During a bus tour of potentially pivotal heartland states, Mitt Romney is drawing clear lines of contrast with President Obama on taxes: The Republican challenger says that as president, he would reject a budget fix that calls for new taxes as part of the mix.
In an appearance on CBS‘s “Face the Nation” Sunday, during a campaign stop in Pennsylvania, Mr. Romney was asked if he would agree to a deficit-reduction plan that involves $1 in new taxes for every $10 in spending cuts.
The former Massachusetts governor said he wouldn’t, reaffirming a position he had taken during debates with other contenders for the Republican nomination.
That position stands in stark contrast with the White House incumbent on one of the central issues in the presidential race. Mr. Obama has called for addressing chronic budget deficits with a mix of spending cuts and tax hikes — especially by calling on the wealthiest Americans to pay more in taxes.
“Do we want to keep these tax cuts for the wealthiest Americans?” Obama asked in his State of the Union address in January. “Or do we want to keep our investments in everything else — like education and medical research, a strong military and care for our veterans? Because if we’re serious about paying down our debt, we can’t do both.”
The fight over taxes sets up a tug and pull for voter hearts. Many Americans are sympathetic to the argument that it’s not realistic to solve chronic budget deficits without some tax hikes alongside spending cuts. For instance, polls have found majority support for tax hikes on the rich, such as by allowing the Bush tax cuts to expire for households earning more than $250,000.
At the same time, Romney may be able to lure swing voters to his side, with an argument based on job growth and reining in the size of government.
“This is all about creating good jobs,” Romney said of his economic plan Sunday. He said that his plan is to bring federal spending down from 25 percent of gross domestic product to 20 percent, and that taming the size of government will translate into “getting people back to work with rising incomes again.”
Bob Schieffer of CBS framed his question for Romney around the fact that contenders for the Republican nomination (Romney included) had backed a controversial pledge created by antitax advocate Grover Norquist. “Government is big and getting larger,” Romney said in defense of his position. “There are those who think the answer is just to take a little more from the American people, just give us a little more. And there are places that have gone that way: California, for instance, keeps raising taxes more and more and more. And funny thing, the more they raise in taxes, the deficits get larger and larger.”
Whichever side is right about tax policy, economists agree on one point: Regardless of tax rates, government revenues hang to a significant degree on the performance of the economy. If jobs and incomes start growing faster, that will be good for tax revenues.
The recession showed what happens to tax revenues in a bad economy: Revenue fell sharply as a share of GDP.
A split in public opinion on taxes is visible in polls, including one taken by Quinnipiac University last fall, as the congressional “super committee” sought a deficit-cutting deal. The poll asked if a deal “should include some increases in tax revenue or should it include only cuts in government spending?” In the context of that budget debate, 49 percent of registered voters said they’d favor spending cuts only, while 39 percent supported some tax hikes and the rest were unsure.
In his Sunday appearance, Romney also sought to insulate himself against the critique that Republican tax policies aim mainly to benefit the rich. The presumptive Republican nominee said the tax code should remain progressive, with high earners paying at least the same share of the nation’s taxes as they do now.
Romney’s bus tour spans communities in New Hampshire, Pennsylvania, Ohio, Michigan, Wisconsin, and Iowa. Those are states that Obama won in 2008, and where political analysts say Romney must score some wins if he hopes to win in November.