Most observers agree that  the October 3  "Presidential Debate"  was "won" by Mitt Romney, and they are right.

President Obama's big mistake was  to repeatedly denounce  Mitt  Romney's   "$5 trillion tax cut,"  which Romney denied ever proposing.  Actually, Romney has proposed cutting tax rates by  20%,  eliminating  the  inheritance ("death") tax and the Alternative Minimum Tax (AMT), and  exempting  investment income  (dividends and interest) from income tax for all but the richest taxpayers.  Maybe these cuts would cost the treasury $5 trillion over several years, maybe even more.  But  Romney  also insisted last night that  his tax cut would not  increase the deficit because he would make up for the reduced revenue by eliminating some deductions and exemptions  ("loopholes") and cut federal spending.  He previouslyl proposed  reducing the federal budget  to   20% of  Gross Domestic Product  (GDP), which would be a cut of about $688 billion  the first year.(1)  Therefore Obama was wrong to insist  that  Romney's plan would cost $5 trillion or any other specific amount, since  there is no way to tell   what his mix of policies would cost, if anything, since Romney has refused to specify  what deductions he would eliminate or what spending he would cut.

Why doesn't Governor Romney tell us right now what  deductions he would eliminate?  The biggest are the deductions (and exclusions from taxable income) for home mortgage interest,  pension contributions and health insurance.  There is no way to reduce taxes for everybody and still keep revenue at current levels;  if some people pay less, others will have to pay more.  It is fairly obvious that  Romney's  exemption of investment interest  will primarily benefit  the rich, and so will the reduction in tax rates.  If the deductions listed above were eliminated,  the cost of additional taxes would be borne by nearly all taxpayers, including large numbers of lower  middle-class and working class people, who would not benefit at all from the exclusion of investment income  (since they don't have any investments) and would benefit only slightly from the reduction in rates.  In my judgment, the net effect of  all  the Romney  tax changes combined  would be to reduce the tax bills of the wealthy, so they are smart to vote for him.   But then,  the only way to keep revenue from dropping would be to be increase taxes  on  those who are not rich: the middle and working classes.  If Romney were to admit this ,  he would lose votes among  those whose taxes would go up, which is why he won't  specify the "loopholes" to be closed.  

For a similar reason, Romney will not specify  the $688 billion in cuts in federal spending he would propose, except  to transfer Medicaid to the states and eliminate federal support for  Public Television and Planned Parenthood.  Since he has proposed to boost defense spending (although he may have changed his mind about that by now),  all of the cuts would be imposed on other federal programs  such as farm price supports,  health, education,  FBI, IRS, prisons, etc.   Thousand of federal jobs and even more jobs  provided by non-defense  contractors would be eliminated.

In reality, even if  Mitt Romney is elected President,  his tax and budget plans are very unlikely to pass Congress, especially in view of the  Senate filibuster threat.  At most, he would get some tax cuts and reduction in unpopular  spending programs, even if Republicans will both houses of Congress.

These points are complicated, and it is hard to explain any of them in two minutes in a debate format.   But  by trying to predict the fiscal   effect of  his opponent's  tax plan  (which he can change at any moment),  Obama  frittered away both his credibility and the chance to  expose the likely consequences of  the entire Republican program.

Gerald S Glazer

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 (1) Center on Budget and Policy Priorities

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