It’s easy to see why Romney’s budget plan is secret, the author writes. Exposing Mitt's secret federal budget

Older voters will remember Richard Nixon’s secret (and phony) plan to end the Vietnam War in the 1968 campaign. Now, Mitt Romney is trying the same thing with his budget plan. He won’t disclose details, with his advisers arguing that doing so would hurt his campaign. Yes, it would. Because Romney’s budget goals are mathematically impossible to achieve. In reality, he would cause middle income Americans to pay higher taxes, budget deficits to skyrocket, or both. That’s a toxic combination, and voters shouldn’t buy this secret plan for a minute.

In the final presidential debate, Governor Romney claimed that his web site explains how he will balance the budget over eight to ten years despite income tax cuts for every American and huge increases in defense spending. Is it logical that deficits would be completely eliminated through tax cuts and more spending? Or, does this sound like a pig in a poke?


Start with taxes. Romney has campaigned for months on the central idea that, if elected, he would implement a 20 percent income tax cut for every American (reducing the first bracket from 10 percent to 8 percent, and so on). In addition, he would reduce the corporate tax rate by nearly 30 percent and repeal the estate tax, the alternative minimum tax and certain other taxes. It’s quite simple to calculate the amount of federal revenue which would be lost through all of these cuts, and non-partisan institutions have made the calculation. They would cost the federal budget $4.8 trillion over ten years. Let’s just call it $5 trillion.

Now, Romney insists that he would cut tax deductions to offset it. Four of the biggest tax deductions are those for mortgage interest, state and local tax payments, charitable contributions and employer-provided health care. Of course, he will not disclose how far he would have to cut these back to neutralize the budget impact of the $5 trillion tax cut. That’s because only drastic reductions in them would match that sum.

Further, Romney implies that only the wealthy use these deductions so most Americans shouldn’t worry about it. That’s false. The primary beneficiaries are middle income Americans. There are 24 million middle-class families, for example, who benefit from the mortgage interest deduction. And 37 million middle-class families who don’t have to pay taxes on health care coverage through their employer. And, it is these families who would lose under the Romney tax plan.

Let’s make this more specific. Assume Romney abolished every deduction used by families earning over $200,000 per year. Even then, his tax cut for this group is so big that it would more than offset this loss. Indeed, despite losing the deductions, these high earners would be ahead by $86 billion a year or nearly $1 trillion over ten years. By definition, either the middle class would pay this huge amount in additional taxes, or deficits would increase by that size. There is no third scenario.

Then, on spending, Romney starts by proposing a stunning $2 trillion increase in defense spending over ten years. This is remarkable because the Pentagon has not asked for this money, and it makes his balanced budget claims even less plausible. Even if Romney pays for his tax plan, it could only be done with a massive $8 trillion of domestic spending cuts over the next decade. But, Mr. Romney has only detailed cuts that add up to less than one-quarter of these savings, leaving $6 trillion of them to be figured out later.

This is not possible. If Romney eliminated every dollar of domestic discretionary spending over these years, he would not save as much as $6 trillion. In other words, eliminate all federal support for education, research, border security, national parks and the like, and you still don’t save this much. President Obama is already cutting this category of the budget to its lowest levels as a share of the economy in 50 years, making cuts this deep both unrealistic and unwise. Therefore, Romney’s budget equation doesn’t work. That could be why the nonpartisan Committee for a Responsible Federal Budget concluded in March that his plan would produce gigantic budget deficits and a national debt that could reach almost 100 percent of GDP on his watch.

You can see why Romney’s budget plan is secret. It would both raise the tax burden on middle income Americans and cause record budget deficits. He is incorrect that revealing this would hurt his campaign. Actually, it would kill it. Are Americans really going to buy this snake oil? Not too likely.

Roger Altman served as U.S. deputy Treasury secretary from 1993-1994, and is founder and chairman of Evercore Partners.

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