Why is it so difficult for our leaders to tell the truth?
Politics these days seems to be an exercise of saying as little as possible about specifics so that you don’t give your opponent, who is also not saying anything specific, something they can use to criticize you. Since both campaigns are playing the same game, what we end up with is “fake” statements of truth followed by claims that the other guy really can’t be trusted.
Here’s an example from Romney:
“Our next president is going to face difficult choices. Among these will be the future of Social Security and Medicare. In their current form, these programs will go bankrupt. I know that, you know that, and even our friends in the other party know that. The difference is that I will be honest about strengthening and preserving them, and they won’t.”
He states the obvious regarding difficult choices and specifically difficult choices in entitlement programs, but he doesn’t say what he is going to do about it. He only says that you can’t trust the other guys to do anything about it.
Here’s what Obama has said about Social Security
“it faces real long-term challenges in a country that is growing older… both parties should work together now to strengthen Social Security for future generations. But we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities without slashing benefits for future generations”
It does seem as though he acknowledges that there is a problem, but he doesn’t say how he is going to solve the problem either. He only says that it’s not going to include slashing benefits or putting any of the current people who depend on the system at risk.
Fortunately when it comes to financial plans,we have two budget proposals to compare. The first is the Ryan Budget. The other is the Obama budget. Romney has yet to release a detailed budget, but we can look at some of the things he has said.
First up, the Ryan budget.
The whole purpose of the Ryan budget is to reduce the deficit.
The problem is that it fails at this most basic goal. According to the Tax Policy Center, the tax cuts that are included in the Ryan budget actually add $418B to the budget deficit every year starting in 2015.
Ryan responds that he intends to close the gap between spending and revenue by eliminating some tax deductions, but he does not specify which ones he is going to reduce or eliminate.
This is more political standard procedure. Those who share Ryan’s view that the government wastes money, are quick to agree with Ryan that there MUST be at least $418B in tax deductions that can be cut to make Ryan’s numbers balance. In order to actually reduce the deficit, he’s going to have to find more than that.
When you actually look at the list of existing tax deductions, however, the stark reality comes into view.
The Congressional Research Service took a look at the 20 tax credits, exclusions and deductions that have the biggest impact on tax revenue. Together, they account for 90 percent of the revenue lost through tax deductions in the code.
Here they are:
Let’s just go through these from the top.
Is Ryan going to eliminate the deduction businesses who offer health insurance to their employees are able to take for their cost of providing that insurance? Not likely when Ryan at the same time supports repeal of the healthcare reform bill because in his opinion it weakens the current employer-based system.
How about the next one? Well this one also benefits employers who provide retirement benefits. Unlikely that Ryan, who is attempting to privatize social security and Medicare is going to touch this one either.
The next one is the single most popular deduction in the tax code, mortgage interest. With the home construction industry in the tank, he won’t even mention this one.
How about taxing the benefits that elderly receive through Medicare? He is already treading on thin ice in suggesting changes to Medicare and Social Security. Forcing seniors to pay tax on the $200,000 worth of benefits that they may have received last year would reverse the whole purpose of Medicare and drive seniors into the ranks of the Democrats faster than any other thing the Republicans could do.
Capital Gains? Nope that’s Republican bread and butter there. That is biting the hand that feeds you.
To save any remaining suspense, analysts for the Congressional Research Service drily concluded, “Given the barriers to eliminating or reducing most tax expenditures, it may prove difficult to gain more than $100 billion to $150 billion in additional tax revenues through base broadening.”
And if you were to make all of the changes that might be feasible, the CRS estimates, you could finance “about a one or two percentage point reduction for each (tax) bracket” through reducing or eliminating existing tax deductions.
Just as a reminder, Ryan proposes a 10-percentage-point deduction for the wealthiest of Americans.
So that leaves the basic question, “How are you going to reduce the deficit AND deliver a 10 point reduction in tax rates when tax loopholes will only get you two of those points?”
The bottom line.
It’s not going to happen.
The Ryan budget is a fiction.
It is a stalking horse which allows Republicans to continue to suggest that overly generous social spending is driving up the deficit.
The truth is that any hope of reducing the deficit has to include economic recovery which will produce higher tax revenue. There just aren’t enough people working and paying taxes to support the cost to run the government. Now you can say that the government is too big, but the reality is that regardless of what the size of the government is today, a campaign to dramatically reduce the size of government in the near term is will also drive up unemployment and make the deficit and revenue problems worse.
Right now that government needs to invest in infrastructure. Infrastructure like roads and bridges generates near term employment in the construction industry and long term benefits in terms of business growth. And yes, these infrastructure investment WILL increase the short term deficit, but they are the only reliable way to reduce the deficit over the long term.
Next let’s see what candidate Romney has to say on the subject.