Potential presidential candidate Mitt Romney has come out against the tax deal negotiated by President Obama and congressional Republicans in an editorial – “Why tax cut is a bad deal” – in USA Today. The former Massachusetts governor argues that “persistent high unemployment” is inevitable if Congress passes the deal as-is.
Romney doubles down on the uncertainty argument put forward by several conservative critics of the deal: “The future for taxes has been left up in the air. And uncertainty is not a friend of investment, growth, and job creation.”
His argument centers on two main problems that he sees with the deal: It fails to permanently extend the Bush tax cuts, and it omits a payroll tax cut for employers in addition to employees.
“Because the extension is only temporary, a large portion of the investment and job growth that characteristically accompanies low taxes will be lost,” writes Romney, who was the founder of Bain Capital. “With only a two-year extension, investors know that before their returns are realized, tax rates may be jacked up to the levels favored by President Obama.”
Furthermore, “by refusing to lower the cost of hiring a new employee” through reductions to the employer payroll tax, Obama “fails to encourage what the American people want even more than lower taxes – more good jobs.”
In criticizing the extension of unemployment benefits, Romney calls for changes to the unemployment insurance system, citing private unemployment savings accounts as a possible remedy.
Romney also addresses the deal’s “grand” price tag and anticipated impact on the nation’s record deficit – but he differs from Democratic critics in arguing that, “in many cases, lowering taxes can actually increase government revenues.”
The problem, he stresses, is that those cuts are temporary in the proposed plan and spending is not offset.
The “disappointing agreement,” he says, won’t lay the groundwork for “lasting growth”; it will only spur short-term growth through consumption.