In this segment of the debate, Paul Ryan finally comes forward with Mitt Romney’s specifics to balance his tax plan without raising the deficit (it comes up in the last few seconds of the clip).
Did you catch it? If you didn’t, don’t feel bad because all of the news media missed it too. They heard the “So now you’re Jack Kennedy,” zinger, but they missed the substance of what Mr. Ryan was saying right before that. And what he said is extremely – extremely – important.
Let’s go through it. The question posed was: “You have refused to offer specifics on how you would pay for that 20% across the board tax cut. Do you actually have the specifics or are you still working on it and that’s why you won’t tell voters?”
Skipping ahead after Ryan offered no specifics and Biden began his attack:
Biden: The only way you can find 5 trillion dollars in loopholes is cut the mortgage deduction for middle class people, cut the healthcare deduction for middle class people, take away their ability to get a tax break to send their kids to college.
Moderator: Is he wrong about that?
Paul Ryan: He is wrong about that. You can cut tax rates by 20% and still preserve these important preferences for middle class taxpayers…
Biden: Not mathematically possible
Paul Ryan: It is mathematically possible. It’s been done before.
Biden: It’s never been done before.
Paul Ryan: It’s been done a couple of times actually. Jack Kennedy lowered tax rates, increased growth. Ronald Reagan….
Biden: So now you’re Jack Kennedy? (the distractor line)!
Before I launch into some commentary (and I do have a lot to say about this) – let’s call this what it is: their specifics. It is specific. The reason the studies democrats cite are wrong is because they assume too low of a growth number – and don’t take into account the benefits in growth a 20% across the board tax cut would provide. So, there will not be $1 in deduction eliminations and loophole closures for every $1 in tax cuts to balance the budget and not add to the deficit like the studies assume (which would be impossible without taking out significant deductions for the middle class), instead there will be an effective tax cut for everybody. And that effective tax cut will increase growth enough (and thus tax revenue) enough to pay for the tax cut.
There are so many problems with this I don’t know where to start. Number one, my headache caused by trying to follow Mitt Romney’s positions has officially turned to a migraine because he’s been going around saying the exact opposite thing until Paul Ryan spilled the beans. He’s been saying (counter to his position in the primaries, the normal Republican position, and to what his big donors want) that Americans should not expect a substantial tax cut from a Romney-Ryan administration. That goes counter to all of his signs on his podiums that read “Middle Class Tax Relief,” and what Paul Ryan said at the debate. But does anybody actually think the Romney-Ryan ticket is really not going to attempt to cut taxes for high income earners?
So, the actual plan balances the budget by assuming growth. We can make everybody really happy– tax cuts for everybody (especially the wealthy who save a whole bunch more money from a 20% tax cut than the middle class person even if you factor in some high-income only deduction eliminations), not increasing the burden on the middle class (it technically would percentage wise but nobody cares because middle class families would get a small tax break too), and not raising the deficit if we only assume that we live in a magical paradise land where growth is 12% a year or something absurd like that.
This is exactly what President Bush said when he rolled out his tax plan: it’ll be paid for by growth. It’s like magic! In their imaginations, our tax rate is so high we’re all the way at the end of the Laffer Curve even though all of the evidence in the world (exhibit #1 the deficit caused by Bush’s tax cuts) assures us we’re not. Mitt Romney said in the secret videotape that they’ll be a boost to the economy just by virtue of him being elected, “without actually doing anything,” (I still don’t know why Obama hasn’t pounced on that comment). He really believes this magical growth stuff. The problem is – it sounds so good, all you have to do to solve all our problems is get us growing – how do you explain to the American people in 90 seconds why that’s a bunch of pie-in-the-sky nonsense. Whether or not President Obama can figure out how to do that may determine the election.