At the Republican presidential debate Wednesday, candidates discussed where they would trim the federal budget fat. But a new report released Thursday suggests no candidate has yet crafted a successful plan for reining in debt.
The report comes from U.S. Budget Watch, a project of the nonpartisan Committee for a Responsible Federal Budget, and shows that the GOP candidates' policy proposals could increase debt. The candidates all get into trouble when they address revenues, says Alice Rivlin, founding director of the Congressional Budget Office and a senior fellow of economic studies at the Brookings Institution.
"I don't expect Republicans to propose raising taxes," Rivlin said Thursday. "But it seems to me that one definition of responsibility is 'Can you reform the tax system … in whatever [way] you think is best that at least doesn't make the situation worse?' And on that score, all of these candidates fail."
The report provides three estimates for each candidate's debt impact, from least to most optimistic. The estimates are based on the candidates' stated policy proposals, as well as official and unofficial estimates of the effect of each policy. The report says Ron Paul could reduce the federal debt by the greatest amount, whereas Newt Gingrich's policies would likely add the most debt. The estimates for Mitt Romney and Rick Santorum's plans fall in between Paul and Gingrich.
Federal debt stands at 70 percent of the country's GDP, and would increase to 85 percent by 2021 according to a "realistic" scenario laid out in the report. The report says that Paul's plan could reduce the debt to 67 percent through 2021.
The Texas congressman's plan to eliminate five federal departments, as well as his proposal to cancel all Federal Reserve debt, are key sources of his potential debt reduction. However, by the report's most pessimistic scenario, Paul could grow the debt to 93 percent of GDP by 2021.
Romney's policies could reduce the debt by nearly $2.3 trillion, bringing it to 75 percent of GDP, or could increase debt to 94 percent of GDP. Taking into account the new tax policies Romney outlined Wednesday, that debt could grow even higher. If Romney's new tax reform ideas, like reducing individual income tax rates across the board, are not offset, it could further increase the debt by 2.6 trillion. The effects of Santorum's plan range widely in the report, either bringing debt as low as 74 percent of GDP or as high as 107 percent by 2021.
There wasn't a single model that showed Gingrich's plan reducing the debt. U.S. Budget Watch estimates that Gingrich would increase debt by between nearly $2.9 and $9.7 trillion, bringing debt as high as 126 percent of GDP in 2021. Gingrich's plan is particularly weak in the area of tax proposals. His plan to reduce corporate taxes would add around $2.3 trillion to debt through 2021, and his alternative flat tax would add as much as $3.4 trillion over the same time period..
In estimating the candidates' budget impact, the report contradicts the popular Republican claim that eliminating the 2010 healthcare reform law would save money. In Wednesday's debate, Santorum presented eliminating "Obamacare" as one of the ways he would reduce the debt. U.S. Budget Watch estimates that repealing the law would add $80 billion to the debt by 2021.
Alternative healthcare reform plans, like those presented by Santorum and Gingrich, could offset some of that debt, but they could also substantially increase spending. Paul's reform proposals could add as much as $330 billion to the debt.
With the election still eight months away, candidates still have time to refine many of their policy ideas. However, the GOP candidates seem content to battle it out for the nomination despite the potential flaws in their policies, says Bill Frenzel, a former ranking minority member of the House Budget Committee.