The 2012 election was supposed to be a choice between two fundamentally different visions for the country’s future. With mounting national debt and trillion dollar deficits, the debate over the size and scope of government took on added importance. Mitt Romney, the Republican nominee, has portrayed President Barack Obama as a free-spending liberal unwilling to make harsh cuts to entitlements and under whom deficits have ballooned. Obama, meanwhile, has fought back by claiming that Romney’s plan would do nothing to reduce deficits besides enforcing draconian cuts to critical government programs and entitlements, all while protecting defense spending and cutting taxes for the wealthy even further. The reality is that both sides are right about the other but wrong about themselves.
Of the two, Mitt Romney has been more recalcitrant in his ideas, although whether that is simply a result of having to survive through a tough primary battle remains to be seen. He has repeatedly called for the restoration of the cuts to defense spending under the so called “sequester” provision of the debt ceiling deal reached last year. More famously, he joined with other Republicans in rejecting the hypothetical “ten-to-one” deal proposed in one of the primary debates, in which each dollar of tax increases would be matched with $10 of spending cuts. By selecting Wisconsin Representative Paul Ryan as his running mate and adopting certain elements of his budget proposal into his own plan (now called the Romney-Ryan Plan), Romney has further committed to $5 trillion of tax cuts with a 20% rate cut across the board. How he would pay for this remains nebulous, although he has recently floated the idea of capping total tax deductions at a certain level. The fact of the matter remains that any tax savings he finds will be used to pay for the tax cuts, and thus not for deficit reduction. Under the Ryan Plan, in fact, the budget is not projected to be balanced until 2040, and even then, only with massive cuts to government spending and drastic changes to Medicare and other entitlements.
Obama, meanwhile, has been similarly unrealistic in his proposals (although once again, it remains to be seen how much is a result of election-year posturing). The biggest driver of budget deficits is entitlement spending, an area that Obama largely shields while marginally cutting around the edges. Ironically, the reductions in Medicare spending that he has proposed – $718 billion under the Affordable Care Act – have been used as political fodder by Romney. Moreover, Obama has promised to preserve Bush-era tax cuts for everyone but those making over $250,000 a year, a move that is a good first step but brings in a mere $1 trillion in revenue over 10 years. For comparison, the deficit in fiscal year 2011 was $1.3 trillion. Nevertheless, Obama has made an effort to work across the aisle on a plan for deficit reduction. Last summer, at the peak of the debt ceiling crisis, Obama and Republican Speaker of the House John Boehner were close to a $4 trillion “grand bargain” of spending cuts and revenue increases before negotiations ultimately fell apart.
Neither Obama nor Romney seem capable, or willing, to put forth serious proposals that will effectively reduce the deficit. Both are welded to the idea of tax cuts – Romney for all, Obama for all but the top earners. The Bush tax cuts, remember, were supposed to be temporary, and the higher Clinton-era tax rates presided over an era of economic prosperity. Neither Obama nor Romney seem truly willing or capable to enact entitlement reform either, as evidenced by Obama’s lack of meaningful proposals to address entitlements and Romney’s attacks on the few Obama cuts to Medicare. Sure, some of this may be election-year rhetoric, and both candidates may actually have serious policy proposals to reduce the deficit after they reach the Oval Office (or, in Obama’s case, secured his stay), but they haven’t shown it so far. Besides, isn’t that what elections are for?