Hacker and Pierson present a convincing argument that America’s economic problems are reversible. Obvioulsy that is long-range thinking and highly debatable. What about this moment?
Let’s consider the frameworks for economic growth proposed by the GOP candidates.
There has been, for too long, an uneven playing field in America whose slope has taken the middle class out of capitalism’s economic equation. We have, algebraically and financially, been factored out of the equation. If our economy was played on a pinball machine, bells would be ringing, lights would be flashing, and the board would be alarming us TILT! TILT! TILT!
Forewarned is forearmed.
1. The nonpartisan Committee for a Responsible Federal Budget provides these insights:
Mitt Romney, Newt Gingrich and Rick Santorum tout policies that would push the debt beyond current projections. This would be primarily because their proposed tax cuts outweigh spending cuts. Ron Paul’s plans, alone, would begin to sharply decrease the debt.However at incredibly great cost to the existing social/financial safety net.
The Committee’s report concludes:
Analysis shows how difficult it will be for any president to change the trajectory of the debt. And it underscores the need for bipartisan efforts to increase revenue and curb spending, particularly as an aging population is about to drastically drive up Medicare costs.
Paul Krugman looks at the Committee’s report this way:
The nonpartisan Committee for a Responsible Federal Budget recently published an overview of the budget proposals of the four “major” Republican candidates and, in a separate report, examined the latest Obama budget. I am not, by the way, a big fan of the committee’s general role in our policy discourse; I think it has been pushing premature deficit reduction and diverting attention from the more immediately urgent task of reducing unemployment. But the group is honest and technically competent, so its evaluation provides a very useful reference point. . . proposals of Newt Gingrich, Rick Santorum, and Mitt Romney would all lead to much higher debt a decade from now than the proposals in the 2013 Obama budget. Ron Paul would do better, roughly matching Mr. Obama. But if you look at the details, it turns out that Mr. Paul is assuming trillions of dollars in unspecified and implausible spending cuts. So, in the end, he’s really a spendthrift, too. . .
- 2. The Congressional Budget Office reports:
The need to cut the national debt is not often discussed in the campaign for the Republican presidential nomination. But a recently released report by the bipartisan Congressional Budget Office found that the budget proposals of the three leading candidates for the nomination, Mitt Romney, Rick Santorum and Newt Gingrich, would all actually increase the national debt to higher levels than the 80% of GDP mark by 2021 it is expected to hit under the current policy proposals of President Barack Obama.
Referring to the Republican candidates, the Committee’s leader Alice Rivlin states:
The budget proposals of Mitt Romney, Rick Santorum, Newt Gingrich and even Ron Paul will all increase the national debt over the next decade, not reduce it as they all would have us believe.
Gingrich brags that the federal budget was balanced when he was House speaker. But the budget group said the policies he’s promoting now, including spending on space exploration, would increase the national debt by an additional $7 trillion over the baseline over the next decade to 114% of GDP.
Santorum’s policies would drive up the debt by an additional $4.5 trillion, to 104%
but his cuts to revenue-raising taxes are advocated alongside a severe cutback in popular federal assistance programs that many Americans across the board depend on.
Romney’s proposals would increase public debt to between 85% and 96% of GDP, depending on the level of new revenue his proposals could generate in addition to the new tax policies he announced this week.
The CBO study proves that the fantasy they are selling the Republican voters in their primary race is indeed a false one. The truth is you can’t slash the main government revenue generators – taxes – and expect to have enough – even after you reduce the size of government – to pay down the national debt. The math just doesn’t work.
3. Another nonpartisan group, the Tax Policy Center has analyzed Romney’s tax proposal:
Compared with current policy, the proposal would actually raise taxes on the poorest 20 percent of Americans, while imposing drastic cuts in programs like Medicaid that provide a safety net for the less fortunate.
The richest 1 percent would receive large tax cuts – and the richest 0.1 percent would do far better, with the average member of this elite group paying $1.1 million a year less in taxes than he or she would if the high-end Bush tax cuts are allowed to expire.
4. The Romney plan (from his campaign website):
Reducing and stabilizing federal spending is essential, but breathing life into the present anemic recovery will also require fixing the nation’s tax code to focus on jobs and growth. To repair the nation’s tax code, marginal rates must be brought down to stimulate entrepreneurship, job creation, and investment, while still raising the revenue needed to fund a smaller, smarter, simpler government. The principle of fairness must be preserved in federal tax and spending policy. (I’m not making this stuff up. He actually says that)
Romney: Individual Taxes
- Make permanent, across-the-board 20 percent cut in marginal rates
- Maintain current tax rates on interest, dividends, and capital gains
- Eliminate taxes for taxpayers with AGI below $200,000 on interest, dividends, and capital gains
- Eliminate the Death Tax
- Repeal the Alternative Minimum Tax (AMT)
Romney: Corporate Taxes
- Cut the corporate rate to 25 percent
- Strengthen and make permanent the R&D tax credit
- Switch to a territorial tax system
- Repeal the corporate Alternative Minimum Tax (AMT)
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5. In summary, Krugman tells the story best:
All four Republican presidential candidates still standing are fiscal phonies. They issue apocalyptic warnings about the dangers of government debt and, in the name of deficit reduction, demand savage cuts in programs that protect the middle class and the poor. But then they propose squandering all the money thereby saved – and much, much more – on tax cuts for the rich.
Republicans screaming about the evils of deficits would not, in fact, reduce the deficit – and, in fact, would do the opposite. What, then, would their policies accomplish? The answer is that they would achieve a major redistribution of income away from working-class Americans toward the very, very rich.