Mitt Romney’s plan to balance the budget from its $1.1 trillion deficit is a fantasy. The numbers don’t add up even without considering an increase in defense spending, but that increase is an integral part of Romney’s platform.
Romney believes that by cutting tax rates, new jobs will be created. Romney also vowed that the tax cuts would be revenue-neutral because they would be offset by the closing of exemptions, many which keep taxes lower for the middle class and poor. This plan is supposed to close the $1.1 trillion deficit because new jobs will bring in new taxes. While it will generate tax receipts — if the jobs are created — the new tax revenues are just drops in the bucket to ridding the budget of the deficit. That funny math is debunked here.
Romney also promises to cut spending — non-defense spending, that is. Romney’s plan would increase spending by one-third, adding hundreds of billions to the budget. Defense spending is approximately 20% of the budget. Medicare and Social Security are approximately 40%. That leaves only 40% of the budget in other spending and 7% of that is interest on the debt. Outside of defense, interest, Medicare and Social Security, the rest of the federal budget is about $1.1 trillion. It is not possible to eliminate all that spending. That means Medicare and Social Security would have to take a big hit. In addition, there is the extra military spending which will total $2 trillion over ten years. It will force even more spending cuts in the remaining 70% plus of the budget (not including interest and defense spending).
It doesn’t matter how the numbers are added up. They don’t. Romney’s plan is an unworkable proposal in which his words and the numbers never match.
That doesn’t mean Barack Obama’s campaign words are any better. He has repeatedly vowed not to increase taxes on the middle class while bringing down the deficit. The deficit will decline as the economy grows, but it will never balance until there are widespread cuts and a proposal that includes taxing the middle class. The most simple way is eliminating the Bush tax cuts, which will bring the U.S. back to where it was during Clinton. Coincidentally, that was when the budget was balanced and the economy hummed along even with those higher tax rates. However, in the midst of a campaign, that is political suicide to propose.