· October 4, 2012

The Day After: There’s Still a $5 Trillion Hole in Romney-Ryan Plan

If you’re tuned in to the ongoing presidential election race, you might have still been scratching your head this morning given Gov. Mitt Romney’s performance in last night’s debate versus President Barack Obama. There’s no confusion over the perceived winner. In our style-first culture, Romney won last night hands down. His answers were sharper, shorter and more pointed than the president’s. He smiled a lot – although that smile was called smug by some, confident by others. Romney looked and sounded great. But, we’re not hiring a Ken doll, we’re deciding on the near term future of the entire country. Romney’s biggest claim last night was to refute Obama’s characterization of his tax plan. Specifically, Obama said:

… Now, in order for us to do it, we do have to close our deficit, and one of the things I’m sure we’ll be discussing tonight is, how do we deal with our tax code, and how do we make sure that we are reducing spending in a responsible way, but also how do we have enough revenue to make those investments? And this is where there’s a difference because Governor Romney’s central economic plan calls for a $5 trillion tax cut …

And Romney answered:

I’d like to clear up the record and go through it piece by piece. First of all, I don’t have a $5 trillion tax cut. I don’t have a tax cut of a scale that you’re talking about.

Whoa. Are we (IO) going to have change our report? Innovation Ohio and the Center for American Progress released a report in September where we analyzed what Romney Economics would mean for Ohio. It demonstrates quite clearly that Romney’s plan to cut taxes – including the wealthy – coupled with his proposals to cut tax benefits for lower and middle income earners would clobber Ohioans. It turns out we don’t have to rework the numbers. The fact-checking has been underway since last night and the Romney-Ryan Plan hasn’t changed. Romney’s centerpiece is still a huge tax rate reduction. From the New York Times this morning:

Mr. Obama and Mr. Romney repeatedly sparred over whether Mr. Romney has proposed a $5 trillion tax cut. It is true that Mr. Romney has proposed “revenue neutral” tax reform, meaning that he would not expand the deficit. However, he has proposed cutting all marginal tax rates by 20 percent — which would in and of itself cut tax revenue by $5 trillion. To make up that revenue, Mr. Romney has said he wants to clear out the underbrush of deductions and loopholes in the tax code. But he has not yet specified how he would do so.

If you’ve watched the two campaigns over the past several weeks and you watched the entire debate last night, you know that the Obama argument boils down to: big tax cut, not paid for, adds to deficit. Romney says he will pay for it, but he doesn’t say specifically from where $5 trillion in cuts or closed loopholes will come. What Romney said last night was astonishing. “First of all, I don’t have a $5 trillion tax cut.” He does. Romney looked straight into the camera and fudged the facts about his plan more than a little. There’s no new Romney Plan rolling out today sans his centerpiece tax cut. As for closing loopholes or cutting other tax breaks, Romney claims he’d close them only for the rich, not listing any by name. But as we show in our report, closing loopholes for the wealthy alone doesn’t raise enough revenue to pay for the tax cut. You need to take a major whack at credits and deductions enjoyed by everyday taxpayers to make up the difference. Our report stands. Style won over substance last night, but Gov. Romney will continue to get questions about the $5 trillion hole in his budget and tax plans. Read: The Real Cost of the Romney-Ryan Plan to Ohioans