AT A TIME of record debts and deficits, the two leading Republican presidential candidates are proposing a path on taxes and spending likely to add trillions more. That’s the sobering conclusion of the nonpartisan Committee for a Responsible Federal Budget (CRFB), whose board includes six Republican former lawmakers with expertise in budget issues, three Republican former heads of the Congressional Budget Office, and two former Office of Management and Budget directors under Republican presidents.
Last month, we examined former Massachusetts governor Mitt Romney’s reckless tax plan, which, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center, would drain another $180 billion from the treasury in 2015 alone. The CRFB estimated the 10-year cost of the original Romney tax plan at $1.3 trillion. By the end of the 10-year window, the debt would be a dangerous 86 percent of the gross domestic product.
But last week Mr. Romney upped the tax-cutting ante, promising, in addition to the previous grab bag of tax goodies, a 20 percent across-the-board cut in marginal rates and repeal of the alternative minimum tax. The Tax Policy Center estimated that the 20 percent rate cut would cost about $150 billion in 2015 alone. The Romney campaign said that the rate change wouldn’t add to the deficit because it would generate unspecified economic growth and be accompanied by spending cuts and elimination or cutbacks of deductions. Okay, which ones? On that question, the campaign was decidedly unspecific — understandably so, because its math doesn’t add up. Until he is more specific about what sacred cows he would tackle — employer-sponsored health care? — Mr. Romney’s plan cannot be taken as a fiscally responsible proposal.
Then again, he looks reasonable by comparison with former Pennsylvania senator Rick Santorum, who envisions a tax cut costing an eye-popping $6 trillion over 10 years — above and beyond the $4 trillion cost of extending the George W. Bush tax cuts. Mr. Santorum would flatten the tax code, collapsing today’s six brackets into two: 10 percent and 28 percent. Those in the 10 percent bracket would pay no taxes on capital gains and dividends; those in the 28 percent bracket would pay a 12 percent rate. He would triple the exemption for dependent children and cut the corporate tax rate in half — except for manufacturers, who would pay nothing.
How to do this without blowing a huge hole in the budget? Mr. Santorum outlines some $2.2 trillion in specific policies, such as shifting Medicare to a premium support system, transforming social programs into block grants to states and capping their growth, and cutting other domestic spending. Then he offers up the biggest magic asterisk of all time, cutting another $5 trillion within five years, details not provided. Wisely discounting that gauzy promise, the CRFB projects that under its intermediate scenario Mr. Santorum’s policies would increase deficits by $4.5 trillion through 2021, bringing the debt to a scary 107 percent of the economy.
The campaign debate needs to move from pie-in-the-sky promises. Promising additional tax cuts may win votes, but these proposals are unaffordable and dangerous.