And what about the charge that Romney’s policies would provide even worse fiscal management with his across-the-board cuts in tax rates and sharply higher spending on national defense?
In fact, the candidate and his aides have become increasingly outspoken in promising that they will never allow their tax changes to bring about a reduction in revenues, while anticipating a sharp increase in the money flow to Washington once the economy resumes normal levels of growth. In Ohio on Sept. 26, Romney told a crowd not to expect any reduction in their overall tax burdens because his lower rates would be combined with sweeping tax simplification and the elimination of loopholes. Ronald Reagan succeeded with the same approach in 1986—dropping the top marginal rate all the way from 50 percent to 28 percent, while seeing revenues increase from 17.3 percent of GDP in ’86 to 18 percent in ’90, when the tax cuts had been fully implemented.
In terms of spending, Romney not only promises a legally mandated spending cap of 20 percent of GDP (which would require massive cuts in most federal programs) but also faces a radically different situation that would make it impossible for him to duplicate the spendthrift excesses of either Obama or Bush. When W. took the helm in 2001, he faced the delightful prospect of a substantial surplus and so pushed hard for increased spending on education and other priorities, even before the big added costs of Iraq, Afghanistan, and the War on Terror.