One of the reasons the commentariat is so befuddled about Romney’s first debate performance is that everyone (especially Mitt) conflates entirely different things: tax cuts (aka, revenue reduction), tax deductions (aka, tax hikes for the punters who can longer write off their mortgage interest), spending cuts, and revenue increases from accelerating economic growth (aka, “trickle down”.)
Here’s the Mittmaster’s hocus-pocus at work at a key moment early in the debate:
The second area, taxation, we agree, we ought to bring the tax rates down. And I do, both for corporations and for individuals. But in order for us not to lose revenue, have the government run out of money, I also lower deductions and credits and exemptions, so that we keep taking in the same money when you also account for growth. (emphasis added)
So this is how he can say that his $5 trillion tax cut is not a tax cut at all because it is “revenue neutral.” In Mittworld, things both are and are not.
And where does the offsetting revenue come from? Two places: one unspecified (which “deductions, credits and exemptions” beyond PBS?) and thus impossible to ever reach, and the other (from “growth”) purely fantastical. Like Wimpy in Popeye, Mitt wants to pay us on Tuesday for a hamburger he wants to feed the super-rich today. Pay it forward, Mittman!
To disentangle this rat’s nest, I’d suggest that next time Professor Obama practice the Socratic Method:
Obama: Do you not agree, Governor, that when speaking of more than thing, that it is prudent to understand each thing fully in its own turn before going on to another?
Romney: Yes, that seems prudent.
Obama: And would you not further agree that you cannot deny the existence of one thing simply by projecting the existence of an entirely different thing?
Romney: That is self-evident.
Obama: Then, sir, let us first speak solely of tax cuts, irrespective of offsets. Is it not true that tax cuts–considered wholly on their immediate and primary effect– only increase the deficit?
Romney: Yes, I suppose that’s true, strictly speaking, in a reductionist way of looking at things.
Obama: And would you not further agree then that your proposed 20% across-the-board tax cuts would deprive the government $5 trillion over ten years?
Romney: No, because, as I’ve already explained, I’m not in any way calling for a tax cut that will cost the government anywhere near $5 trillion. In fact, my tax cut will pay for itself.
Obama: But that is an impossibility because you cannot generate revenue out of a reduction of revenue, just as you cannot generate water out of a parched desert. The water has to come from some other source. And you specify two sources: “reduced deductions, credits and exemptions,” and the presumed economic growth that will trickle down from the rich, who most benefit from the tax cuts. Since both of these assumptions are not in any way properties of the tax cuts themselves, to speak of them in the same breath as the tax cuts in simply to change the subject, and sneak in a new ace when everyone is looking the other way.