Mitt Romney will give up just about anything to secure the precious and evanescent allegiance of nonaligned voters.
But I don’t think the country or Washington realizes how much Romney has given up in terms of tax policy and the potentially large implications this carries for upper-income taxpayers.
Mitt “That’s Not My Plan” Romney ran from his original tax plan as if it were a hornets’ nest he just stepped into. Yes, yes: The Romney campaign still defends the concept of a 20 percent across-the-board tax cut (with the “six studies” rhetorical gymnastics). That matters far, far less than the public vows Romney made: that his plan would not cut taxes for the wealthy, raise the deficit, or increase taxes on the middle class.
It doesn’t matter the amount by which Romney intends to reduce marginal tax rates and on whom. It doesn’t matter if he does or does not identify which tax preferences, dodges, and carve-outs he intends to neutralize. At least, none of these details matters as much as Romney’s three-pronged pledge to protect the middle class, keep the deficit in check, and not play tax-policy footsie with the wealthy.
He couldn’t win the presidency by advocating higher taxes on the middle class and lower ones on the rich. An antitax Republican Party and any slop-over centrist Democrats who might vote for a Romney tax-cut bill will never support raising taxes on the middle class, tax cuts for the wealthy, or new, higher (gulp!) deficit spending. Mitt “That’s Not My Plan” Romney sprinted from the sting of his own ideas in the hopes of first winning the White House and then governing.
Here’s why this counts. At no point has Romney advocated the use of any other scorekeeper than the Congressional Budget Office. CBO does not use so-called dynamic scoring, which projects higher revenue from tax-policy changes based on an anticipated boost in economic growth triggered by these policy changes. CBO uses static modeling and would do so for any Romney economic plan.
Romney may want dynamic scoring. He may write sprightly op-ed prose on behalf of dynamic scoring. He may have a chorus of Republicans chant for dynamic scoring. But he can’t have it. Why?
Because the only realistic chance that Romney would have of passing a big tax measure would be through reconciliation—a 51-vote filibuster-proof Senate process that reconciles policy changes contained in House and Senate budget resolutions. (See “Obamacare,” 2010; Bush tax cut, 2001; and Bush tax cut, 2003.) The only official reconciliation scorekeeper is CBO. Even daredevil Felix Baumgartner isn’t fast enough to find a different scorekeeper for Romney. Neither could the Mars rover Curiosity.
With CBO scorekeeping, Romney has to put his marginal tax cuts (as well as his even flimsier promise of eliminating the alternative minimum tax and the estate tax) through the CBO arithmetic mill. He would then have to submit revenue raisers from closed loopholes, preferences, and standard deductions. Without dynamic scoring, Romney must live with numbers that don’t account for economic growth but that do take current revenue receipts and place them alongside projected revenue losses.
That means the more Romney cuts taxes for the middle class—5 percent, 10 percent, 20 percent—the bigger the bite he will have to take out of deductions that favor the wealthy. Romney’s already plunged into some of these choppy tax waters. Within philanthropic circles, anxious note was taken of Romney’s advocacy of a cap on allowable deductions. He floated a $17,000 cap in a radio interview before the first debate and has since spitballed that number to $25,000 or $50,000. The elasticity betrays Romney’s plans. He will settle on what scores and what makes his other tax changes pass CBO muster and fit a reconciliation bill.
If the arithmetic doesn’t add up, or if Romney has to break any of his three pledges (no tax increase on the middle class, no tax cut for the wealthy, no increase in the deficit), he may be president but he won’t have a bill he can pass in Congress. And there’s little point being a president who has pledged to turn around the economy by lowering rates and broadening the tax base if ... you can’t lower tax rates and broaden the tax base.
Romney knows this. That’s why he said it. And that’s why he’s elated that tea party Republicans didn’t cry foul and GOP enthusiasm increased after the first debate. He’s more than happy to watch President Obama and his advisers chase tax-policy specifics down the wonky rabbit hole. Romney’s spoken to his immediate political needs while heeding the messy legislative realities should he actually win. Amazingly, he won immediate GOP buy-in.
Think about it. Romney diminished the scope and ambition of his tax-cut plans—or at least hitched them to an arithmetic process likely to shrink their expansiveness—and made his rabid tax-cutting party love him for it. He might be a politician after all.
This article appears in the Oct. 17, 2012, edition of National Journal Daily.