Mitt Romney's Debt Explosion Plan

Writing for CNN, Peter Hamby reports that Team Romney will move to deficit and debt as its theme for this week. Part of that includes a set of talking points on how President Obama has added trillions to the debt, and will add trillions more if he isn’t removed from office. To wit:

President Obama has racked up more than $5.5 trillion in debt over the past four years, putting our national debt above $16 trillion—and in a second term he’ll let it climb to $20 trillion.

He also broke his promise to cut the deficit in half by the end of his first term, instead presiding over four straight trillion-dollar deficits.

Middle-class families are facing a $4,000-a-year tax increase just to service the debt President Obama has already racked up and the new spending he has proposed.

Missing from this, of course, is the fact that Romney has no interest in deficit reduction; if he did, he wouldn’t have a tax plan that cuts rates across the board, lowers taxes on investment, and doesn’t specify new revenue, either from raising taxes or closing loopholes. Under the best-case scenario, Romney’s plan would increase public debt to $30 trillion by 2022—$5 trillion more than if the Bush tax cuts were extended in full, and almost double what we would see under current policies. The ratio of debt to gross domestic product would grow from 60 percent—under current policy—to 90 percent under Romney.

In fairness, Obama wants to extend the Bush cuts for income under $250,000, which would have a significant effect on future deficits. But that pales in comparison to what the Republican nominee has proposed.

Whatever he says about his plan, Romney may not actually intend to lower deficits; in the absence of further fiscal stimulus, deficit-driven tax cuts are an OK way to stimulate demand and generate growth when the economy is sluggish—for every dollar in income tax cuts, you get an estimated 80 cents of additional growth. This is less than the yield from payroll tax cuts ($1.24 for every dollar in cuts) or food stamps ($1.79!), but it's better than nothing. 

The Republican commitment to spending cuts and austerity is an inch deep and a mile wide; when push comes to shove, as we saw in 2010, Republicans will sacrifice deficit reduction for upper-income tax cuts. Despite its reputation for fiscal hawkery, the GOP isn’t particularly interested in reducing federal outlays: Ronald Reagan and George W. Bush were both responsible for huge accumulations of debt. Indeed, the creation myth of the current Republican Party revolves around the 1990 revolt against the deficit0reduction package signed by George H.W. Bush. If he’s elected president, most Republican lawmakers will go along with Romney’s plan: It cuts taxes on the rich, and provides a substantial boost to the economy (which will help Republican political fortunes).

In fact, Romney’s deficit-financed tax cuts are the only thing from his campaign that you could plausibly call a “jobs plan,” and even that depends on the assumption that he won't cut spending; the combination of tax cuts and large spending cuts would harm the economy. His remaining proposals are GOP boilerplate—fewer regulations, more drilling, more trade agreements—that has little bearing on the immediate problem of mass unemployment. Indeed, if there’s one piece of rhetoric that annoys me most in this campaign, it’s Romney’s promise to create “12 million jobs” during his presidency. This sounds impressive, until you realize that it’s the projection for job creation over the next four years, regardless of who takes office. In essence, Romney’s pledge amounts to a promise to move the calendar forward, and take credit for it.

By contrast, the American Jobs Act, introduced by the administration last year, would create 1.9 million additional jobs over the next year and serve as a substantial boost to the economy. But for whatever reason, Team Obama has decided not to campaign on this. The effect of that decision is to allow Romney to position himself as the candidate of growth and “change,” despite the fact that most of his agenda—and all of his promises—are fraudulent.