The First Debate: Mitt Romney's Five Biggest Lies

Mitt Romney turned in a polished performance in last night's presidential debate – and revealed himself to be an accomplished and unapologetic liar. In an evening where he sought to slice and dice the president with statistics, Romney baldly misrepresented his own policy prescriptions, made up numbers to fit his attacks and buried clear contrasts with the president under a heaping pile of horseshit.

1. "I don't have a $5 trillion tax cut." Romney flatly lied about the cost of his proposal to cut income-tax rates across the board by another 20 percent (undercutting even the low rates of the Bush tax cuts). Independent economists at the Tax Policy Center have shown that the price tag for those cuts is $360 billion in the first year, a cost that extrapolates to $5 trillion over a decade.

2. "I will not reduce the taxes paid by high-income Americans." Romney has claimed that he will pay for his tax cuts by closing a variety of loopholes and deductions. The factual problem? Romney hasn't named a single loophole he's willing to close; worse, there's no way to offset $5 trillion in tax cuts even if you get rid of the entire universe of deductions for the wealthy that Romney has not put off the table (like the carried interest loophole or the 15 percent capital gains rate.) The Tax Policy Center report concludes that Romney's proposal would create a "net tax cut for high-income tax payers and a net tax increase for lower- and or middle-income taxpayers." Moreover, some of Romney's tax cuts are micro-targeted at American dynasties, particularly his proposal to eliminate the estate tax, which would reduce his own sons' tax burden by tens of millions of dollars.

3. "We've got 23 million people out of work or [who have] stopped looking for work in this country." Romney is lying for effect. The nation's crisis of joblessness is bad, but not 23 million bad. The official figure is 12.5 million unemployed. An additional 2.6 million Americans have stopped looking for jobs. How does Romney gin up his eye-popping 23 million figure? He counts more than 8 million wage earners who hold part-time jobs as also being "out of work."

4. Obamacare "puts in place an unelected board that's going to tell people ultimately what kind of treatments they can have." Romney is reviving Sarah Palin's old death panels lie here. Obamacare does establish an Independent Payment Advisory Board to help constrain the growth of Medicare spending. The body has no authority to dictate the practices of the private insurance marketplace. And the law also makes explicit that this body is banned from rationing care or limiting medical benefits to seniors.

5. "Pre-existing conditions are covered under my plan." In the biggest whopper of the night, Romney suggested that his health care proposal would guarantee coverage to Americans with pre-existing conditions. This is just not true. Under Romney, if you have a pre-existing condition and have been unable to obtain insurance coverage or if you have had to drop coverage for more than 90 days because you lost your job or couldn't afford the premiums, you would be shit out of luck. Insurance companies could continue to discriminate and deny you coverage, as even Romney's top adviser conceded after the debate was over.

Each one of those is easily refuted, especially the first $5 trillion one — it’s contradicted by item #2, which discusses the closure of loopholes. The author has a very selective memory in the first two items.

The 23 million refers to unemployed and underemployed. Semantics. And if someone applied the same criteria to Obama’s statements, they’d be screaming “liar liar” too.

This is incredibly weak. If that’s the best these folks can do, they’re in deep trouble. Romney, like all candidates, spun things to his advantage.

IPAB? If IPAB can’t cut services or ration care, how exactly is it going to reduce costs? I mean, think about that for a second. How does it achieve savings and what exactly is it going to do? It obviously isn’t just giving advice to doctors, because that wouldn’t have a Congressional override.

So clearly it’s going to change what is and isn’t covered by Medicare, perhaps indirectly by cutting reimbursements for certain procedures so low that nobody will offer them (”hey, we didn’t ban hip replacements for 80-year-olds, we just reduced the cost, it’s not our fault that no doctor will do them for $2,000 per procedure”).

As I said, this is really weak spin from a bunch of cocooned leftists.

Regarding Point #1 above ( the $5 Trillion tax cut )

Leaving aside that no one’s heard anything from Romney about “5 trillion in tax cuts that favor the wealthy,” Romney’s disavowal of a huge net tax cut is completely consistent.

It’s what he’s been saying since he was forced during a harrowing primary run to come up with the tax plan in the first place. He isn’t proposing to cut Americans’ taxes by $5 trillion dollars — he’s going to cut SOME taxes substantially, but overall, he’s not proposing a massive tax cut, since most would agree that the federal government’s current fiscal situation is such that we can’t afford less revenue.

His plan is, in the main, a cut in tax RATES that will reduce revenues by a number that’s actually a lot lower than $5 trillion, paid for by eliminating tax deductions and broadening the base — so you’re not looking at a trillion-dollar tax cut at all.

This happens to be pretty widely acknowledged good tax policy, since it improves incentives and reduces distortions in the tax code, without blowing a hole in the federal balance sheet.

IMHO, this seems relatively doable, since Romney’s proposed rate cuts amount to about $360 billion a year in 2015 (about $300 billion when dynamically scored), and in that year, tax deductions/expenditures will amount to $1.3 trillion. It seems, then, that even major deductions can be preserved while still paying for the plan.

The debate focuses on a study by Brookings’s Tax Policy Center (TPC) which found, operating under certain assumptions about Romney’s plan, that upper-income taxpayers don’t receive enough in deductions to cancel out the revenue losses from rate cuts. This is basically true, but Romney could violate some other promises if he is committed to maintaining progressivity: For instance, TPC followed his dictum that he won’t touch incentives for investment and savings, and therefore assumed that he wouldn’t eliminate the tax exemption for, say, municipal-bond interest.

That was a fair assumption in their study, but given that such a change could go a long way toward maintaining progressivity (and be good policy that doesn’t affect overall investment incentives, to boot), it’s just one way that Romney might be able to get closer to achieving his goals. That said, given that the U.S. currently faces a trend of unacceptably slow growth and yawning federal budget deficits, it seems that out of pro-growth reform, revenue neutrality, and constant progressivity, policy-wise, Romney’s least important goal is the last of these, but it seems quite unlikely he’ll disavow it.

TPC’s study has also pointed out that practically speaking, it will be difficult to eliminate tax expenditures in a strictly progressive way, as you’d need to do to maintain progressivity, while lowering rates.

One way around this is a hard cap on deductions, as Romney mentioned last night and on the trail recently (throwing around numbers in the range of $15–20,000, the implications of which Josh Barro discusses here). However, if this is the primary venue Romney is going to use for base-broadening and deduction-elimination (rather than eliminating specific deductions), his plan may be more politically palatable, but “revenue neutrality will likely prove an elusive goal.”

You’re still not going to see, however, the phantom “$5 trillion tax cut,” since Romney’s committed to raising revenue to offset it, and he’s said that all along.

And a final point on “$5 trillion”: Even if Romney were proposing only his rate cuts, and estate-tax and AMT elimination, Obama’s favorite new number isn’t really the actual revenue loss.

Here’s how they got to it: The Tax Policy Center, at one point, estimated that cutting every individual income tax bracket by 20 percent would cost $360 billion a year by 2015, and then Romney’s other proposals, relative to current policy (enactment of Obamacare, continuation of all Bush tax cuts) would cost another $96 billion, so the 2015 cost is $456 billion. This was originally $480 billion, before TPC took into account a range of obvious microeconomic incentive effects.

Over ten years, you’re looking at either $4.56 trillion, or $4.8 trillion; Obama decided $5 trillion sounded nicer. But there’s a further important caveat to that: Cuts on earned-income tax rates that are already in the 10 to 35 percent range are never going to come anywhere close to paying for themselves, but there will be DYNAMIC effects.

One reasonable model Brookings used suggests about 15 percent of the value of the cuts will be made up for, so we now end up with $3.9 trillion in revenue losses from all of Romney’s tax-cutting proposals.

And that isn’t really fair, either: Yes, Romney is proposing these cuts relative to current policy, but “current policy” involves some significant Obama tax HIKES in 2013: most prominently, Obamacare’s new surtaxes on investment and wage income by high-income earners.

I wouldn’t exactly call it a tax cut to prevent increases that have been scheduled for next year by the current administration. The CBO estimates that the cost of preventing these tax increases over the next ten years would be $569 billion. Since that number isn’t actually a tax cut, but in fact, the cost of preventing proposed tax increases, you can subtract it from the $4.56 trillion number, end up with $4 trillion, and after allowing for a reasonable amount of dynamic effects, you have $3.4 trillion in cuts. Thus, Obama is also significantly overrating how dramatic a cut Romney’s rate cuts would actually imply.

And the counter to Rolling and Stoned article.

- - - -

Check the Math: Romney's Tax Plan Doesn't Raise Middle Class Tax

12:39 PM, Oct 3, 2012 • By JOHN MCCORMACK

A study by the Tax Policy Center, a project of the center-left Brookings Institution and Urban Institute, claims that Mitt Romney's tax plan is mathematically impossible.

TPC claims that Romney cannot cut tax rates by 20 percent across the board and maintain revenue neutrality without raising the net tax burden on the middle class. According to TPC, in the year 2015 under Romney's tax plan, "maintaining revenue neutrality mathematically necessitates a shift in the tax burden of at least $86 billion away from high-income taxpayers onto lower- and middle-income taxpayers. This is true even under the assumption that the maximum amount of revenue possible is obtained from cutting tax expenditures for high-income households."

So, according to the Tax Policy Center, we start out with an $86 billion hole in Romney's tax plan. But the Tax Policy Center's own calculations show that that $86 billion hole can, in fact, be filled without raising middle class taxes.

TPC's study assumes that pro-growth tax reform cannot produce any economic growth. TPC acknowledges that, according to an economic model created by Harvard professors Greg Mankiw and Matthew Weinzerl that assumes tax reform will produce economic growth, "the tax cuts would result in revenue reductions of $307 billion (instead of $360 billion)." In other words, economic growth could fill $53 billion of that $86 billion hole.

That still leaves us $33 billion short. But TPC also acknowledges that its study assumed that Romney would not touch "the exclusion of interest on state and local bonds and the exclusion of inside-buildup on life insurance vehicles." According to TPC, eliminating these exclusions could raise $45 billion in revenue.

So economic growth ($53 billion) plus nixing these two exclusions ($45 billion) equals $98 billion. That's $12 billion more than the $86 billion needed to prevent a middle class tax hike.

William G. Gale, co-director of the Tax Policy Center and one of the authors of the study on Romney's tax plan, told me this morning that under these two assumptions Romney's tax plan would maintain revenue neutrality without raising middle class taxes. "Under those assumptions and policies it would be revenue neutral," Gale wrote in an email, "but remember the tax expenditures are eliminated from the top down and that is not administratively feasible. So you also have to assume tax expenditures are eliminated in an infeasible manner to avoid the tax increase on households with income below $200,000."

So what the Tax Policy Center is really saying is not that Romney's tax plan is mathematically impossible, but that it's difficult. Whether or not eliminating tax expenditures from the top down is "administratively feasible" is a matter of opinion--not a matter of math.

One final point: As Alex Brill of the American Enterprise Institute writes, TPC wrongly assumes that Romney's tax reform must pay for repealing Obamacare's tax hikes:

The TPC revenue baseline assumption is inflated. TPC assumed that the baseline against which Romney is seeking revenue neutrality includes a 0.9 percent surcharge on “earned” income and an additional 3.8 percent surcharge on “unearned” income of high-income taxpayers that were adopted in the healthcare law. Romney has proposed repealing these taxes, but has not suggested that the cost of repeal would be paid for by tax reform. Instead, the budget effect of repealing these taxes should be analyzed in the context of the repeal of various other healthcare provisions.

Despite TPC’s assertion that adjusting its baseline assumption "does not alter our primary conclusion," the revenue consequence of repealing this tax in 2015 is a full $29 billion, all of which falls on high-income earners. Correcting the baseline by removing this provision means that more of the revenue raised by broadening the tax base on high-income taxpayers can be used to finance tax reductions for the middle class So if we assume (1) that the repeal of Obamacare's tax hikes is more than paid for by repeal of Obamacare's spending and (2) that Romney could nix the exclusion of interest on state and local bonds and the exclusion of inside-buildup on life insurance vehicles, then the $86 billion hole is actually a $12 billion hole. So the boost to economic growth from the Romney plan could be much smaller than what the Mankiw-Weinzerl study indicates it would be, and Romney's plan would still maintain revenue neutrality without raising middle class taxes.
As Alex Brill writes, "if the economy were to grow just 0.1 percentage point faster per year as a result of the reform, the additional revenue in 2015 would be approximately $13 billion. The result: A $12 billion tax increase on the middle class actually becomes a tax cut."
http://www.weeklystandard.com/blogs/check-math-romneys-tax-plan-doesnt-raise-middle-class-taxes_653485.html

Liberals’ definition of “lie” is quite expansive when it comes to Republicans, and not applicable to Obama’s whoppers over the years:
1) So, an “independent” panel found something out and extrapolated to 10 years; that sounds like an opinion, and not a fact, given that calculations are based on assumptions; given that Romney did not talk about which loopholes he’d close (see #2 below - he did mention he’d be open to negotiate which ones with both Republican AND Democrat leaders), it is impossible to say their calculations are based on facts.
2) So Mitt Romney did not specify which loopholes and deductions he’d close. Remind me again what’s the definition of lie?
3) Romney and Republicans call the 23 million numbers the unemployed AND under-employed. Most of the part-time workers would rather have a full-time position, but not enough of those positions are available in the Obama economy.
4) The un-elected Board. It is designed similar to the one in the UK. Sure they do not tell doctors what treatments they are allowed to give, but as Obama says, using the purchasing power of Medicare and Medicaid (big stick), all they have to do is to simply say what’s reimbursable and what’s not. This is similar to the way Obama planned to deal with the coal industry before his election - sure you can build new plants, but you’ll go bankrupt!
5) I don’t know enough about this issue.

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The First Debate: Mitt Romney's Five Biggest Lies

The truth behind that $5 trillion tax cut, pre-existing conditions and more