Quotations and some notes on Mitt Romney's budget proposal

[yllus]

On a long train ride back home, I read all of Mitt Romney's budget proposal, Believe in America: Mitt Romney’s Plan for Jobs and Economic Growth. It was pretty light on details but you could at least get an idea of the direction President Romney would head in. Some key points quoted and commented on below.

Mitt Romney’s Plan: Promote Savings and Investment

Further Reduce Taxes on Savings and Investment

As with the marginal income tax rates, Mitt Romney will seek to make permanent the lower tax rates for investment income put in place by President Bush. Another step in the right direction would be a Middle-Class Tax Savings Plan that would enable most Americans to save more for retirement.

As president, Romney will seek to eliminate taxation on capital gains, dividends, and interest for any taxpayer with an adjusted gross income of under $200,000, helping Americans to prepare for retirement and enjoy the freedom that accompanies financial security. This would encourage more Americans to save and to invest for the long-term, which would in turn free up capital for investment flowing back into the economy and helping to facilitate economic growth.

I recall this graph as being instructive as to how the current U.S. budget woes were arrived at:

I've been doing a fair amount of reading on what makes for the best tax policy for nations - the consensus between economists seems to be a fairly high personal income tax (35% - 55%) and low corporate tax rate (10% - 15%). Mr. Romney's budget proposal actually notes the drop in the corporate tax rate as the behaviour of other nations in the know, but then goes ahead and advocates dropping the personal rate anyways.

Eliminate the Death Tax

The federal estate tax has become a political football in recent years. The tax was temporarily eliminated in 2010, was reinstated in a last-minute deal between Congress and President Obama at a top rate of 35 percent for 2011 and 2012, and is slated to bounce up to 55 percent in 2013. As president, Mitt Romney will work to eliminate the tax permanently. All told, the negative effects on savings, investment, and job creation show how pernicious an estate tax can be. For those reasons, it should be stricken from the books as soon as possible.

Pretty much just a political football at this point; take it as you will.

Mitt Romney’s Plan: Streamlined Regulation

Repeal Obamacare

Mitt Romney has laid out a specific plan for dismantling Obamacare even without the congressional majorities required to strike it formally from the books. On his first day in office, he will issue an executive order paving the way for Obamacare waivers for all 50 states. He will then work with Congress to accomplish full repeal.

Mr. Romney doesn't appear to have done any such thing (that is, give specifics on an alternative) to date.

Mitt Romney’s Plan: Streamlined Regulation

Reform Financial Regulation

As president, Mitt Romney will also seek to repeal Dodd-Frank and replace it with a streamlined regulatory framework. The recent financial crisis exposed serious weaknesses in a regulatory system that was poorly equipped to deal with dynamic and evolving markets. The government’s response was to layer on new regulations and invent new bureaucracies that do not address the underlying causes of a crisis driven by the over-leveraging of our financial institutions and our homeowners. Rather than dealing directly with those issues, the government gave itself an open check book to write ambiguous regulations that have left our businesses and households uncertain of their obligations and uncompetitive in a global marketplace.

Some of the concepts in Dodd-Frank have a place. Greater transparency for inter-bank relationships, enhanced capital requirements, and provisions to address new forms of complex financial transactions are all necessary elements of effective financial reform. But these concepts must be translated into law in a way that creates a simple, predictable, and efficient regulatory system appropriate for our dynamic economy.

While not an Obama-era invention, the Sarbanes-Oxley law passed in the wake of the accounting scandals of the early 2000s should also be modified as part of any financial reform. Many of its requirements were designed for large companies but impose onerous burdens when applied to mid-size firms. The result is that smaller companies are penalized for growing larger, and those attempting to make the leap are discouraged from seeking out the investment capital with which to expand. Romney will seek to amend the law to remove unreasonable burdens on mid-size companies. These companies are a crucial component in the economy’s job-creation engine, and regulation must not place unnecessary obstacles in their path to growth.

This is sort of a joke. I can't imagine an area in which Mr. Romney would be better suited (in contrast to his opponent) to give very specific policy details and really advocate a terrific way to both slim down paperwork for businesses but also protect the public. Instead, you got:

As president, Mitt Romney will also seek to repeal Dodd-Frank and replace it with a streamlined regulatory framework.

Haha. Maybe he's saving it for a debate.

Reform Environmental Regulation

As president, Mitt Romney will eliminate the regulations promulgated in pursuit of the Obama administration’s costly and ineffective anti-carbon agenda. Romney will also press Congress to reform our environmental laws and to ensure that they allow for a proper assessment of their costs. Laws that forbid cost assessment may have had some merit in the era in which they were passed.

But that was a time when the environment was severely contaminated and the United States enjoyed full employment and low energy prices. Today, such laws are a costly anachronism and are in urgent need of reform. Romney will seek to amend the Clean Air and Clean Water Acts to ensure that cost is taken properly into account at every stage in the regulatory process.

In addition, Romney will seek amendments that provide a multi-year lead time between the date when a new regulation is issued and the date by which companies must come into compliance. If there are compelling human health reasons to restrict industrial emissions, regulatory bodies must issue standards that can be achieved over a reasonable period of time, affording industries fair notice and a significant window in which to invest in the development and installation of new technology that would bring their facilities into compliance.

You can either believe that this would be a good thing or a bad thing; who really knows how corporations will respond? Also, lol @ "anti-carbon agenda".

Impose a Regulatory Cap

To force agencies to limit the costs they are imposing on society, and to provide the certainty that businesses crave, a system of regulatory caps is required. As noted, the federal government has estimated that the existing regulatory burden approaches $1.75 trillion. We cannot afford those costs to go any higher.

Yet because the costs are invisible—government agencies do not go through a budgeting process for their regulatory agendas—they simply continue to grow. As president, Mitt Romney will impose a regulatory cap that forces agencies to recognize and limit these costs. In the first term of a Romney administration, the rate at which agencies could impose new regulations would be capped at zero. What this means is that if an agency wishes or is required by law to issue a new regulation, it must go through a budget-like process and identify offsetting cost reductions from the existing regulatory burden.

While not a panacea for the problem of over-regulation, implementation of this conservative principle would go some distance toward halting the relentless growth of the regulatory state.

Interesting idea - I wonder what its real world effects would be, though. If you tend to believe that regulation is mostly enacted because it is very much needed, this is a terrible development. The other side would see it as a major victory.

Fiscal Policy

Enact Entitlement Reform

Any serious attempt to rein in spending will have to include entitlement reform. This issue is among the most complex facing policymakers, but some basic principles guide Mitt Romney’s position. First, we must keep the promises made to our current retirees: their Social Security and Medicare benefits should not be affected. But second, we should ensure that the promises that we make to younger generations are promises we can keep.

With respect to Social Security, there are a number of options that can be pursued to keep the system solvent—from raising the eligibility age to changing the way benefits are indexed to inflation for high-income retirees. One option that should not be on the table is raising the payroll tax or expanding the base of income to which the tax is applied. Similarly, with respect to Medicare, the plan put forward by Congressman Paul Ryan makes important strides in the right direction by keeping the system solvent and introducing market-based dynamics.

As president, Romney’s own plan will differ, but it will share those objectives. Romney will also work to reform and restructure Medicaid. Currently, the federal government writes the states a blank check for the program. Each state decides how much to spend on Medicaid, and Washington reimburses them as much as 80 percent of the cost. It does not take an economist to recognize the problems with having one level of government make the spending decision while another pays the bill. States have every incentive to expand Medicaid spending—at the expense of other state priorities such as education, and with little regard for efficiency—in order to maximize their federal subsidy. And with federal money comes federal strings attached. Washington micromanages decisions as to who and what the states must cover, and forbids states from experimenting with new approaches that might improve care and reduce cost.

The result is a Medicaid system that generates poor health outcomes at enormous expense. As president, Romney will push for the conversion of Medicaid to a block grant administered by the states. This approach could save the federal government over $200 billion each year by the end of the decade, while also providing states with the flexibility to develop innovative and effective approaches best suited to their needs.

This is the only context that health care seems to be mentioned in, other than an earlier mention of repealing Obamacare on his first day in office.

 

[Anarchist420]

He is probably going to do selective regulation. He skillfully worded his proposal.

He will not reduce spending, so no need for fiscal liberals to worry about deficit reduction at all.

Thrid, the vast majority of revenue reduction due to the bush tax cuts was was not due to the decrease in the top marginal rate, nor was it due to the capital gains rate being cut.

Finally, even if the top marginal income tax rate was reduced to 10%, the govt could still get the same amount of revenue as it does now... think about the payroll tax.
I'd rather Romney repeal the payroll taxes completely than see an implementation of his revenue neutral tax plan.

 

[Matt1970]

You are putting too much faith in the economists that have a less accurate track record than weather forcasters.

 

[soulcougher73]

You are putting too much faith in the economists that have a less accurate track record than weather forcasters.

You mean like the 400 economists that back Romney that you conservatives went ape shit over?

 

[a777pilot]

At least Romney has a plan to do more than borrow, tax and then spend twice as much more.

Quick question: What has happened to all of obama's budgets?

 

[Matt1970]

You mean like the 400 economists that back Romney that you conservatives went ape shit over?

I don't see many on the record supporting Obama. But no, I meant the ones that rarely predict any of the recessions we have and the ones that say what it will take to get out of them. A lot of economists are saying we will not see 6% unemployment for 20 years.

 

[a777pilot]

If one were to take all the economists in the world and laid them end to end, you could still never reach a conclusion.

 

[zsdersw]

If one were to take all the economists in the world and laid them end to end ...

They'd be more satisfied than they've ever been before.

 

[a777pilot]

They'd be more satisfied than they've ever been before.

LOL!

I'm sure some would be.

Good one.

 

[First]

I don't see many on the record supporting Obama. But no, I meant the ones that rarely predict any of the recessions we have and the ones that say what it will take to get out of them.

Plenty of economists were saying in early 2008 we were already in recession. In fact, a majority of them were.

A lot of economists are saying we will not see 6% unemployment for 20 years.

Please list in detail which economists are saying we won't reach 6% until 2032.

 

[OneOfTheseDays]

Romney has actually flat out stated he wants to keep specifics out of his budget plans until he is elected so the other side won't criticism them. This guy is so beneath the Presidency it astounds even me sometimes.

Thankfully his tax return snafu will completely crush his chances by itself.

 

[a777pilot]

Romney has actually flat out stated he wants to keep specifics out of his budget plans until he is elected so the other side won't criticism them. This guy is so beneath the Presidency it astounds even me sometimes.

Thankfully his tax return snafu will completely crush his chances by itself.

LOL!

When compared to this current Fool, Bobo the Post Turtle, Romney is a fuck'in genius.

 

[Fern]

-snip-

I've been doing a fair amount of reading on what makes for the best tax policy for nations - the consensus between economists seems to be a fairly high personal income tax (35% - 55%) and low corporate tax rate (10% - 15%). Mr. Romney's budget proposal actually notes the drop in the corporate tax rate as the behaviour of other nations in the know, but then goes ahead and advocates dropping the personal rate anyways.

As a tax professional I find this opinion highly questionable. Every time we've had different rates for corp's and people we've seen a lot of 'tax planing' aimed at exploiting that difference. There is no reason to believe that won't happen again.

Another point I think important: Here in the USA the majority of corporations are pass-through entities (e.g., S-corps) that don't pay income tax. So, their business income will be taxed at the (much) higher personal tax rate. If economists believe, for whatever reasons, that business income should be taxed at low rates I don't see how it makes any sense for all the S-corps etc to pay the higher rate via personal taxes.

The benefit of the lower corp rates will primarily accrue to large international businesses that are set-up as C-corps; I don't see why they should receive an advantage over smaller domestic business.

Fern

 

[hal2kilo]

He is probably going to do selective regulation. He skillfully worded his proposal.

He will not reduce spending, so no need for fiscal liberals to worry about deficit reduction at all.

Thrid, the vast majority of revenue reduction due to the bush tax cuts was was not due to the decrease in the top marginal rate, nor was it due to the capital gains rate being cut.

Finally, even if the top marginal income tax rate was reduced to 10%, the govt could still get the same amount of revenue as it does now... think about the payroll tax.
I'd rather Romney repeal the payroll taxes completely than see an implementation of his revenue neutral tax plan.

No worry. You only pay payroll taxes if you work and earn an income.

 

[Zargon]

Romney has actually flat out stated he wants to keep specifics out of his budget plans until he is elected so the other side won't criticism them. This guy is so beneath the Presidency it astounds even me sometimes.

Thankfully his tax return snafu will completely crush his chances by itself.

sounds alot like how we got obamacare?

 

[Matt1970]

Romney has actually flat out stated he wants to keep specifics out of his budget plans until he is elected so the other side won't criticism them. This guy is so beneath the Presidency it astounds even me sometimes.

Thankfully his tax return snafu will completely crush his chances by itself.

Sounds similiar to "We need to pass the Bill so people can see what's in it"

 

[Jhhnn]

I don't see many on the record supporting Obama. But no, I meant the ones that rarely predict any of the recessions we have and the ones that say what it will take to get out of them. A lot of economists are saying we will not see 6% unemployment for 20 years.

Out in the weeds, as usual.

Economists, at least most worthy of note, overwhelmingly supported Obama over McCain whose policies were the same as Bush & now Romney- more trickle up, more tax cuts at the top, more cornholio for everybody else, particularly those low on the foodchain. They seem to think that a very top heavy economy is somehow stable, the same as it was in 1929.

Of course, if they get what they want, which hasn't really changed at all, we'll have a whole lot more McJobs and a lot fewer people doing decently well. Personal unemployment isn't as big a problem when welfare pays better & has better benefits than the work that's available. Why, you can always borrow the money to go back to school to qualify for other will o' the wisp jobs that will magically appear if rich people just get lower taxes so they can offshore more jobs & more money faster than ever.

It all makes perfect sense, right?

There is a small cohort of economist who predicted bad things, bad things, man, for the housing bubble, but their voices were drowned out by the usual rightwing talking heads, thinktanks, institutes, & from the bully pulpit of the presidency.

None of them can be characterized as Romney fans, at all-

http://investorhome.com/predicted.htm

 

[Matt1970]

Out in the weeds, as usual.

Economists, at least most worthy of note, overwhelmingly supported Obama over McCain whose policies were the same as Bush & now Romney- more trickle up, more tax cuts at the top, more cornholio for everybody else, particularly those low on the foodchain. They seem to think that a very top heavy economy is somehow stable, the same as it was in 1929.

Of course, if they get what they want, which hasn't really changed at all, we'll have a whole lot more McJobs and a lot fewer people doing decently well. Personal unemployment isn't as big a problem when welfare pays better & has better benefits than the work that's available. Why, you can always borrow the money to go back to school to qualify for other will o' the wisp jobs that will magically appear if rich people just get lower taxes so they can offshore more jobs & more money faster than ever.

It all makes perfect sense, right?

There is a small cohort of economist who predicted bad things, bad things, man, for the housing bubble, but their voices were drowned out by the usual rightwing talking heads, thinktanks, institutes, & from the bully pulpit of the presidency.

None of them can be characterized as Romney fans, at all-

http://investorhome.com/predicted.htm

So the Bezemer 12 and a few others mentioned in that article there saw it coming out of 16K or so economist? Nice arguement. There was no mention of republicans drowning them out in that article so your theory is false once again. Care to try again?

 

[Jhhnn]

So the Bezemer 12 and a few others mentioned in that article there saw it coming out of 16K or so economist? Nice arguement. There was no mention of republicans drowning them out in that article so your theory is false once again. Care to try again?

You exhibit the usual short & selective memory so common among Righties.

 

[zsdersw]

LOL!

When compared to this current Fool, Bobo the Post Turtle, Romney is a fuck'in genius.

Not really. Anyone can make proposals when running for office that sound perfect and appear to be just what the doctor ordered. What truly counts is what gets passed into law. 99% of the time what is passed is many orders of magnitude worse than what was proposed, promised, or campaigned on.

It is the result of the disconnect between campaigning and governing.

 

[a777pilot]

Not really. Anyone can make proposals when running for office that sound perfect and appear to be just what the doctor ordered. What truly counts is what gets passed into law. 99% of the time what is passed is many orders of magnitude worse than what was proposed, promised, or campaigned on.

It is the result of the disconnect between campaigning and governing.

No shit! This nation voted for Hope and Change in 2008 and what they got was National Socialism.

6 NOV 2012
Time to take the trash out.

 

[zsdersw]

No shit! This nation voted for Hope and Change in 2008 and what they got was National Socialism.

That's 100% hyperbolic.

The point of my reply, though, is that there is no reason to assume Romney/Ryan will actually do, in a good way, all the sounds-too-good-to-be-true things they're campaigning on.

 

[Slew Foot]

Doesnt matter, hes got zero chance of being elected

 

[yllus]

I think that it's pretty telling that the content (or lack thereof in this case) of Mr. Romney's platform is such that most of the conversation around it is in regards to "can we really trust the experts".

 

[a777pilot]

The point of my reply, though, is that there is no reason to assume Romney/Ryan will actually do, in a good way, all the sounds-too-good-to-be-true things they're campaigning on.

I agree with that statement but I am in favor of giving them, Romney/Ryan, a chance. We have seen what almost four years of amateur government has given us.