Mitt Romney’s Supply Side Delusions

Republican presidential nominee Mitt Romney is a very smart man and a great businessman, as is clear from Michael Kranish and Scott Helman’s The Real Romney, which I’m reading now.

But politics must addle the brain like Southern Comfort or opium. That’s the only explanation I can think of for his performance last weekend on CBS News’ “Face the Nation” in which he lapsed into the kind of incoherence only huge draughts of ideology or ambition can induce.

Host Bob Schieffer asked Romney about what must have been one of the low lights of the Republican primary season—and that’s saying a lot.

That was the moment when not a single candidate at a GOP debate said he or she would support $10 of spending cuts for every dollar of tax increases in a deficit-reduction bargain with Democrats.

Here’s part of Romney’s answer:

My policies reduce the rate of spending, bring government expenses from 25%…of the economy down to 20% and ignite growth of our economy. That’s the way that we’re going to balance our budget is getting people back to work with rising incomes again. So, we’re going to get bigger tax revenues as a…result of that good news.

Huh? When did cutting spending generate growth? The very opposite is happening in Europe now. And what does any of it have to do with “getting people back to work” or “rising incomes”? And can he really believe that spending cuts will pay for themselves?

Schieffer prodded Romney to specify where he would raise the revenue to eliminate the deficit, as the former Massachusetts governor has said he would do, especially since he wanted to cut taxes and spending.

Romney spoke vaguely about reviewing “all the different deductions and exemptions” and combining lower tax rates with fewer exemptions or deductions for high-end taxpayers.

Former Massachusetts Gov. Mitt Romney on CBS News' "Face the Nation."

Then he said this:

One of the absolute requirements of any tax reform that I have in mind is that people who are at the high end…will still pay the same share of the tax burden they’re paying now. I’m not looking for a tax cut for the very wealthiest. I’m looking to bring tax rates down for everyone, and, also, to make sure that we stimulate growth by doing so and jobs. For me, this is all about creating good jobs.

Actually, Romney’s economic plan does call for a 20% tax cut for the wealthiest Americans and for other taxpayers. He would cut the top marginal tax rate to 28% from 35% and hope to make up the lost revenues through the aforementioned removal of “deductions and exemptions.”

I don’t see how the numbers could come close to adding up. Even conservative commentator Rich Lowry lamented Romney’s “great allergy to specifics and details.” (And President Obama has his own delusions about how the economy works, too.)

The fact is,  supply-side cuts in marginal tax rates haven’t created jobs in 20 years. In fact, as I wrote in my column a couple of weeks ago, the Bush tax cuts may have produced two million jobs at most, a miserable performance compared with the huge job growth following a tax increase under President Clinton.

I’m still waiting for a knowledgeable supply sider to challenge my numbers or logic. But this is not about logic; it’s about faith and passing the many litmus tests of the Republican Party.

I don’t expect cheerleaders like Larry Kudlow to change their tune, but we should demand more from someone who’s running for president on his economic expertise. We need new ideas, not the same stale, discredited old ones.

 

 

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