|Remember how Romney wanted to give the states more responsibilities in making decisions about healthcare among other things? What he convieniently left out is that states are in no position whatsoever to do anything and his plan would make the situation worse:
My colleagues Josh Bivens and Andrew Fieldhouse recently released a report finding that Republican presidential nominee Mitt Romney's budget plan would reduce employment by between 550,000 and 1.9 million jobs over the next two years relative to current policy, depending on whether his tax cut is deficit-financed or fully paid for with base-broadening. This job loss is overwhelmingly fueled by his proposal to cap federal spending at 20 percent of GDP.
But the impact of any fiscal plan goes beyond the job impact-after all, a little over 17 percent of non-interest federal spending flows directly to states (e.g., matching funds for Medicaid and unemployment insurance), and with a half trillion dollars in cumulative shortfalls that states have faced in the last few years and another $55 billion in shortfalls faced this year, states would have difficulty handling another blow to their budgets. So how would Romney's proposed spending cap affect state budgets?
To make this calculation, I started with the U.S. Census Bureau's Annual Survey of State Government Finances, which shows total expenditures and federal transfers to state governments, each by state. I then applied the Center on Budget and Policy Priorities' estimate that a 20 percent cap on spending would require a 32 percent across-the-board cut by 2016 to all programs save Social Security, Medicare, and core Department of Defense spending (essentially excluding war costs) to the federal transfers for the estimated cut in transfers by state. I divided the estimated cut by each state's total expenditure and also included the cut as a share of each state's general fund (data from National Association of State Budget Officers) because generally, state budget shortfalls are calculated as a share of the general fund.
What I found is that a majority of states would see federal funding losses equal to at least 9 percent of their total expenditures, which translates into about 20 percent of their general fund (see map below). The darker the state, the higher the fiscal hit. The worst-hit state is Louisiana, which would see a funding loss of 12.3 percent of their total spending. However, as a share of their general funds, Vermont and Michigan fare the worst, with fund loss over 60 percent of their general fund (or 9.2 and 8.8 percent of their total expenditures, respectively).
So what else is Romney not telling anyone? Well the truth of the matter is that Romney's tax cuts for himself and his ilk will not be paid for by economic growth. Not even close:
His campaign states that this new tax cut will be fully paid for with a combination of tax expenditure limitations on high earners, spending cuts, and economic growth. We don't know the details of the tax expenditure limitations, but we do know that the Feldstein proposal-popular in conservative circles-would only cover about 15 percent of the cost of these new tax cuts, and likely less. His spending cuts are already more than offset by his previous tax cuts, so that's out. That leaves economic growth.
Problem is, there's no way his tax cuts can generate enough additional economic growth (and associated revenue) to cover anywhere near 85 percent of these tax cuts' price tag. Even the most favorable studies, with the most favorable assumptions, find that economic growth effects may offset a maximum of 10-20 percent of tax cuts' static cost. Under the George W. Bush administration, the Treasury Department found that the Bush-era tax cuts recouped only 7-10 percent of their cost through macroeconomic effects. The Congressional Budget Office, under noted Republican and supply-sider Douglas Holtz-Eakin, found that the economic impact of a hypothetical across-the-board tax cut could only cover 19 percent at best (more if it were financed by tax increases after 10 years, but Romney's anti-tax pledge rules that out) and -3 percent at worst (in this case, the tax cut would be a net drag on the economy). Most tellingly, Romney's own economic advisor, Greg Mankiw, found that a hypothetical cut to ordinary income rates would offset less than 15 percent of its own cost over 10 years.
And each of those estimates assumes that households have unlimited foresight (likely false) and ignore the long-run impact of budget deficits on the economy by magically assuming that the deficit is stabilized. Estimates using more realistic assumptions often find that permanent, deficit-financed tax cuts skewed to high-income taxpayers actually slow long-run growth.
Yes indeed. Just like everytime trickle-down is attempted all of America, the economy and everyone but those very few that can afford to sit and listen to how worthless Romney thinks the rest of us are suffer.
But of course for Mitt Romney and his ilk the good times simply roll on at the cost of everyone else. Mitt Romney does not give a damn about his country, or any of us within if we come between him and the greed of those he "leads":
The Bush tax cuts-estimated to have added $2.6 trillion to public debt from 2001-2010-boosted the after-tax income of filers by an average of 3.2 percent in 2011, but this average is overwhelmingly driven by the top of the income distribution, according to the Tax Policy Center. While the Obama administration is proposing to roll back these tax cuts for the top two brackets beginning in 2013 (affecting around 2 percent of filers), congressional Republicans are adamant about keeping the cuts in place for those at the top of the income distribution. The graph below illustrates the difference between the administration's desired policy for the top two brackets and the policy supported by most congressional Republicans. For tax units (either an individual or a married couple who file a tax return jointly, along with all dependents included on the tax return) in the top 1 percent of the cash income distribution (income break at $569,944),1 this policy difference means an average cut of almost $25,000 in 2013 alone. For tax units in the top 0.1 percent of the cash income distribution (income break at $2,474,273), this policy difference means an average cut of around $140,000 in 2013.
Keeping the Bush tax cuts in place for the top two brackets is extraordinarily expensive. Furthermore, targeting tax cuts to the highest earners is poor economic stimulus. High-income individuals are less likely to spend extra dollars of disposable income; Moody's Analytics Chief Economist Mark Zandi estimates that making the Bush tax cuts permanent would generate only 35 cents in economic activity for every dollar in forgone revenue. Other targeted credits, meanwhile, could have much higher economic impact.
So you see there is a very good reason why Romney lies and refuses to tell Americans the truth of his plans. He can't. He is a self-serving narcissist that does not care one iota about anyone or anything if he is asked to sacrifice or show any fairness whatsoever towards his fellow Americans.
A debate victory still cannot erase the ugly stain of a selfish liar.