Unfortunately for the government, taxes are extremely unpopular. Especially among those whom said taxes least benefit: the extremely wealthy and corporations.
This ever-relevant fact is the heart of Mitt Romney’s campaign platform, and his raison d’etre on the Republican ticket. His tax-slashing budget outline offers up an economic plan that tries to be as little of one as possible.
WHAT’S THE BIG IDEAUnfortunately for the government, taxes are extremely unpopular. Especially among those whom said taxes least benefit: the extremely wealthy and corporations.
This ever-relevant fact is the heart of Mitt Romney’s campaign platform, and his raison d’etre on the Republican ticket. His tax-slashing budget outline offers up an economic plan that tries to be as little of one as possible.
At its core is the call to get rid of those little adored things called taxes.
To begin, Romney wants to lower the corporate tax rate, a move that would increase revenue for corporations. This supply-side idea is based on the theory that such a move would increase corporate investment, thereby (hopefully) creating jobs.
Romney also wants to indefinitely extend the Bush-era tax cuts for those making over $250,000 per year. Obama temporarily extended these cuts in 2010 as part of a two-year compromise deal on a larger economic bill. They are set to expire Dec. 31.
The Congressional Budget Office estimates that indefinitely extending the Bush tax cuts would result in 3.3 trillion added to the national debt between 2011–20 because of the loss of government revenue.
In order to pay for these tax cuts, the government would immediately be forced to cut its spending.
This is the second part of Romney’s economic plan, and the part that has drawn the most fire from critics far and wide, who have christened it with names like “the fantasy budget.”
Romney has made it clear that he wants to exempt Social Security and defense from any spending cuts. Two large categories remain—amounting to 60 percent of the annual budget—that would bear the totality of the slashing.
One category is entitlement programs, like Medicare and Medicaid, and the other is “discretionary spending.”
Discretionary spending is money earmarked annually by Congress to go toward a specific purpose. This money can fund anything and everything—from a bridge to nowhere, to clean energy initiatives, to state programs for education, to food stamps and unemployment. It encompasses anything that the government is not legally obligated to pay for. In essence, anything “extra.”
Central to Romney’s budget slashing plan is his proposal to cap federal spending at a maximum of 20 percent of gross domestic product. This comes before tax cuts are figured into the equation, and just to achieve this percentage the budget will have to immediately shrink drastically. (The current annual budget amounts to 24 percent of the annual GDP.)
In order to reach Romney’s proposed budget levels, Medicare, Medicaid and all discretionary programs will suffer drastic cuts.
It is estimated that, just to achieve Romney’s 20 percent mark, nonexempted programs would have to be cut by 22 percent in 2016 and 34 percent in 2022.
This doesn’t factor in the Bush cuts and other cuts that Romney has proposed, which will burn just as many holes in the budget to account for loss of revenue.
Since discretionary spending can refer to anything, the programs most likely to be cut in a Romney administration are those he has expressed disdain for in his campaign as being “extras.”
These include programs for the unemployed and incentives for investment in clean energy, among other social programs.
And, last but not least, Romney wants to repeal Obama’s healthcare act.
The CBO estimates that, if passed, a bill repealing this act would reduce government revenues by $1 trillion between 2013–22, thereby adding “$109 billion to federal budget deficits over that period.”
If that is the case, Romney will have even more slashing to do.
