In my column for CNN, I talk about my disappointment with Mitt Romney’s most recent economic speech:
Compare and contrast the economic plan Mitt Romney released in September with the speech he delivered Friday in Detroit.
The plan was published as a downloadable e-book, introduced by a former chair of the president’s Council of Economic Advisers, Columbia business school dean Glenn Hubbard. It was the product of heavy research and careful thought. The plan rejected further early tax cuts for high-income individuals, saying instead:
“We need taxes to pay for the operations of government. But they should be collected by a system that is simple and fair, and that causes the least possible disruption to the productive economy.
“While the entire tax code is in dire need of a fundamental overhaul, Mitt Romney believes in holding the line against increases in marginal tax rates. The goals that President Bush pursued in bringing rates down to their current level—to spur economic growth, encourage savings and investment, and help struggling Americans make ends meet—are just as important today as they were a decade ago. Letting them lapse, as President Obama promises to do in 2012, is a step in precisely the wrong direction. If anything, the lower rates established by President Bush should be regarded as a directional marker on the road to more fundamental reform.” (Italics added.)
By contrast, the Detroit speech seems to have been written on the back of an envelope. The only thought that went into it was: How do we rev up the base so that we can win the next primaries?
“First, I will make an across-the-board, 20% reduction in marginal individual income tax rates [tax brackets]. By reducing the tax on the next dollar of income earned by all taxpayers, we will encourage hard work, risk-taking, and productivity by allowing Americans to keep more of what they earn.
“The businesses that pay taxes through the individual income tax system account for more than half of all private sector jobs in the United States. So this tax cut will encourage businesses to hire, raise wages, and grow the economy.”
No effort is made to corroborate these claims for the economic benefits of a further 20% tax cut. Corroboration is not needed in a speech intended narrowly for the pre-convinced.
But wait—won’t such a big tax cut, piled atop the previous commitment to renew the Bush tax cuts when they expire in 2013, greatly add to the deficit? Especially when joined to new promises to permanently abolish the Alternative Minimum Tax and estate tax? How will the federal budget be balanced?