How is this "simpler"?

It makes a fair degree of intuitive sense that eliminating some number of tax credits/deductions would make the tax code simpler.  If Romney were to eliminate, say, the the mortgage interest deduction and the charitable contribution deduction, the tax code is of course simpler, since all the laws pertaining to those deductions could be wiped off the books, leaving a shorter, simpler set of laws.

But what of Romney's idea to limit the overall value of deductions to $17,000 (or $25,000-$50,000)?  Such a change doesn't make anything simpler, and in fact adds another layer of complexity.  Actually, Romney aides have since expanded on the idea by suggesting that the $17,000 cap is in fact only one of three caps, along with a cap on personal exemptions and another on health insurance.

Well that's not any simpler at all.  Far from it.  We'd still have all the same complexities we have now, plus three different caps to deal with.

In defense of (some) tax loopholes

Romney, Obama, the Simpson-Bowles Commission and an increasingly-large share of Congress all agree that we need to "simplify the tax code" by reducing or eliminating tax expenditures.  I agree that punitive damages from civil lawsuits probably shouldn't be tax deductible, and that encouraging home ownership through the tax code probably isn't worth the cost.  But there's lots of stuff that's tax deductible that seems totally reasonable to me.

Deductions for charitable giving are a smart way for government to encourage people to provide public services so the government doesn't have to.  Giving a tax break in exchange for donating money (by definition more money than the tax break costs) to a hospital or a scholarship fund might save the government more money that they cost through decreased costs for Medicare or Pell Grants.  I'm sure there are examples of ridiculous 501(c)(3) corporations out there which don't benefit the public enough to justify the cost of the tax breaks, so I'd be all for tightening the qualifications to earn tax-exempt status.  But taking a hatchet to the charitable giving deduction seems a poor plan.

Incentives for decreasing pollution make sense.  If my kid has asthma, I have an interest in encouraging people to not drive gas guzzlers.  The tax code provides a way to put a number on the true costs of polluting behavior.

The whole economy benefits from a more educated workforce, so tax incentives for education should probably stick around.  I'd be happy to discuss the proper level of such incentives and where the societal cost/benefit balance point is, but I imagine one would have a pretty hard time arguing the best level is $0.

This is an area where Democrats play into the Republicans' hands by how they approach the issue. Both parties suggest that there's plenty of money to be had if we'd just eliminate silly loopholes like deductions for corporate jets or donations from viewers like you.  Neither side wants to be the voice for those expenditures which are actually worthwhile, so we're left with the current and ongoing march toward "simplifying the tax code".

Romney's foreign policy speech

Mitt Romney delivered a major foreign policy speech today at the Virginia Military Institute.  Romney put forth several proposals which are, frankly, just awful.

I will put the leaders of Iran on notice that the United States and our friends and allies will prevent them from acquiring nuclear weapons capability. I will not hesitate to impose new sanctions on Iran, and will tighten the sanctions we currently have. I will restore the permanent presence of aircraft carrier task forces in both the Eastern Mediterranean and the Gulf region—and work with Israel to increase our military assistance and coordination.  For the sake of peace, we must make clear to Iran through actions—not just words—that their nuclear pursuit will not be tolerated.

Apparently Romney thinks that we don't have enough forces near Tehran.  Here's a map that shows the US bases in the vicinity of Iran:

(source)

Note: The map appears to be slightly out of date, as we've handed over the bases in Iraq when our last soldiers left the country last year.  But still, that's a shitload of bases, not to mention that we can send stealth bombers from Missouri anywhere in the world, as well as lots of other ways to project our power across the globe.  And the 75,000 American soldiers permanently deployed in Europe.  But yeah, we need two more carrier groups.  Then they'll know we're serious.

Romney continues:

The size of our Navy is at levels not seen since 1916. I will restore our Navy to the size needed to fulfill our missions by building 15 ships per year, including three submarines.

If there's one thing that'll make terrorists huddled in caves or hiding in major cities shake in fear, it's a nuclear attack sub at $2 billion a pop.

In Syria, I will work with our partners to identify and organize those members of the opposition who share our values and ensure they obtain the arms they need to defeat Assad’s tanks, helicopters, and fighter jets.

What could possibly go wrong?

And in Afghanistan, I will pursue a real and successful transition to Afghan security forces by the end of 2014.  President Obama would have you believe that anyone who disagrees with his decisions in Afghanistan is arguing for endless war. But the route to more war – and to potential attacks here at home – is a politically timed retreat that abandons the Afghan people to the same extremists who ravaged their country and used it to launch the attacks of 9/11.  I will evaluate conditions on the ground and weigh the best advice of our military commanders. And I will affirm that my duty is not to my political prospects, but to the security of the nation.

Allow me to paraphrase what he just said.  "I agree that getting out by the end of 2014 is a good idea.  I'm not sure exactly what I'd do that's any different, but Obama must be wrong somehow.  After I win, I'll talk to the generals and have them tell me what to do."

Finally, I will recommit America to the goal of a democratic, prosperous Palestinian state living side by side in peace and security with the Jewish state of Israel.  On this vital issue, the President has failed, and what should be a negotiation process has devolved into a series of heated disputes at the United Nations. In this old conflict, as in every challenge we face in the Middle East, only a new President will bring the chance to begin anew.

As you may recall, Romney had something rather different to say about the possibility of Palestinian statehood at that secretly-taped fundraiser from a few months back (when he talked about his disdain for the 47%):

One is the one which I've had for some time, which is that the Palestinians have no interest whatsoever in establishing peace, and that the pathway to peace is almost unthinkable to accomplish.

The final debate of the season, on October 22, concerns foreign policy.  Hopefully, Obama will find the time to do his homework and be ready to take down Romney, who gave him lots of ammo today.

Cartoon of the day

(source)

Reference, from the raid on bin Laden's compound

"Which Romney will voters get?"

Ezra Klein has a tremendous article which tries to divine what kind of president Mitt Romney would be.  Given the contrasts among the positions Romney held in 1994 when running against Ted Kennedy, in 2002 when he was elected governor, in the 2012 primaries, and at the debate, it's a valid question.  Romney has presented himself to the left of Kennedy and the right of Rick Santorum on various issues at various times, so how can anyone know for sure how he would lead?

The ultimate conclusion Klein reaches is that Romney will be shaped by his circumstances, just like he always has.  Klein writes:

"One thing Romney emphasized over and again was the need to hammer out his policy agenda through negotiations with Congress. And that, I think, provides the answer. If Romney is facing a Democratic Congress that demands compromise in return for votes — the same situation he faced in Massachusetts — he’ll be more like the Massachusetts moderate he presented as last night. If he’s facing a Republican Congress that’s pulling him to the right and threatening to reject his proposals and force him into a primary in 2016, he’ll be more like the candidate we saw in this year’s  primaries and throughout much of this campaign."

Deductions, charity and shredding the safety net

At a time that GOP dogma requires massive cuts to social programs like Medicaid and food stamps, Romney is advocating essentially eliminating the tax deduction for charitable donations.  A limit on deductions of $17,000 would squeeze lots of people who itemize, as the average total deduction for itemizers is $26,000.  If someone who currently deducts $26,000, including charity along with mortgage interest, health care costs and state/local taxes, no longer has an incentive to engage in tax-advantaged behaviors after they hit $17,000, it stands to reason that some number of people will do less of those behaviors.  As health care costs, mortgage interest and state/local taxes are somewhat difficult to change, it stands to reason that charitable contributions might be in line for a big hit.  Charity organizations would be less able to handle the increased demand for their services that would arise from the proposed cuts to the safety net.

Romney promises to off Big Bird for pocket change

One of the few specific policy proposals Romney made last night included his promise to stop federal funding of PBS, saying "I’m sorry, Jim, I’m going to stop the subsidy to PBS.  I like PBS, I love Big Bird... But I’m not going to -- I’m not going to keep on spending money on things to borrow money from China to pay for it."

China owns $1.149 trillion of our debt.  Our total debt is around $16.149 trillion, meaning China holds about 7% of it.  PBS's annual subsidy is $450 million.  7% of that is $31.5 million, which is less than Romney made in 2010 and 2011 while running for President.  It's a trivial amount of money (in government terms), but apparently Romney thinks being willing to off Big Bird will earn him credibility as a fiscal guardian.  If voters don't bother to actually look at the numbers, he might get away with it.  Of course, he has good reason to think most people won't look at the numbers, since voters' knowledge on important matters is so often hugely wrong.

Bad night for Obama

Mitt Romney gave a tremendous performance tonight.  On each topic, he had a numbered list of things to say, and he had (relatively, for him) specific things to say.  Obama, on the other hand, had a more general approach.  For example, he mentioned the Tax Policy Center study (.pdf) which shows Romney's tax promises are impossible, but he wasn't able to specifically say that the cost of the plan would be $4.8 trillion, and that part of those cuts would be paid for by something like $800 billion in increases on lower-income people.  He failed to call out Romney for citing six studies which supposedly support Romney's tax math, but each of those studies made fundamentally different assumptions from Romney's statements.

Obama appeared to try to play a safe, non-combative game, giving ground to avoid a big moment.  To his credit, there was not one particular moment that would be memorable.  But Romney was so consistently sharper and more polished that he'll probably pick up a few days of positive press coverage.  We'll see what happens with the polls.

Romney gets ever so slightly more specific

Today, Romney suggested a way to pay for his 20% income tax cut.  He floated a limit of $17,000 on the total amount of tax deductions which are allowable in a given year.  Since lots of people, particularly the wealthy, claim much more than that in deductions each year, lots of people's taxable incomes will go up, since their deductions are limited.

I've been trying to find enough info online to do some calculations on the feasibility of Romney's proposal, but honestly I'm not having much luck.  So I'm afraid we'll have to do with just some impressions for the evening.  It seems unlikely that there would be enough savings from limiting deductions to pay for the rate cuts and other cuts.  Consider the effect on the 70% of us who take the standard deduction (that is, who don't itemize) plus people who itemize with total deductions that don't add up to $17,000.  Romney's proposal would seem to be a huge net win for these people, since they'd get the 20% cut without really giving up anything, since they are already under Romney's limit.  Even a good number of people with deductions over $17,000 will come out ahead if the 20% cut in their rates is greater than the amount they lose because they're over Romney's limit.

Where does the money come from to offset these cuts for non-itemizers and low-itemizers?  Of course some money would come from high-itemizers (who are, generally, the wealthy); however, the savings from limiting high-itemizers' deductions would first be applied to offsetting the high-itemizers' own 20% rate cuts.  If there is any additional revenue gained from limiting high-itemizers' deductions, those would, ipso facto, be net tax increases on the wealthy.  I'm perfectly willing to keep an open mind until I see Romney's numbers, but I don't think this will be the actual end result of the proposal.

So if we assume that Romney wouldn't raise rich folks' taxes, and the money for non- and low-itemizers rate cuts has to come from somewhere, we'd be left once again with the idea that tax cuts paying for themselves through increased economic growth.  It's the same thing Republicans have been selling for decades.

Wheels coming off?

A loud chorus of conservative pundits and politicians declare that the murder of four diplomatic staff in Libya means the "wheels are coming off" Obama's foreign policy, or that it's "unraveling" as Paul Ryan called it.  Each one of those four deaths is a terrible tragedy, and the incident will hopefully provoke changes in how we defend our embassies.

Given recent history, however, it seems a stretch to suggest that this is some sort of hugely significant landmark event that should change how America views Obama's foreign policy.  In the last 11 years, over 6,000 American soldiers have died in Afghanistan and Iraq.  2,977 Americans were killed on 9/11.  I understand that the Romney campaign is searching for a game-changing moment, but the attacks in Benghazi, though horrible, are not that moment.

This is by no means to suggest that Obama's foreign policy is without flaw.  It would be healthy for us to discuss the 2,000th American death in Afghanistan, or our use of drones, or Obama's policy of labeling any young man killed in a strike zone a "militant".  The Republican Party isn't presenting an alternative on those issues, however, so we don't get to have that discussion.