Romney trumpets economic plan as analysts critique GOP proposals

McClatchy NewspapersFebruary 24, 2012 

DETROIT_ Mitt Romney offered a sweeping plan Friday to boost the American economy, a program loaded with previously outlined tax and spending cuts as well as new emphasis on how he’d change future Social Security and Medicare benefits. He pledged repeatedly to reduce federal deficits, but an independent analysis has found that his plan, like those of Rick Santorum and Newt Gingrich, would add trillions to the government's already surging debt over 10 years.

Any serious plan to reduce the debt needs some revenue-raising component, and "on that score, all of these candidates fail," said Alice Rivlin, the former Federal Reserve vice chair and federal budget director who co-chaired a 2010 bipartisan panel that recommended deficit-reduction strategies.

Apart from Texas Rep. Ron Paul, the GOP presidential candidates' plans are largely similar. All want lower taxes, big spending cuts and changes in Social Security and Medicare. Paul alone proposes plans that, if enacted, would reduce the national debt over time.

Romney is promoting himself as a business-turnaround specialist uniquely qualified to ease the nation's economic pain. But he's locked in a tight contest with former Pennsylvania Sen. Santorum as they fight to win Michigan's Tuesday GOP presidential primary.

Romney spent much of his 25-minute talk Friday to the Detroit Economic Club trying to promote the image that he’s the most presidential GOP candidate.

Speaking from the 35-yard line to 1,200 people sitting on the Detroit Lions' football field, Romney insisted that he was the only Republican who could beat President Barack Obama.

"I not only think I have the best chance," he said. "I think I have the only chance."

The Obama campaign quickly fired back. "The lip service Mitt Romney paid to the middle class today was as empty as the stadium he stood in," said press secretary Ben LaBolt. The stadium has 65,000 seats.

Romney, who grew up in the Detroit area, also appealed to local sensibilities. "I like the fact that most of the cars I see are Detroit-made automobiles." He said he drives a Mustang and a Chevy pickup and his wife, Ann, "drives a couple of Cadillacs, actually."

Romney reviewed his proposals to cut income tax rates by 20 percent across the board and to reduce federal spending to 20 percent of gross domestic product, down from the current 24 percent.

He talked a bit more about Social Security and Medicare. He pledged to "slowly raise the retirement age" for future Social Security recipients, but he gave no details, and he promised to "slow the growth in benefits for higher-income retirees."

The Social Security full-benefit retirement age now varies depending on the year of birth. For those born between 1943 and 1954, full benefits are available once they turn 66. The age gradually increases; those born after 1960 will be fully eligible at age 67.

For Medicare, Romney said that he would have the private sector "compete to offer insurance coverage at the lowest possible price."

Starting in 2022, new retirees would participate in the new system. Medicare's eligibility age would increase by one month each year. The current eligibility age for most Medicare recipients is 65.

In the long run, Romney said, eligibility ages for Social Security and Medicare would be tied to longevity "so that they increase only as fast as life expectancy."

Santorum offered his own set of ideas Friday night. Speaking to a half-full Knights of Columbus hall in Lincoln Park, he listed 10 priorities for his first 100 days, including promoting more domestic oil production, reducing burdensome regulations and providing new incentives for m manufacturing.

He also pledged to propose on "day one" legislation to repeal the 2010 federal health care law, and to take steps to balance the federal budget in four years.

Romney's ideas, like those of Santorum and Gingrich, the former speaker of the House of Representatives, would lead to much bigger national debt in the years ahead, according to a nonpartisan budget watchdog group.

U. S. Budget Watch, a project of the respected bipartisan Committee for a Responsible Federal Budget, projects that three of the four Republican candidates' tax and spending plans would add dramatically to the federal debt. Its analysis looked at the plans' impact through 2021, the year a new GOP president's second term would end. It acknowledged that because candidate plans remain imprecise, the projections could change as they get more specific.

Romney's latest blueprint would increase debt $2.6 trillion. Santorum would add $4.5 trillion, while Gingrich would add $7 trillion, the analysis said.

The exception is Texas Rep. Ron Paul, who proposes to cut taxes by more than $5 trillion over the next decade, and to cut spending by more than $7 trillion. His plan would, on balance, trim the debt by $2 trillion by 2021.

The norm ratio of national public debt to U.S. annual gross domestic product is about 40 percent. Current public debt is about 70 percent and is expected to keep climbing under current policies.

Paul's plan would put the level at 76 percent by 2021, the Budget Watch analysis said. But others would raise the ratio: Romney to 96 percent, Gingrich to 114 percent and Santorum to 104 percent.

Romney’s aides say they’ll offset his tax cuts with unspecified spending cuts to avoid increasing the debt, but the independent budget analysts couldn’t calculate such cuts until they’re specified.

"I don't expect Republicans to propose raising taxes," said Rivlin. "But it seems to me one definition of responsibility is … are you proposing to reform the tax system (in a way) that at least doesn't make the situation worse?"

Romney would lower the top income tax rate to 28 percent, down from the current 35 percent. If Bush-era tax cuts are allowed to expire at the end of 2012, the top rate will be 39.6 percent.

Santorum also would seek a top 28 percent rate, and would have only one other rate, of 10 percent. Today there are six tax brackets ranging from 10 percent to 35 percent. Santorum also would triple the exemption for dependent children, now $3,800.

Gingrich would offer an optional flat tax of 15 percent or allow taxpayers to stay with the current system. Paul favors abolishing the Constitution’s 16th Amendment, which created the income tax. Once done, he favors a flat or fair tax, pending shrinking the government so much that the income tax rate is 0 percent.

All four candidates would cut the corporate rate. Santorum would slice the 35 percent top rate in half and eliminate it for manufacturers. Romney would lower it to 25 percent, Gingrich to 12.5 percent and Paul to 15 percent.

Romney would eliminate taxes on capital gains, dividends and interest for families earning less than $200,000. Most capital gains are now taxed at 15 percent. Santorum would lower the tax rate on capital gains and dividends to 12 percent. Gingrich and Paul would eliminate taxes on capital gains and dividends.

All four candidates promise significant federal budget cuts. Romney would ax a long list of domestic programs. Santorum offers a $5 trillion, five-year, across-the-board cut in most non-defense spending.

Paul pushes a $1 trillion cut in his first year. He'd reduce most spending to 2006 levels and eliminate five Cabinet agencies.

Gingrich has proposed a 15 percent optional flat tax with a $12,000 personal deduction. He'd eliminate capital gains taxes and lower the corporate rate to 12.5 percent.

ON THE WEB:

U.S. Budget Watch Analysis of GOP plans

Romney economic plan

Santorum issue positions

Gingrich issue positions

Ron Paul issue positions

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