President Obama swung wildly at Mitt Romney’s tax plan during the first debate, claiming it would “cost” about $5 trillion. When Mitt denied that was true, the only counter punch the president came up with was that Mitt was a liar.
For the president to accuse a candidate with whom he disagrees of being a liar is not only undignified but, in this case, hard to prove, particularly since some of the same economists the president used to back up his $5 trillion charge now say that their research is being misused by the president. I guess that means they must be liars, too.
Continue Reading Below
Since the $5 trillion charge has been pounded into the ground, some analysts say it won’t be heard of again. Don’t bet on it. That’s because it’s at the heart of the President’s view of the relationship between the private sector and the government.
In the first place, the idea that a tax-rate cut will “cost” the country something implies that tax cuts take money away from where it really belongs… in the hands of the government. It goes along with the thinking that we all “belong” to the government now.
Mitt Romney believes that more money left in our hands is a good thing. And his across-the-board tax-rate cut allows people to keep more of every dollar they earn. That is an incentive to work harder. And the harder folks work the bigger and better the enterprise for which they work becomes, hiring more people and paying more in taxes.
If you believe the Romney tax plan would “cost” $5 trillion, than the Reagan tax rate cuts, which cut rates much more than what Romney’s proposing, would have ended up “costing” the Treasury more in revenue. But that’s not what happened. In the years following Reagan’s cut of individual tax rates from a high of 70% down to 28%, tax revenue doubled because of the dynamic growth of the economy.
We had seven fat years of explosive growth and innovation once the rate cuts were rolled out in 1983. And the same kind of thing happened after every major tax rate reduction in this country -- in the 1920s, the 1960s, the 1980s, and, yes, even after the Bush tax-rate cuts.
Romney understands this not only because he’s a student of history, but because his view of reality was forged in the private sector. Folks who build businesses understand that the economy is not a machine; it’s a dynamic organism, as alive and emotionally charged as the millions of individuals who form its substance. A change in tax policy or regulation can change behavior, and that has to be factored into policy decisions.
President Obama, on the other hand, had his view of reality forged in political and academic circles. It’s not surprising that few if any of the president’s staff have any real business experience to speak of. They’ve never had to meet a payroll, or work on impossibly difficult tax strategies that waste their time and divert their resources. Right now, thousands of small business owners are losing sleep trying to figure out how they can pay for and administer the new health care law. But President Obama hasn’t got a clue about what they’re going through…not a clue! It’s much easier to write a law than it is to have to live under its gun.
So as you can see, it’s almost a certainty that President Obama will double down on his claims that Romney’s tax plan is what it clearly isn’t. He’s really got nowhere else to go. He will continue to make charges that can’t be backed up because to do otherwise would be to admit that his entire world view is wrong. And even a performance as bad as his last debate will not crack a foundation that thick.