Republican presidential nominee Mitt Romney’s economic plan will take the country in the right direction with tax cuts, two economists say, but they disagree on other aspects of the plan.
Byron Schlomach, an economist at the Goldwater Institute in Phoenix, and David Wells, a political economy lecturer at Arizona State University, made their assessments in the first of a two-part interview on the presidential candidates’ economic plans for Friday’s Arizona Week.
“The idea of tax reform is probably the single best idea (in the Romney plan),” Schlomach said. “It’s a little short on specifics. It would be nice to know more.
“I like the idea of reducing marginal tax rates,” he said. “Obviously, I think right now with the situation with the deficit, you can’t have a big tax cut. But if you can reduce the rate and broaden by reducing loopholes and such, the incentives structure really improves.”
Schlomach compared it to the 1986 tax reform under President Ronald Reagan, saying that stimulated the economy.
“I think I agree with Byron … in part,” Wells said. “The idea that part of the goal of the Romney plan is to broaden the tax base and eliminate a number of deductions and loopholes. We’re not quite sure what exactly those are yet, because it hasn’t been specified. But that conceptually is an important part.”
Schlomach said his main objection to Romney’s plan is the insistence on declaring that China is unfair in foreign trade.
He said the Republican candidate’s plan to declare China a currency manipulator and open the way for trade sanctions goes against the idea of having a free market in global trade.
Wells said he sees the biggest issue with the Romney plan is that “it doesn’t add up.”
“Right now, it’s supposed to be revenue neutral, and it’s not supposed to shift the tax burden onto lower-income individuals,” he said. “But as the Tax Policy Center has looked at it, and I’ve reviewed it … it does not add up.”
On other aspects of the Romney economic plan:
- Schlomach and Wells disagreed on the government’s role in the economy. “ … it’s not the president that creates jobs,” Schlomach said.
“The government has a very important role in providing a foundation for economic growth,” Wells said.
- The federal budget needs to be balanced much sooner than 2040, which is the target under the Romney plan as described by GOP vice presidential candidate Paul Ryan, Schlomach said.
The country must live with the deficit short term because of the slow economy and the need for government services, Wells said.
- If Romney is elected, Schlomach would advise him to deregulate business as much and as quickly as possible and repeal the Affordable Care Act.
Wells would advise Romney to be prepared to compromise with Democrats, including revenue increases as well as spending cuts.
Watch Arizona Week Friday, Sept 7 for Chihak's interview with the same economists about President Barack Obama's economic performance and plan.