‘Dubious Denver Debate Declarations’

05 Oct 2012

‘Dubious Denver Debate Declarations’

Mitt Romney : “You know, in the past, when people pointed out that something was inaccurate, why, campaigns pulled the ad,” Romney said on the radio. “They were embarrassed. Today, they just blast ahead. You know, the various fact checkers look at some of these charges in the Obama ads and they say that they’re wrong, and inaccurate, and yet he just keeps on running them.”
From : http://www.washingtonpost.com/blogs/plum-line/post/romney-campaigns-shouldnt-run-ads-that-fact-checkers-say-are-false/2012/08/09/abe6ca4a-e24c-11e1-a25e-15067bb31849_blog.html
‘Analysis’

‘$5 Trillion Tax Cut’

‘The Tax Policy Center concluded earlier this year that it wasn’t mathematically possible for a plan such as Romney’s to cut rates as he promised without either favoring the wealthy or increasing the federal deficit’.

Romney: “There are six other studies that looked at the study you describe and say it’s completely wrong”.

‘That’s not quite true, as we previously reported when the count was at five. We found that two of those “studies” were blog items by Romney backers, and none was nonpartisan’.

‘The only one of those “studies” by someone not advising Romney was done by Harvey Rosen, a Princeton economics professor who once served as chairman of President George W. Bush’s Council of Economic Advisers’.

‘Rosen concluded that Romney could pull off his tax plan without losing revenue assuming an extra 3 percent “growth effect” to the economy resulting from Romney’s rate cuts’.

‘That’s an extremely aggressive assumption, and in conflict with recent experience. Despite Bush’s large tax cuts in 2001 and 2003, for example, real GDP grew by 3 percent or more for only two of his eight years in office. The average of the year-to-year changes was just over 2 percent’.

‘Furthermore, Bush’s cuts reduced the total tax burden on the economy because they were not offset by base-broadening measures. In theory, at least, Romney’s revenue-neutral rate cuts would have even less of a stimulative effect than Bush’s cuts did’.

_ _ _ _ _ _ _ _

‘The president said Romney was proposing a $5 trillion tax cut and Romney said he wasn’t. The president is off base here — Romney says his rate cuts and tax eliminations would be offset and the deficit wouldn’t increase’.

Obama: “Governor Romney’s central economic plan calls for a $5 trillion tax cut — on top of the extension of the Bush tax cuts”.

Romney: “First of all, I don’t have a $5 trillion tax cut. I don’t have a tax cut of a scale that you’re talking about”.

‘To be clear, Romney has proposed cutting personal federal income tax rates across the board by 20 percent, in addition to extending the tax cuts enacted early in the Bush administration. He also proposes to eliminate the estate tax permanently, repeal the Alternative Minimum Tax, and eliminate taxes on interest, capital gains and dividends for taxpayers making under $200,000 a year in adjusted gross income’.

‘By themselves, those cuts would, according to the nonpartisan Tax Policy Center, lower federal tax liability by “about $480 billion in calendar year 2015” compared with current tax policy, with Bush cuts left in place. The Obama campaign has extrapolated that figure out over 10 years, coming up with a $5 trillion figure over a decade’.

‘However, Romney always has said he planned to offset that massive cut with equally massive reductions in tax preferences to broaden the tax base, thus losing no revenue and not increasing the deficit. So to that extent, the president is incorrect: Romney is not proposing a $5 trillion reduction in taxes’.

The Impossible Plan

‘However, Romney continued to struggle to explain how he could possibly offset such a large loss of revenue without shifting the burden away from upper-income taxpayers, who benefit disproportionately from across-the-board rate cuts and especially from elimination of the estate tax (which falls only on estates exceeding $5.1 million left by any who die this year)’.

‘Except for saying that his plan would bring in the same amount of money “when you account for growth,” Romney offered no new explanation for how he might accomplish all he’s promised. He just repeated those promises in some of the strongest terms yet’.

Romney: “My number one principal is, there will be no tax cut that adds to the deficit. … I will not reduce the taxes paid by high-income Americans. … I will lower taxes on middle-income families”.

‘But he didn’t say how he’d pull off all those things at once’.

‘Six Other Studies’

‘When the president referred to the Tax Policy Center’s criticisms, Romney claimed it was contradicted by several others’.

Romney: “There are six other studies that looked at the study you describe and say it’s completely wrong”.

‘That’s not quite true, as we previously reported when the count was at five. We found that two of those “studies” were blog items by Romney backers, and none was nonpartisan’.

Rosen concluded that Romney could pull off his tax plan without losing revenue assuming an extra 3 percent “growth effect” to the economy resulting from Romney’s rate cuts’. That’s an extremely aggressive assumption, and in conflict with recent experience. Despite Bush’s large tax cuts in 2001 and 2003, for example, real GDP grew by 3 percent or more for only two of his eight years in office. The average of the year-to-year changes was just over 2 percent.