On Friday, Mitt Romney took the field at Detroit’s Ford Stadium, intending to regain momentum for his struggling campaign by releasing a bold plan economic plan to get America back to work.
The high-profile policy speech, which was designed to showcase Romney’s economic acumen and reinforce his business credentials, instead turned out to be an embarrassment, as it was delivered to a meager crowd of 1,250 in a stadium that seats 65,000. Row upon row of empty seats in the stadium underscored the lack of public enthusiasm for Romney’s campaign, especially when compared to President Obama’s campaign at this stage of the 2008 election, when Obama repeatedly packed stadiums with 16,000, 18,000 and even 20,000 supporters.
What is even more embarrassing than Romney’s pathetic support in the blue collar state of Michigan, however, is his economic plan. For someone who received an MBA from Harvard Business School and spent years at the prestigious private equity firm Bain Capital, Mr. Romney seems to understand surprisingly little about economics.
Take Romney’s much bragged-about tax plan put forth earlier this week with the title “Restore America’s Promise: More Jobs, Less Debt, Smaller Government.” In his speech on Friday, Mr. Romney summarized his tax proposals in the following manner:
“First, I will make an across-the-board, 20% reduction in marginal individual income tax rates…Second, I will make our business taxation globally competitive. I will reduce the corporate tax rate to 25%…I will make the R&D tax credit permanent so we can encourage the kind of innovation that drives economic growth. And I will end the job-killing repatriation tax, so American companies who do business overseas will bring their profits here and invest at home…Third, I will promote savings and investment by maintaining the 15% rate on capital gains and dividends. I will eliminate the tax entirely for those with annual income below $200,000…Finally, I will repeal the Alternative Minimum Tax, and I will abolish the death tax.”
By my count, that is three major tax rate reductions (the individual income tax rate, the corporate tax rate and the reduction of the capital gains rate to 0% for those earning less than $200,000 a year), the abolishment of three entire taxes (the repatriation tax, Alternative Minimum Tax, and the estate tax), and not a single tax increase. Somehow, Romney comes to the conclusion that “these changes will not add to the deficit.”
Impossible. What Romney claims is simply impossible.
As anyone who has taken an introductory level economics course can tell you, the tax cuts Romney has proposed will reduce government revenues by hundreds of billions of dollars every year. Furthermore, these tax cuts are supposed to be offset by economic growth, spending cuts and tax base broadening measures. “Tax hikes,” he insists, “are off the table.”
While some of the costs of the tax cuts may be offset by a growing economy, if Romney refuses to consider tax raises, the vast majority of the lost revenue will have to be made up from spending cuts. And, as we all know, government spending disproportionately goes towards the working and middle classes, which means that President Romney would offset tax cuts for wealthy corporations and millionaires on the backs of the poorest Americans. As Ezra Klein observes, “When Romney said he ‘wasn’t concerned about the very poor,’ he wasn’t kidding. He’s using the policies they depend on most as a piggy bank for tax cuts.”
Now, Romney’s plan isn’t all bad. He does take the unpopular position of calling for the retirement age to be raised, a change everyone knows we will have to make at some point in the future in order to put Social Security on sounder financial footing in the long run.
But overall, it is hard to overestimate just how unfair Romney’s plan is to the poorest and neediest Americans. The overwhelming majority of the spending cuts Romney has called for will come from capping the rate of growth for Medicaid, the insurance program for the poor, as well as unemployment benefits, food stamps, and other welfare programs.
In the Gospel of Matthew, Christ says to his disciples, “Whatever you did for one of the least of these brothers of mine, you did for me.” What Mitt Romney is proposing is to take away the health care, the food stamps, and the unemployment benefits of the poorest Americans. That is what he wants to do to the least of us. And that is what is truly embarrassing.