Romney's "Plan" - Debt

How on earth does Mitt Romney plan to abide by the balanced-budget amendment he claims to support?

Well, by cutting spending, of course! Because it's actually possible to pull off a balanced budget in the United States purely by cutting spending, without causing economic chaos, right? Infrastructure will just fund itself, you know, if at least a plurality of Americans clap their hands a la reviving Tinkerbell.

No, that's not good enough. Obviously, he would have to implement strategies that cut spending, making up the difference by closing unspecified loopholes in our confusing and often-exploited tax code, right? So it's like a balanced approach: trim some fat here, bulk up the revenues on the other side by closing loopholes that individuals and corporations are currently taking advantage of. Like offshore accounts, or revoking one's citizenship.

But wait, there's more:

Romney would keep the Bush-era tax cuts, AND then proceed to cut all marginal income tax rates by 20 percent. Good, sound, balanced budgeting there!

But wait, there's more: Romney would also lower the corporate tax rate and says he wants to eliminate estate taxes.

All this in spite of history, which says that in times of economic stress, taxes should be made more progressive (that means raise them primarily on the wealthy) and demand should be inflated artificially through, yes, debt-financed stimulus.

Although it seems to be impossible to effect a stimulus without making mistakes and/or investing in some programs which fail, the point is to do the best you can to lay a firm foundation for recovery by investing in projects that citizens take for granted in the good times: infrastructure improvements, education, R&D, etc. The Nation's need for various government functions will NOT cease simply because you fire 10% of public sector employees. What happens is that those needs will be filled with far more expensive private contractors.

Thus, stimulus tends to be more effective when a fair portion of it is devoted to wisely expanding public sector job growth (see, for example, the Reagan years). When the recovery begins to pick up steam, you can roll back the stimulative efforts as tax receipts grow, and then begin the process of taking care of the debt issue (see, for example, the Clinton years). In short, strict austerity never works (see much of Europe as well as Wisconsin), mild austerity frequently hurts (see Texas), and we must continue to look to history for its overwhelming refutation of the notion that lower taxes increase job creation.