|“We don’t need to cut entitlements; we need to reform them. I’m interested in what that vision looks like.” said Douglas Holtz-Eakn, talking about the GOP candidates’ proposals.|
Clashing GOP fiscal visions take stage
N.H. debate could shed light on rivals’ priorities
WASHINGTON — Republicans who have been bashing President Obama’s handling of the economy as they seek to oust him from the White House will get a big chance to showcase their own ideas for leading a financial recovery when they face off tonight in New Hampshire for the first major debate of the GOP primary season.
The thrust of their fiscal proposals won’t necessarily surprise the New Hampshire and national viewers who tune into the CNN forum at 8 p.m.: Cut taxes, cut spending — standard Republican doctrine. But the candidates will probably differ significantly in approach, level of detail they provide, and emphasis.
Former Minnesota governor Tim Pawlenty is making the most comprehensive pitch to the party’s fiscal conservatives with a detailed economic austerity and tax-reduction plan that would force dramatic government cuts. But while making a play for fiscal hawks, he also has risked the ire of seniors by saying he would support a partial privatization of the nation’s Medicare health insurance program for the elderly.
Mitt Romney, the former Massachusetts governor who has a big lead over the six rivals who will appear with him tonight on the Manchester stage, has been much less specific than Pawlenty. But what he has said thus far indicates that he would not cut taxes as deeply. And he has not said how he would deal with the skyrocketing costs of Medicare and other entitlement programs.
A Globe poll published yesterday showed that the economy, unemployment, and government spending are foremost on the minds of New Hampshire voters. The survey found that 85 percent of likely New Hampshire GOP primary voters surveyed said the deficit is a major problem that must be addressed immediately.
The poll also found that just 47 percent of the GOP voters blame Democrats for the weak economy, and analysts say GOP candidates will have to do more tonight than simply criticize President Obama on economic grounds.
“I’m more interested in the ability of these folks to provide a compelling vision for economic growth and prosperity, upward mobility, and the role of government in that,’’ said Douglas Holtz-Eakin, a former director of the Congressional Budget Office who was chief economic adviser to Senator John McCain’s 2008 presidential campaign. “We don’t need to cut entitlements; we need to reform them. I’m interested in what that vision looks like.’’
The debate will run from 8 to 10 p.m. in Manchester, and will be televised nationally by CNN.
The candidates will not just be fighting for attention among themselves, but with the
The debate will also feature US Representative Michele Bachmann of Minnesota; businessman Herman Cain; former House Speaker Newt Gingrich; US Representative Ron Paul of Texas; and former US senator Rick Santorum of Pennsylvania. It will be Gingrich’s highest-profile appearance since his senior staff defected last week from his woeful campaign.
Former Utah governor Jon Huntsman, who has been toying with entering the race and was campaigning in New Hampshire this weekend, decided not to participate; a curious decision for a little-known candidate who had placed early emphasis on the Granite State.
Much of the talk among the primary contenders so far has been around cutting taxes. They argue that it would put money in the pockets of individuals and corporations, boosting the economy.
Even some conservatives wonder if that line of reasoning is appropriate now, given the depths of the government’s financial problems.
“The Republicans basically want to cut taxes and they think that’s a magic formula. We’ve got a $6 trillion deficit; it’s a recipe for bankruptcy,’’ said Peter Morici, a conservative-leaning economics professor at the University of Maryland. “They’re just not serious. They don’t say anything original; they don’t say anything insightful. And they certainly don’t say anything that will get this economy going again.’’
Gingrich would allow individuals to choose to file under a flat income tax of 15 percent (a simplified system that he says would allow Americans to file taxes using a postcard), and would lower the corporate tax rate to 12.5 percent. Cain is pushing for the so-called fair tax, which would eliminate the income tax altogether and replace it with a 23 percent national sales tax. Bachmann has called for cutting the corporate tax rate to 9 percent.
With Romney enjoying a huge lead in the New Hampshire poll, Pawlenty is attempting to portray himself as a responsible alternative for voters seeking a harder line on government spending. He detailed an aggressive tax- and budget-cutting proposal last week in a speech at the University of Chicago.
While his plan goes further than those of Romney and others in the race, some economists have panned it for relying on overly optimistic estimates on economic growth. He suggests that the economy would grow by 5 percent over 10 years, something that has no historic precedent.
Pawlenty also would adjust the tax code for individuals, eliminating a six-bracket system that ranges from 10 percent to 35 percent, and replacing it with a two-tier system: those making $50,000 or more would be taxed at 25 percent and those making less than $50,000 at 10 percent. For corporations, Pawlenty would reduce the tax rate from 35 percent to 15 percent, which he says would stimulate business sector growth and employment.
Romney has been less specific, but — as he pointed out himself last week — he laid out detailed economic plans in his losing 2008 presidential bid. That includes a corporate tax cut, but not as deep as Pawlenty’s.
“I ran for president four years ago,’’ he said after touring a business incubator in Detroit. “At that time I was the one [who] said take the corporate tax rate from 35 percent to 25 percent. I haven’t changed that at this point. And you’ll see more as time goes on. Don’t forget, I’ve been out there with a book for two years and ran for president before and laid out my plan.’’
Romney’s personal income tax plan four years ago was less dramatic than Pawlenty’s this year, cutting the lowest tax rate from 10 percent to 7.5 percent but leaving other brackets intact.
Pawlenty would entirely eliminate taxes on capital gains, dividends, and interest income. During the last campaign, Romney said he would eliminate those taxes for those making less than $200,000, but would keep it in place for wealthier Americans.
The candidates talk about budget-cutting in broad terms, mostly without saying what specific programs would get the ax. Both Pawlenty and Romney have proposed tying the size of the federal budget to the size of the country’s economy, as measured by the gross domestic product.
Pawlenty says the United States should limit federal spending to 18 percent of GDP — a level it hasn’t been at since 1966 — while Romney has proposed capping it at 20 percent or less.
This year, federal spending is projected to be $3.8 trillion, or 25.3 percent of the economy. If that were reduced to 20 percent, it would result in about $800 billion in cuts to the federal budget. If it were reduced to 18 percent, as Pawlenty proposes, it would result in about $1.1 trillion in cuts.
During 2008, President George W. Bush’s last year in office, federal spending accounted for 20.7 percent of the economy. During 2009, Obama’s first year in office, that figure leapt to 25 percent, largely because of spending related to the federal stimulus (which Obama signed) and the Troubled Asset Relief Program (which Bush signed).
Matt Viser can be reached at email@example.com.