Romney and Ryan: Higher Military Spending, Lower Taxes — Fiscal Hawks?

Can you be called a “fiscal hawk” or a “deficit hawk” if you are pushing for higher military spending along with a built-in floor that stipulates “core defense spending” must be maintained at 4% of GDP? Can you be called a fiscal or deficit hawk if you advocate for lower, across-the-board tax cuts at a time when the federal government is running trillion-dollar-plus deficits?

Here are a few excerpts from Mitt Romney’s National Defense plan:

He [Romney] will put our Navy on the path to increase its shipbuilding rate from nine per year to approximately fifteen per year.

[H]e [Romney] will fully commit to a robust, multi-layered national ballistic-missile defense system to deter and defend against nuclear attacks on our homeland and our allies.

This will not be a cost-free process. We cannot rebuild our military strength without paying for it. Mitt Romney will begin by reversing Obama-era defense cuts and return to the budget baseline established by Secretary Robert Gates in 2010, with the goal of setting core defense spending—meaning funds devoted to the fundamental military components of personnel, operations and maintenance, procurement, and research and development—at a floor of 4 percent of GDP. –, National Defense

Romney says he will cut wasteful spending and “find efficiencies throughout the Department of Defense budget,” but that doesn’t change the fact that he wants to arbitrarily maintain “core” military spending at 4% of GDP. Military spending is not the same as buying groceries, or a new electronic gadget. Inflation affects everything, but the size and spending level required for our military is dependent on a lot more factors than inflation.

Take a look at the charts in Dylan Matthews’s Wonkblog article (“Defense spending in the U.S., in four charts“). As you can see, military spending has fluctuated through the decades. It doesn’t always have to go up. Matthews says, “Defense spending fell during detente in the 1970s, rose during Reagan’s tenure, fell during the 1990s peace and has grown since the war on terrorism started to a level surpassing that of the Reagan years.” The question is, do we think worldwide threats warrant increasing our military budget after the massive increases over the past decade? Maybe (although I have my doubts), but an arbitrary floor takes the decisions out of the hands of those who know best as conditions change.

This is the entire Romney “plan” for individual taxes:

Reducing and stabilizing federal spending is essential, but breathing life into the present anemic recovery will also require fixing the nation’s tax code to focus on jobs and growth. To repair the nation’s tax code, marginal rates must be brought down to stimulate entrepreneurship, job creation, and investment, while still raising the revenue needed to fund a smaller, smarter, simpler government. The principle of fairness must be preserved in federal tax and spending policy.

Individual Taxes

America’s individual tax code applies relatively high marginal tax rates on a narrow tax base. Those high rates discourage work and entrepreneurship, as well as savings and investment. With 54 percent of private sector workers employed outside of corporations, individual rates also define the incentives for job-creating businesses. Lower marginal tax rates secure for all Americans the economic gains from tax reform.

  • Make permanent, across-the-board 20 percent cut in marginal rates
  • Maintain current tax rates on interest, dividends, and capital gains
  • Eliminate taxes for taxpayers with AGI below $200,000 on interest, dividends, and capital gains
  • Eliminate the Death Tax
  • Repeal the Alternative Minimum Tax (AMT), Tax

That’s not much of a plan is it? And that’s the problem. Romney promises an across-the-board 20 percent cut to marginal tax rates and he says that this cut is paid for by eliminating tax deductions and loopholes. Notice that his plan does not include any detail on which deductions and loopholes would be targeted, and in fact, makes no mention of this at all. This is why an independent study by the Tax Policy Center shows Romney’s tax plan will cost nearly $5 trillion over 10 years. If Romney says he doesn’t have a $5 trillion tax cut plan, it is up to him to prove it. Even if Romney’s tax plan is paid for, does anyone believe lowering tax rates (that are already at historic lows) is a sensible way to tackle the federal deficit?

Also notice the language in Romney’s tax plan. It says the current tax code “applies relatively high marginal tax rates on a narrow tax base.” Relative to what?…Romney’s effective tax rate (13-14%)? The top marginal tax rate is 35%, but hardly anyone pays 35% in federal income taxes due to tax deductions. And don’t overlook the “narrow tax base” part. That’s another way of saying: a lot of people are not paying federal income taxes, or in other words, poor people. Remember, it was Romney who said 47% don’t pay income taxes. He’s not the only Republican to repeat this. It ignores the fact that these individuals still pay payroll tax, state and local taxes, real estate tax, gas tax, etc.

Being a fiscal or deficit hawk should not equate to being a shill for rich people, who stand to benefit most from Romney’s tax cut plan. It should mean making sensible decisions with revenue and spending. A fiscal conservative should be willing to increase revenues to cut the federal deficit, particularly if the alternative is to put greater burden on lower and middle income Americans.

Election 2012Politics

#deficit#deficit hawk#federal budget#federal deficit#fiscal#fiscal conservative#fiscal hawk#military spending#Mitt Romney#Paul Ryan#revenue#spending#tax cuts#taxes