. European officials approved $170 billion in new public loans for Greece on Tuesday as part of a three-year plan to stabilize the nation’s finances and diminish the risk that its problems might do more damage to Europe’s economy...Theoretically, during the three years of the rescue plan, Greece will restructure its economy, become more competitive and resuscitate economic growth -- and be ready to wean itself from IMF and European help by again selling bonds to private buyers. But with so much owed to governments and other public entities -- all of which will take priority when it comes to repayment -- private investors may well avoid investing in the country."
5) The SEC is worried about the rise of high-frequency trading, reports David Hilzenrath: "The chairman of the Securities and Exchange Commission is worried about the rise of high-frequency trading, but two years after the agency flagged the phenomenon as a potential problem, Chairman Mary L. Schapiro says regulators still don’t know enough to do much more about it. High-frequency trading, which is practiced by hedge funds and other technologically turbocharged investors, involves the purchase and sale of large volumes of shares in tiny fractions of a second...Last year, a congressionally mandated consultant’s report on the SEC said high-frequency trading accounted for about 56 percent of the stock trading volume in the United States, up from 35 percent in 2005. The behavior of high-frequency traders is believed to have contributed to the 'flash crash' of May 6, 2010, when markets swung wildly, the report said. Such trading 'creates new potential for market manipulation' and can create 'an uneven playing field,' the report by Boston Consulting Group said."
1) Parties are bad guides for ideology, writes Ezra Klein: "Perhaps my biggest frustration with the U.S. news media (and yes, I am a card-carrying member) is that we permit the two parties to decide what is 'left' and what is 'right.' The way it works, roughly, is that anything Democrats support becomes 'left,' and everything Republicans support becomes 'right.'...Parties -- particularly when they’re in the minority -- care more about power than policy. Perhaps there’s nothing much to be done about this. And as I said, it isn’t clear that the media, or anyone else, should try. But it puts the lie to the narrative that America is really riven by grand ideological disagreements. America is deeply divided on the question of which party should be in power at any given moment. Much of the polarization over policy is driven by that question, not the other way around. But the voters who trust the parties don’t know that, and they tend to take on faith the idea that their representatives are fighting for some relatively consistent agenda."
2) The Greek debt deal will lead to disaster, writes Clive Crook: "If Europe’s new plan for Greece succeeds, nobody will be more surprised than the politicians who designed it. At best, the arrangement is a holding action, one that fails yet again to deal with the much larger confidence crisis facing the euro area. The deal announced on Tuesday starts with private lenders. Their representatives agreed to accept even bigger losses on Greek government bonds than previously discussed...If too many private lenders opt out, it’s back to the drawing board. Ditto if voters in Greece force the government to renege on promises to cut the minimum wage, make advance debt- service payments into an externally monitored account, change the constitution to prioritize debt repayment, accept oversight of public accounts by an on-site team of EU officials, and more. That’s only a partial list of what might still derail the agreement. Even if it sticks, its designers don’t sound confident it will work."
3) The contraception debate highlights the need to end employer-based insurance, writes Matt Miller: "It’s important not to let this contraception clash pass without understanding the true source of the problem. It’s not President Obama’s debauched liberal drive to shower teens with condoms and morning-after pills. It’s not the bishops’ urge to enforce a moral code from which most of their flock dissents. A sane America would never deny women who work for Catholic employers access to the contraception that every other health plan offers -- but it also wouldn’t force Catholic employers to offer coverage that violates their beliefs. Instead, a sane America would solve this whole problem by moving into the 21st century and making sure people can buy group health coverage on their own and not tied to their employers."
4) Health care is undergoing a price revolution, writes Joeseph Rago: "Two years on, the major achievement of President Obama's new entitlement and its regulatory apparatus has been to heighten the contradictions and dysfunctions of the health-care status quo even as it creates multiple new problems. The good--and less noticed--news is that the growing disruption is driving the industry toward the solution that prevails in the rest of the economy: the price mechanism. In the context of American health care, this might be a watershed...Insurers are starting to give workers and businesses the information and tools they need to lower costs. This is, in fact, a remarkable period of industry innovation and creative thinking. All the major insurers--UnitedHealth, Aetna, Cigna, WellPoint--are now mining their billing data and attempting to accurately measure costs and compare them with outcomes. 'Moneyball' is coming to health care for the first time."
5) The best way to help the poor is focusing on the middle class, writes Mark Schmitt: "We’re back to arguing about how the middle class is doing over the long sweep of history since the 1980s: Have they been dragged down by stagnating wages, high-end inequality, economic insecurity, and a greater chance that economic mobility will take them downward than up? Or is the middle class doing OK?...With the unifying experience of the recession, low-income Americans are no longer 'them'--they’re people who have suffered or worry about job loss, bankruptcy, foreclosure, or a costly health crisis just like many others. Studies that show how these experiences are shared by those in the bottom income quintile and the middle quintile--even if the circumstances are different in scale--can create a kind of cross-class solidarity...To the extent that many middle class families are experiencing insecurity, stagnating incomes, and doubts about mobility, it’s a chance to create a safety net that can support both the least-advantaged and those with a surer footing on the economic ladder."
80s nostalgia interlude: Prince plays "Purple Rain" live at First Avenue in 1983.
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Still to come: Home resales are rising; the contraception debate moves to the states; the Obama administration outlined online privacy principles; gas prices are not rising due to lack of drilling; and many, many openings of a symphony.
China is facing a new call for economic reform, reports Bob Davis: "An exclusive preview of an economic report on China, prepared by the World Bank and government insiders considered to have the ear of the nation's leaders, offers a surprising prescription: China could face an economic crisis unless it implements deep reforms, including scaling back its vast state-owned enterprises and making them operate more like commercial firms. 'China 2030,' a report set to be released Monday by the bank and a Chinese government think tank, addresses some of China's most politically sensitive economic issues, according to a half-dozen individuals involved in preparing and reviewing it. It is designed to influence the next generation of Chinese leaders who take office starting this year, these people said. And it challenges the way China's economic model has developed during the past decade under President Hu Jintao, when the role of the state in the world's second-largest economy has steadily expanded."
The U.S. is hesitant to contribute to the IMF's Europe fund, reports Howard Schneider: "The world’s economic powers won’t consider pumping more money into the International Monetary Fund until Europe puts up more cash to battle its own problems, Lael Brainard, undersecretary of the Treasury for international affairs, said ahead of key meetings in Mexico this weekend. The United States has already said it won’t contribute to an IMF effort to raise $500 billion from its members as a precaution in case problems in the euro zone intensify into a broader global crisis. Brainard, in comments Wednesday, appeared to take the U.S. position a step further, saying she 'doesn’t see the need' for an increase in IMF financial resources. The United States is the fund’s major shareholder. European officials have not settled on how much they will put into their regional crisis-fighting fund, an issue they are set to debate further in March. Given the region’s wealth, U.S. and other officials argue that the euro nations can largely take care of their own problems."
Home resales rose last month, report Alan Zibel and Eric Morath: "Sales of previously owned homes in the U.S. rose last month to the highest level in nearly two years, and the inventory of unsold homes contracted to a level considered healthy by economists, positive signs for the housing market. Existing-home sales increased 4.3% in January from a month earlier to a seasonally adjusted annual rate of 4.57 million, the National Association of Realtors said Wednesday. It was the third increase in the past four months and the highest level of sales since May 2010, when the housing market was lifted by federal tax credits. Compared with January a year ago, sales rose 0.7%. Economists were generally encouraged by the report, which comes amid other signs that the housing market may have bottomed and is starting to heal. 'We're slowly improving for the right reasons: more jobs, more credit availability and affordability of homes,' said Stuart Hoffman, chief economist with PNC Financial Services Group."
Experts are divided on the benefits of manufacturing, reports Annie Lowrey: "The Obama administration is undertaking an athletic push to promote manufacturing employment in the United States: proposing giving manufacturers new tax breaks, closing loopholes that benefit companies that send manufacturing jobs offshore, expanding worker training programs and increasing trade enforcement, for instance...But what’s so special about manufacturing? Is there really a reason for the White House to champion that certain set of businesses? Why not services? Or another growing sector of the economy, like agriculture? Policy experts have long been divided on these questions. Many economists argue that there’s nothing special about manufacturing, and that Mr. Obama’s proposals are simply an election-year sop...But others say the United States can create, retain and regain higher-end manufacturing jobs. They also argue that manufacturing has potent spillover effects that make it worthwhile for the government to promote."
@ryanavent: Mfg advocacy too often boils down to, "we should behave more like these other countries that are poorer than us".
Robots interlude: An autonomous robot climbs trusses and reconfigures them on the fly.
The debate over contraception coverage is moving to the states, report Lester Feder and Jason Millman: "The contraception fight is expanding far beyond Washington, with several states eyeing ways of blocking the new Obama administration rule requiring most insurers cover contraception, or considering rolling back rules that the states themselves already had on the books. The combination of a hot-button social issue and the calendar for state implementation of the health care reform law’s fine print virtually guarantees the fight will continue for months. Even if the debate subsides in Washington, voters may hear about it in their states for some time to come. In some ways, history seems to be repeating itself. Last year, legislatures in conservative states passed laws to block abortion coverage in the health insurance exchanges created by the health care reform law -- even as those same states resisted creating exchanges in the first place. A similar debate is beginning on birth control coverage."
A controversial Virginia anti-abortion bill was scaled back, report Anita Kumar and Laura Vozzella: "A controversial bill that would require women to get an ultrasound before an abortion is now in doubt after Virginia Gov. Robert F. McDonnell diluted the measure Wednesday by making it optional in many cases. The legislation initially sought to require ultrasounds, which early last week prompted opponents to raise concerns over the procedures’ potentially invasive nature. In many cases, the ultrasounds would require a vaginal probe to establish gestational age. On Wednesday, citing concerns over that intrusiveness, McDonnell (R), an abortion opponent who had repeatedly said he would sign the bill, asked state lawmakers to amend the measure. House members approved the governor’s amendments, but the bill’s Republican sponsor in the Senate said she would try to pull the measure for the session."
A new study provides evidence that colonoscopy prevents deaths, reports Denise Grady: "A new study provides what independent researchers call the best evidence yet that colonoscopy -- perhaps the most unloved cancer screening test -- prevents deaths. Although many people have assumed that colonoscopy must save lives because it is so often recommended, strong evidence has been lacking until now. In patients tracked for as long as 20 years, the death rate from colorectal cancer was cut by 53 percent in those who had the test and whose doctors removed precancerous growths, known as adenomatous polyps, researchers reported on Wednesday in The New England Journal of Medicine...Cancer screening tests have come in for greater scrutiny recently...The new study on colonoscopy has limitations -- it is not a randomized clinical trial -- but some experts say it nonetheless was well done and helps answer questions about the effectiveness of the procedure."
@ModeledBehavior: We're going to look back on this time when talented people in the world wanted to come here & we turned them away as embarrassing & absurd
The Obama administration outlined its principles for online privacy, reports Edward Wyatt: "The Obama administration on Wednesday outlined a set of online privacy principles that officials said would help consumers control the use of their personal data gleaned from Internet searches. The framework for a new privacy code moves electronic commerce closer to a one-click, one-touch process by which users can tell Internet companies whether they want their online activity tracked. Much remains to be done before consumers can click on a button in their Web browser to set their privacy standards. Congress will probably have to write legislation governing the collection and use of personal data, officials said, something that is unlikely to occur this year. And the companies that make browsers -- Google, Microsoft, Apple and others -- will have to agree to the new standards."
Same-sex partners of federal employees could soon have equal benefits, reports Joe Davidson: "Just as social issues are stealing some of the economy’s thunder in the Republican presidential nomination contest, the Obama administration is preparing to finalize regulations that would advance benefits for the same-sex partners of federal employees. The regulations were proposed many months ago, but plans to make them final in this election year could draw distinctions between the approach President Obama and the GOP hopefuls take on social issues in general and those affecting gay men and lesbians in the federal workforce in particular. And faced with a Republican-dominated House, the administration believes it must do what it can through regulation while still advocating related legislation, even when prospects for it are dim in this Congress."
Food trucks shouldn't face extra regulation, writes Matthew Yglesias: "Gourmet food trucks are a business uniquely suited to our times. A global financial crisis has made credit tight for the past several years but left the skills and ingenuity of American workers intact. An obvious response to this: business plans that can be executed with a minimum of up-front capital--a van, not the whole restaurant...The food service industry is generally heavily regulated for safety purposes, and trucks should be no exception to that. And food sales are intimately related to parking, a fraught and much-regulated activity all its own. But a basic rule of thumb seems to suggest itself: The fact that business owners would prefer not to face competition is not a valid regulatory purpose. A food truck is a kitchen and a vehicle and should need to follow the rules that generally apply to both things. But there’s no need for extra regulatory burdens over and above those. If you’re allowed to have a restaurant two blocks away from a school, there’s no reason to ban a food truck."
Shaming teachers is a bad way to improve teaching, writes Bill Gates: "Last week, the New York State Court of Appeals ruled that teachers’ individual performance assessments could be made public. I have no opinion on the ruling as a matter of law, but as a harbinger of education policy in the United States, it is a big mistake. I am a strong proponent of measuring teachers’ effectiveness, and my foundation works with many schools to help make sure that such evaluations improve the overall quality of teaching. But publicly ranking teachers by name will not help them get better at their jobs or improve student learning. On the contrary, it will make it a lot harder to implement teacher evaluation systems that work...Developing a systematic way to help teachers get better is the most powerful idea in education today. The surest way to weaken it is to twist it into a capricious exercise in public shaming. Let’s focus on creating a personnel system that truly helps teachers improve."
Music throughout the ages interlude: Every opening of Beethoven's "Eroica" symphony ever.
American industry isn't to blame for the recent spike in gas prices, reports Tom Fowler: "America is pumping more oil out of the ground than it has in years thanks to a surge in onshore drilling. U.S. refineries are producing more gasoline and diesel than ever. And Americans' gasoline consumption is at an 11-year-low. So with all that supply and not much demand, why have gasoline prices risen high enough this year to resurface as a national political issue? The short answer, experts say, is that the global economy and geopolitics, not the U.S. industry or economy, are driving gasoline prices. The national average price for a gallon of unleaded as of Wednesday was $3.579, some 40 cents more than this time last year, according to AAA, the automobile association. The current price is 53.5 cents shy of the record, and the peak driving months, with their increased demand, are still ahead."
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.