By Eddlem, Thomas R.
The New American , Vol. 28, No. 16
President Barack Obama and presidential hopeful Mitt Romney are in the public eye almost every day, telling Americans about their plans to guide the country should they win the 2012 presidential race. Ironically, given such constant coverage, most Americans would probably be hard pressed to factually state what positions the candidates hold concerning fiscal issues, foreign policy, civil liberties, and social issues, especially to a depth great enough to compare and contrast the candidates or understand the long-term ramifications of their policies. Americans are likely aware that Obama claims to have turned our ailing economy around, while Romney claims Obama is making the economy worse. And they are probably cognizant of the fact that Romney claims that while he was governor, he pushed fiscally sound policies and didn't raise taxes and that he will undo Obama-Care, while Obama claims Romney's policies will lead to the outsourcing of the remainder of America's manufacturing and hi-tech jobs. But are the claims true, and if they are true, are the claims meaningful?
Even with information about the candidates readily available, most Americans simply don't have the time to research the claims and counterclaims that are being made about the men, so information overload literally leads to ignorance.
So we did the homework for you.
Obama's budget plan is pretty simple: increase tax revenues by a third over the next four years and still rack up an annual deficit of $650 billion in 2016. And that's assuming his budget estimates, unlike his past projections, turn out to be accurate. Three years ago, in his first budget, he projected a deficit of $557 billion in 2012. He was off by about a factor of two. The deficit for 2012, the fiscal year ending this September 30, is now estimated to be $1.17 trillion.
Mitt Romney promises "spending cuts of approximately $500 billion per year in 2016 assuming robust economic recovery with 4% annual growth, and reversal of irresponsible Obama-era defense cuts."
But the math on Romney's spending cuts thus far proposed doesn't match his $500 billion campaign promise. Even taking his dubious campaign figures at face value, which include $60 billion in savings by eliminating waste and fraud (a standard promise by politicians that is never realized, at least in part because of the inefficiencies inherent in government bureaucracies), the Romney campaign details less than $320 billion in proposed cuts (see attached chart). And those cuts are based on cutting projected future spending, they are not based on cutting the budget in the absolute sense. Even if all the proposed cuts are made, government spending would still climb, only not as much as currently projected.
Moreover, Romney would radically increase defense spending over Obama's projections with his promise of "reversal of irresponsible Obama-era defense cuts." Romney promises to keep defense spending "at a floor of 4 percent of GDP," which is slightly less than the United States is spending this year ($718 billion) on two wars, but some $203 billion more than Obama's recommendation of $578 billion by 2016.
In short, Romney would re-spend most of his proposed "cuts" on defense and not make any substantial overall cuts in federal spending. Indeed, his campaign promises he would "Set Honest Goals: Cap Spending At 20 Percent Of GDP ... Reduced from 24.3 percent last year; in line with the historical trend between 18 and 20 percent." But with his publicly released cut proposals, Romney would not substantially cut federal spending, and spending would remain at the 24 percent of GDP level into the indefinite future.
Romney does propose some tax cuts that Obama hasn't proposed, and this is the only substantial fiscal difference between the two candidates. While Obama wants to raise the income-tax rates on Americans earning $250,000 or more per year, Romney proposes only tax cuts, including:
* Make a 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)
* 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
While Romney's proposal to cut corporate tax rates may actually bring in more federal revenue, as capital that has fled abroad comes home, many of his other tax-cut proposals, in the absence of offsetting spending cuts, will spike the national debt--resulting in the creation of more money out of thin air to finance the debt, higher interest payments to service the debt, and the further decline of the dollar's purchasing power. …