Thursday, October 04, 2012

A thought on Romney's proposed policies.

Last night in the first presidential debate, as close as I can figure out, Mitt Romney said:

  1. He would work with the Congress to reduce the top tax rate to 20 percent across the board.
  2. He would work with the Congress to close enough loopholes to balance out the rate cut but he will not specify now what loopholes he wants to close
  3. He thinks that his overall program will stimulate sufficient economic growth over that which would be achieved with the current recovery program to markedly increase tax income and close any gap created between the revenue lost to rate cuts and that gained by closing loopholes.
  4. He would not sign the changes in the tax code into law unless he could achieve the first three conditions.
Romney has also promised to shrink the debt and to increase defense spending. 

I don't see how this will work. As President Obama pointed out last night, if Romney were to try to repeal Obamacare as the first step in his program, he would find the Democratics in Congress in strong and vocal opposition. Moreover:
  1. With no added tax income and a massive increase in defense spending the government would have to make massive cuts elsewhere. It can not cut payment on the debt. The Congress would never go along with the massive cuts in entitlements that would be required.
  2. The Congress itself put those loopholes into the tax code. In some cases it has done so for public policy reasons that are supported by large majorities of the population. In other cases they have been the result of lobbying by special interests, the special interests that Congressmen depend upon for campaign financing. Most experts don't think he could convince the Congress to close enough loopholes to produce nearly enough tax income to both lower rates and keep total tax income the same. I agree that in the huge job of revising the tax code, the lobbyists would win.
  3. So either Romney would be faced by not keeping his promise to keep total tax revenue, or not keeping his promise to reduce the debt, or not keeping his promise to increase defense spending, or not keeping his promise to reduce top tax rates to 20 percent. Of course he might find that he would need to break several or all of these campaign promises.
There are a number of problems with his proposed increase in military spending. 
  1. The Department of Defense has not asked for it.
  2. Having ended the war in Iraq and ending the war in Afghanistan by the end of 2014, that increase is not needed.
  3. Since the United States currently spends more on its military than the next 17 nations combined, that increase is not warranted.
  4. As President Eisenhower warned, the ever larger military-industrial complex is dangerous itself. I would fear that the increase in military spending would encourage inappropriate military interventions abroad. 

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