Friday, October 12, 2012

Catch of the Day

Goes to a definitive Josh Barro post ripping apart the Mitt Romney claim that there are six studies which support Romney's math on the tax plan.

Remember: the TPC study finds that you can't (1) cut tax rates by 20% and include the other tax treatments that Romney is proposing; (2) avoid increasing taxes on middle-income filers; and (3) keep the same revenues by closing the remaining available tax preferences for the rich. It's simply a question of math; the rich don't have enough tax preferences remaining after the ones that Romney specifies to make up what they would get in the rate reduction, even if you took all of it and if you make very generous assumptions about growth effects.

But Team Romney's constant refrain is that the TPC study has been knocked down by not one, but six other studies.

The problem? Those studies don't do what Romney says they do. Barro goes through each one, and just demolishes the argument.

What's important to point out here is that with I think one exception, there's no argument in any of this about what Romney's plan would actually do. It's not that TPC says that repealing X deduction would yield $Y while Romney says that it will actually yield $Z. If that was the argument, I wouldn't be writing about it all the time, because I'm not even remotely qualified to judge between those sorts of questions. In other words, I have to trust others to tell me how much money, for example, would be raised by lowering rates by 20%. But there's no real disagreement about that sort of thing here. Because, for the most part, the "studies" that Romney cites don't actually support his plan.

(The best example is that Martin Feldstein shows that Romney could do it by raising taxes on those making over $100K -- but Romney explicitly rules that out).

There is one bit I'd take slight issue with Barro on. He accepts two criticisms of the TPC study. One I known nothing about, but the other is that TPC counted Romney's repeal of ACA taxes as part of the missing revenue he would have to make up, while Barro accepts an argument from Alex Brill at AEI that it shouldn't count against Romney's tax plan because Romney doesn't intent to offset those revenues. I get that, and I'm not exactly going to say it's wrong...presumably we're talking about two different bills, after all. Nonetheless, it's worth being careful here. After all, Romney could redefine other things as not part of tax reform -- say, repeal of inheritance taxes -- and wind up with a claim that his tax reform bill balances just fine...which would ignore that everything defined as outside the tax plan would explode the deficit. That said, I'm okay with scoring it the was Barro does here, as long as we remember that Romney's program outside tax reform includes a budget-busting ACA repeal, which is probably a bigger deal than the tax plan itself.

And: great catch!


  1. Also on Bloomburg: repealing deductions pays for 4% of tax cuts.

    That's a whole lot of growth Romney's projecting, to make up the difference. Where's the study showing how that's possible?

  2. "budget-busting" is far too strong for ACA repeal. Now that HHS ended CLASS and Congress repealed the goofy provision that would have required businesses to keep paper on minor purchases, the estimated savings from ACA is down to about $150M over 10 years. (The original estimate was about that, but only included 6 full years of ACA fully implemented. The estimate today would be about $225M with those revenue enhancers in.)

    Anyways, point is: repealing ACA would cost (if CBO is correct on their many assumptions) about $15B/year, less than 2% of the current deficit. Whatever the merits of the policy, it wont have much of an effect on the defict either way.

  3. Tweet from Matt O'Brien re his own takedown of Mitt's "6 studies" claim:

    In fewer words, here's why everything @jbarro said about Mitt Romney's tax plan is correct

  4. When Romney won't cite the studies by name, you know something is wrong--he's making it hard to check. If he started having to name the studies, we'd probably find out that they're from the American Enterprise Institute and aren't specific analyses at all. (They're probably the equivalent of scientific papers on intelligent design.)

    1. Read the Barro post. He got a list of the 6 "studies" from the Romney campaign, and systematically goes through each of them to show why they don't actually support Romney's tax plan.


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