BOTH DEMOCRATS and Republicans are happy about Mitt Romney’s choice for VP — and for the same reason.
Both sides believe that having Paul Ryan on the GOP ticket helps underscore their strongest electoral argument. For Romney and the Republicans, that’s the (supposed) economic imperative to address the yawning budget deficit without any new taxes, plus the need for another round of income tax cuts to kick-start economic growth. For Democrats, Ryan’s no-new-taxes fiscal framework throws into stark relief the deeper cuts such an approach spells for cherished entitlement programs like Medicare and Medicaid (much of which goes for nursing home care for seniors), K-12 education, Pell Grants, Head Start, research funds, and a long list of similar programs. These are things Democrats see as essential both for a basic level of equity and for laying the foundation for future economic growth in a global economy that demands educated workers.
There will be a fierce fight to frame the argument, but Romney and Ryan will have a tougher challenge persuading the relatively small percentage of undecided voters. With Ryan as his running mate, Romney will no longer be able to hide behind strategic ambiguity about his budget and tax cut plans. To date, a lack of key details has made those proposals hard to analyze, which has obviously been intentional. Nor does the Republicans’ presumptive nominee want to be pinned to the details of Ryan’s Medicare plan, which would shift thousands in health care costs onto the backs of future generations of seniors; one of the talking points the campaign distributed to help Republicans discuss Ryan’s selection is that, as president, Romney will have his own Medicare proposal. But absent necessary details about Romney’s proposal, Ryan’s plan will and should stand as a fair campaign proxy.
Second, the reality is that you simply can’t accomplish what Romney and Ryan hope to — that is, a large, new across-the-board tax cut while tackling the long-term federal budget deficit — without hitting both middle-class and moderate earners. A recent analysis by the nonpartisan, well-regarded Tax Policy Center illustrated that very point. It showed that Romney’s vague assertion that he could pay for his new tax cut by closing loopholes and deductions, but without targeting those important to the middle class, was undoable. If Romney hews to his resolution to pay for his tax cut through loophole closings, the elimination of deductions would be so extensive that the average middle class family would see a tax hike, according to the center’s analysis.
In broad conceptual strokes, here’s the difference between the Republican and Democratic approaches. A dozen years ago, the budget was in surplus, and the nation’s long-term fiscal picture looked promising. Then Washington slashed the revenue base through two major rounds of tax cuts, even as policy makers increased spending to fund two wars, a prescription drug benefit for seniors, and other domestic priorities such as increased education spending.
Now, with the baby boomers retiring and increasingly drawing on Medicare, Medicaid, and Social Security, the nation faces a large gap between future spending commitments and future revenues. But though tax cuts helped create the problem, Romney and Ryan insist it must all be solved through spending cuts. That flies in the face of several recent bipartisan deficit commissions, which have said that policy makers should rely on both spending cuts and new revenues.
President Obama, by contrast, wants tax breaks for upper earners to expire, which would mean more revenue, and thus lighter cuts in future spending. Because Obama wants to keeps the tax breaks for families making less than $250,000, substantial spending cuts will still be required, including reductions in entitlements. Obama has left many of those details for the future. But that failing is less egregious than Romney’s. Obama, after all, would recapture $750 billion or more (over 10 years) by ending the Bush tax cuts. And the president isn’t proposing a large new tax cut.
With Ryan aboard the ticket, these fiscal arguments should now move to center stage. And appropriately so. This is a debate that’s both vitally important and long overdue.