The Failed Math Of The Romney/Ryan Budget

Now, fair warning before I get started: I’ve not seen this budget that these two have worked out. As far as I can tell, almost no one has. See, the two of them are nearly adamant in refusing to actually tell anyone how their budget would work. In an interview with Fox News, Paul Ryan nearly said that he didn’t have the time to give Chris Wallace the numbers and said, “It would take me too long to go through all of the math.”

Which might be true. It’s an interview. But maybe Ryan and Mitt Romney could supply some of those numbers, considering Ryan is claiming that the budget is “revenue neutral.” Which, from my understanding, means that their budget plan won’t earn America any money, but it will certainly stop America from losing money.

That means, numbers wise, that they have to cut $1.1 trillion (the current deficit, as I recall) from the current budget, or add it to the government’s income. Generally speaking, the government’s income comes from taxes. So, the solution is to cut spending and to raise taxes.

Now, Romney’s been having a bit of a problem on the road of telling anyone what he’s going to actually do in any specifics whatsoever. He’s said, specifically, he’ll cut funding to PBS and NPR. Okay. That’s specific. He’s said he’d slash funding to education. …a bit less specific, but alright. He’s said he’ll close tax loopholes… though, apparently, we have to wait until he’s elected to find out which ones.

“The Daily Show,” my go to source for a collection of clips of candidates and others saying things that don’t seem to add up with one another, had a rather excellent segment on Romney’s odd mathematics, or lack thereof.

See, it’s hard to find the specifics of what Romney wants to give up. We could look at Ryan’s budget, but Romney has said, very firmly, that his budget is different. Things changed. So it wouldn’t really do us much good. There are, however, some specifics on Romney’s website here. With the numbers provided there, it tallies up to a total of:

$219.6 billion slashed from the deficit. With a potential extra $100 billion from “empowering states to innovate.”

That’s a chunk, but it’s not deficit eliminating chunk. So, is he going to do something else?

Well, apparently, Romney is going to cut taxes across the board by 20 percent, and then he’s going to restore the defense budget to pre-Obama spending and increase it by building a lot more boats and three subs a year.

…which is where things start to get wonky for me. See, the way I understand it, if taxes, the federal government’s biggest revenue, go down, then the deficit goes up. For taxes to lower, things have to be slashed en mass to get the deficit lowered. But Romney wants to increase defense spending. All of this seems to almost eliminate the (let’s say) $319.6 billion cut from the budget.

“But it takes time! You can’t eliminate a deficit this big in one night!”

I find that argument intensely ironic, as that’s what supporters of President Barack Obama have been saying for a while now. And he still had to drive through the storm for a couple years before coming out on the other side. Romney would be starting his presidency, if elected, with unemployment rates lower than Obama started with and a stronger stock market than Obama started with. It’d seem that the sluggish removal of the deficit would have almost no excuse.

“If you lower taxes, the economy improves!”

Now, this gets into big economic theories I’m not personally familiar with. However, using logic, I can determine a few things. First, that likely isn’t true as a rule. If lower taxes improved the economy, then why tax at all? There is likely a point after which to lower taxes any more would be detrimental. Second, I feel like if that were a fact, the economy would have been doing nothing but improving since Ronald Reagan. In fact, it should have seen a strong hey day during Bush’s presidency. And it was strong for a while. Then it crashed. Which reminds me of the 1920s in America. The economy was going swell… and then it shattered. Could it be that there were not enough regulations and policies were passed that saw brief economic booms traded in for lengthy depressions?

But whether the economy improves or not isn’t what I’m discussing. I’m talking the federal budget. Simple as that. An improved economy would help, certainly, as it would potentially increase tax revenue, but I don’t think the economy will improve that much during a Romney presidency. It would be slow. Which sounds like his recovery plan.

And that’s the thing. Romney’s specific slashes and changes to the budget (which are, in my opinion, quite irresponsible) would move the deficit down some, while our debt continued to increase. Then he’d put policies in place he thinks will improve the economy (and let’s hope it won’t crash it), which would slowly move the deficit down some more. And if no one touches anything, maybe, in 10, 15, 20 years, the deficit will be gone. Tada!

But that’s not enough. There need to be some harsh realities. Taxes need to be raised. Loopholes need to be closed, particularly for corporations that get to keep their money overseas for free. We need to make it more expensive for companies to give their jobs to other countries, and make sure no corporation goes without paying taxes. The defense budget needs trimming, as does the rest of the budget. If you eliminate charitable donations tax deductions, close off tax deductions and loopholes that tend to only apply to the extremely wealthy and the big corporations, and bring corporations and companies back to the US with their jobs, you might start seeing a flow of money both in the economy and in the government’s pocketbook. THAT is what needs to happen.

Dunno if Romney will do that or not.

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One thought on “The Failed Math Of The Romney/Ryan Budget

  1. mharper says:

    The tax issue also gets into inflation, which the Federal Reserve is “supposed” to deal with, but does so with limited success. If the cost of living goes up, but wages remain the same, then the same tax rate ends up cutting into a bigger portion of one’s disposable income–for example, say you have $40,000 taxable income (which is not the same as making $40,000 a year). If your tax rate is 10%, you owe $4000. But due to inflation, the rest of your income doesn’t go as far.

    The Federal Reserve also sets interest rates. Higher interest rates encourage people to put their money into savings. Lower interest rates do not encourage savings, though they do encourage people to take out loans. But to get a loan, you have to have some kind of collateral or evidence that you will be able to pay back your loan in a timely manner (namely gainful employment). If you don’t have anything in savings, a lender is taking a big risk in extending a line of credit to you, and perhaps will be wary of your ability to ultimately repay the loan.

    So, while low interest rates offer an incentive for individuals to take out loans (to start up businesses, say), the lenders don’t have as much of an incentive to lend, and borrowers tend to have less collateral on the table with which to negotiate.

    I agree that the economy is a thorny issue, and the reluctance to make deep cuts to our defense budget is troubling. (Our continued military presence in the Middle East is troubling as well, but that’s for another time.) But the Federal Reserve is so intertwined with our economy that talking about tax cuts or budget cuts is only one part of the issue.

    As for the “empowering states to innovate” business (getting away from the utter PR bullsh*t), there is an argument to be made that the state and local level is better equipped to deal with issues regarding education, Medicare, and Medicaid. There’s not a one-size-fits-all solution. But we also have to accept that states will have to raise taxes–which they are usually reluctant to do.

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