Romney economic plan: necessary but not sufficient
There’s not much I actually dislike about Mitt Romney’s economic plan. I’m even OK with most of the aggressive China trade policy stuff (though probably not the “retaliation if not revaluation” stuff on the currency).
Maybe my biggest problem with what’s in there is that Romney would leave a 10 percentage-point gap between the top marginal income tax rate and the top corporate tax rate, 35 percent to 25 percent.
It’s what’s not in the Romney plan that I have a real problem with. As I read through the 160-page proposal, here are the questions that popped into my noggin:
1. Why not lower the top income tax rate to 25 percent and also clear out many of the tax preferences/breaks/loopholes? Why just hint at broader tax reform? Why not a flat consumption tax?
2. Why not provide a McKinsey-style breakdown on how Romney would achieve four percent annual GDP growth? Adviser Glenn Hubbard comes so close in the foreword that I am pretty certain he’s read this McKinsey report.
3. Why not eliminate all investment taxes along the lines of a tax reform plan outlined by Hubbard in his recent book, “Seeds of Destruction“?
4. OK, Romney would repeal Obama’s healthcare and financial reform plans. Me, too. But what would he replace them with? Again, Hubbard recently wrote a great book on healthcare.
5. And does Romney really think the big problem with Dodd-Frank is that it’s too tough on the banks? Funding statistics should Too Big To Fail still exists. In event of another financial crisis, how would he handle mass insolvency?
6. Nothing about housing. Really? Really?
7. If Romney doesn’t want to go the full Ryan on entitlement, how about at least Ryan-Rivlin?
I guess my core point is that conservative wonks — including his own campaign economists — have been generating loads of interesting tax, entitlement, banking and housing reform ideas over the past few years. But little if any of that stuff is reflected in Romney’s economic plan. Maybe Romney still feels burned by listening to the Heritage Foundation and its support of an individual health insurance mandate.
America faces big short-term and long-term problems. Romney’s economic plan would start to deal with them. Hopefully there will be more to come. But maybe there won’t be. Maybe Romney is following the Chris Christie election model. Make the incumbent the issue and don’t show much of your hand until in office. But I don’t see how that approach creates momentum for substantive change.