Thursday, February 23, 2012

Report: Debt will swell under top GOP hopefuls’ tax plans - The Washington Post

Report: Debt will swell under top GOP hopefuls’ tax plans - The Washington Post

Report: Debt will swell under top GOP hopefuls’ tax plans

    The national debt is likely to balloon under tax policies championed by three of the four major Republican candidates for president, according to an independent analysis of tax and spending proposals so far offered by the candidates.
    The lone exception is Texas Rep. Ron Paul, who would pair a big reduction in tax rates with even bigger cuts in government services, slicing about $2 trillion from future borrowing.

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      According to the report — set for release Thursday by U.S. Budget Watch, a project of the bipartisan Committee for a Responsible Federal Budget — former Pennsylvania senator Rick Santorum and former House speaker Newt Gingrich would do the most damage to the nation’s finances, offering tax and spending policies likely to require trillions of dollars in fresh borrowing.
      Both men have proposed to sharply cut taxes but have not identified spending cuts sufficient to make up for the lost cash, the report said. By 2021, the debt would rise by about $4.5 trillion under Santorum’s policies and by about $7 trillion under those advocated by Gingrich, pushing the portion of the debt held by outside investors to well over 100 percent of the nation’s economy.
      The red ink would gush less heavily under former Massachusetts governor Mitt Romney, the report said — at least under earlier Romney proposals that paired $1.35 trillion in tax cuts with $1.2 trillion in spending reductions and would leave the debt rising on a trajectory that closely tracks current policies.
      But that probably changed Wednesday, when Romney tacked to the right and proposed to cut federal income tax rates by an additional 20 percent for all earners — an idea that could easily slash federal revenues by another $3.5 trillion over the next decade, said Edward Kleinbard, a University of Southern California law professor and former chief tax analyst for Congress.
      In a late-night addendum Wednesday, analysts for U.S. Budget Watch set a slightly lower price for the new tax provisions, suggesting that Romney’s entire budget framework would add about $2.6 trillion to the debt by 2021.
      Only Paul emerged as a fiscal conservative in the report. His policies would cut tax revenues by more than $5 trillion over the next decade, the report said, but the revenue loss would be offset by more than $7 trillion in spending cuts, including deep reductions in defense and federal health programs.
      The report marks the first independent attempt to gauge the overall impact of policies proposed by the GOP candidates on the nation’s $15.4 trillion debt.
      “As we enter the thick of the campaign season, no one can ignore the debt issue,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which works actively to support debt-reduction efforts in Washington. “This report is designed to inform the public on the fiscal policies put forward by each of the Republican candidates and stimulate debate on this crucial topic.”
      The report does not include an analysis of President Obama’s latest budget request, which claims to reduce borrowing by $3 trillion over the next decade. The group plans to do its own analysis of Obama’s request in a future report. The group said it also plans to update the GOP proposals as they evolve and add details.
      The report does not seek to offer support to any candidate, and its authors have gone to great lengths to give everyone the benefit of the doubt. For example, the report offers three scenarios for each candidate: a “low-debt scenario” based on the most generous assumptions about vague changes in policy and a “high-debt scenario” that gives credit only for specific policy proposals.
      The numbers cited above are taken from the report’s “intermediate-debt scenario,” which “gives credit for non-specified changes to certain part of the budget (for example, reducing non-defense discretionary spending by a percentage)” even if the candidate has not identified specific policy changes.

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