Romney tax plan vs. Bush tax cuts: Why the details matter
At the second presidential debate, a woman in the audience asked Mitt Romney how his economic plan differed from the last Republican president, George W. Bush. The woman who asked the question was worried that Romney would repeat the Bush policies that lead to the meltdown of US banking system and the worst recession since the Great Depression hit in 1929.
It is a legitimate question, since the focal point of the 2012 presidential campaign has been the economy, which candidate will create the most jobs and, more importantly, how he will create them.
How Romney plans to carry out his plan must go beyond campaign trail rhetoric, because the success or failure of any plan is in the details. That's why the truth about the details matter. Words don't create jobs.
Any successful economic plan must address outlying issues in a comprehensive way. As we heard in the second presidential debate, health care, taxes and education are pocketbook issues that affect overall quality of life for millions of Americans.
President Obama strongly supports education programs and job training as one of the many ways to grow the economy outward from the middle class. He also believes that a good education is a clear path to lifting people out of poverty.
Romney takes a completely different approach.
Even with most of the details still missing, Romney is a still a Republican, and there are certain fundamentals tied to his party affiliation that fill in some of those details.
Republicans believe that job growth comes from manipulating regulatory policy and the tax code. They suggest that if the wealthy pay less in taxes, they will use their extra money to expand their businesses, which in turn, is supposed to create more jobs.
The theory is only partly based on Keynesian supply-and-demand economics, which support a certain degree of government involvement to balance the inherent dangers of unrestrained capitalism.
There are historic references to the success and failure of extreme departures from the "tried and true." The most recent example is what happened during the George W. Bush administration.
In response to the 2001 recession, Bush attempted to grow the economy through massive tax cuts, not unlike those that Romney is proposing.
The first round of Bush tax cuts in 2001 included, "a reduction in income taxes, the elimination of the so-called 'marriage penalty,' the end of the estate tax," according to the Bancroft Library. "Congress estimates the total cost of these tax cuts to be at least $1.4 trillion through fiscal year 2011."
Bush took his tax cut policy a step further two years later, with the Economic Growth and Tax Relief Reconciliation Act of 2003 in response to the failure of the previous tax cut to sufficiently revive the economy during the 2001 recession.
Despite two massive tax cuts and the deregulation of the banking industry, the Bush economic policies did not achieve the desired result. Instead, they created an explosion in the deficit and led to a financial meltdown in September of 2008, just as Bush was winding down his second term.
The Romney tax plan is fundamentally the same as the Bush policy. Both plans rely on tax cuts for the wealthy to generate economic growth. So in order for Romney's plan to yield a different result than the Bush plan, there must be some details that differentiate it.
The Romney-Paul Ryan ticket has been reluctant to offer details of their economic plan and there has been vigorous debate over whether the numbers actually add up.
When challenged about his tax plan details at Tuesday's debate with Obama, Romney insisted that his numbers "add up."
A New York Times analysis on Thursday put it this way:
"So does it all add up because he says so? No.
The Tax Policy Center did the math yesterday. Capping deductions at $25,000 would raise $1.3 trillion in tax revenue over 10 years, $3.7 trillion short of what Mr. Romney needs to pay for his tax cut promises. Capping deductions at $17,000 – a level the Romney campaign floated a few weeks ago – would raise $1.7 trillion, a shortfall of $3.3 trillion. Even if Mr. Romney eliminated all itemized deductions, his plan would raise only $2 trillion, a deficit of $3 trillion.
Under any scenario he has sketched so far, Mr. Romney’s proposed tax cut would blow a hole in the deficit. And for what? To preserve and enhance immense tax cuts for the already wealthy."
According to the Congressional Budget Office, if the Bush tax cuts are extended, as in Romney's plan, the national debt will increase dramatically. But Romney wants to expand those tax cuts even more.
Claiming that the tax cuts will be offset by budget cuts does not change the dollar amount of the tax cuts themselves. So when Romney and Ryan dodge questions on their tax plan, saying no one should worry about the details, this is a response that should set off all sorts of alarm bells.
All totaled, the Romney-Ryan plan will cost about $9 trillion over 10 years. If that money is not going to add to the deficit, it has to come from cuts. The only place that gives a hint of where those cuts come from is the Ryan budget, which slashes federal spending so deeply that even Romney admitted in an interview with Time Magazine it would cause a "recession or depression" if enacted.
And much like the Bush economic plan, the Romney proposal does not create jobs, it destroys them.
"Full implementation of the economic plans of Romney-Ryan and the Republican Congress would kill 1.9 million jobs in 2013 and 2014, sinking the economy back into recession," according to the Daily Kos.
Furthermore, "Extreme spending cuts caused by Romney's proposed 20% government spending cap would trigger a shock wave of job losses starting in Washington then moving out into the U.S. private sector. Because the United States is the world's largest consumer of global products and the European Union is struggling to contain its debt crisis, implementation of the Romney-Ryan plan could start a deflationary spiral and global economic panic."
There are enough questions surrounding the Romney-Ryan economic plan to be worried. Why hide the details if there is nothing in them for voters to fear?
If you like writing about US politics and Campaign 2012, enter "The American Pundit" competition. Allvoices is awarding four $250 prizes each month between now and November. These monthly winners earn eligibility for the $5,000 grand prize, to be awarded after the November election.