How Mitt Romney Is Dooming His Own Tax Plan

It's looking like a big mistake to leave so many key details blank.

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Mitt Romney speaks as Barack Obama listens during a town hall style debate at Hofstra University October 16, 2012 in Hempstead, N.Y.
Mitt Romney speaks as Barack Obama listens during a town hall style debate at Hofstra University October 16, 2012 in Hempstead, N.Y.

Since nature abhors a vacuum, it tends to fill them. That's exactly what is happening to Mitt Romney's tax reform plan, prompting a a nasty verbal spat between the GOP presidential nominee's economic advisers and Washington wonkdom.

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The Romney campaign is fighting a tedious battle with the nonpartisan Tax Policy Center and other analysts who are trying to determine how Romney's tax plan would change the federal budget should it ever become law. Nobody denies that the changes would be big. Romney basically wants to rewrite the tax code by cutting federal income tax rates on everybody by 20 percent, and slashing or abolishing a bunch of other federal taxes. Such changes would represent the most sweeping changes to the tax code since Ronald Reagan defied the pundits by getting his 1986 tax reform plan into law.

The obvious problem with Romney's plan is that it would slash government revenue at a time when Washington is already awash in debt and there's a huge mismatch between spending and revenue. Romney has insisted that he'd balance the federal budget—which hasn't happened since 2000—by 2020, by raising other types of tax revenue and cutting spending. But he hasn't specified what taxes he'd raise or what spending he'd cut, which is kind of like buying a ticket to Florida without know whether you'll be traveling there by plane, bus or donkey.

Not to worry, the Romney campaign insists. "Technical details like this will be worked out with Congress," wrote Pierce Scranton, Romney's economic policy director, in a blog post on the campaign's Web site. "Reagan's goals [in 1986] were far less specific than Mitt Romney has been here."

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To bastardize a phrase, Mitt Romney is no Ronald Reagan—and 2012 isn't 1986. Reagan had already been president for a full four-year term when he began campaigning for tax reform. Americans knew his leadership style and record, and Reagan had a working relationship with leaders of both parties on Capitol Hill. It helped even more that the economy was growing and the national debt was manageable.

For most voters, Romney is much more of an unknown. You might think he'd indulge voters who are understandably skeptical, by explaining how he'd pull off the sort of budgetary miracle that has eluded the last two presidents, including Republican George W. Bush.

But Romney's details are notoriously flimsy. So far, Romney has suggested he could make up the lost tax revenue by capping the total amount of tax deductions people claim, or closing a lot of other loopholes. Or he could do it by subjecting more people to federal taxes. Or he could do a bunch of other things, all of which would cut the flow of money to groups that are sure to fight like mad to keep it. That's why gridlock happens and nothing gets done in Washington.

These details will affect millions of Americans, which is why the Tax Policy Center and other outfits have been trying to fill in the blanks and estimate what would happen to the federal budget under Romney's plan. The latest analysis shows that Romney's idea of setting a cap on total deductions—which many tax experts, across the political spectrum, think is a good idea—would raise some additional revenue, but not nearly enough to make up for the $500 billion per year that the government would lose from the tax cuts Romney proposes.

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Scranton complains that the Tax Policy Center's analysis is bogus because "they didn't actually analyze Governor Romney's tax reform plan." Instead, he says, they made up details that Romney hasn't actually proposed. The Catch-22, of course, is that even Romney can't properly analyze his own plan by this standard, because he'd have to estimate details that he himself hasn't provided. As a sideshow to this kabuki, the Romney campaign keeps pointing to half a dozen quasi-supportive third-party analyses that are at least as speculative as anything the Tax Policy Center has published.

With so much of Romney's plan open to conjecture, it's inevitable that others will fill in the blanks. But that's Romney's own fault. Politics abhors a vacuum even more than nature. It's true that Congress would determine many details of any tax reform plan, and possibly override many of the White House's proposals. That happens all the time with important legislation. But would any president ever submit a mere sketch of a tax-reform plan to Congress and claim to be unconcerned about the fine print?

President Obama, for his part, has engaged in plenty of campaign distortions, and his own tax plan is mostly a continuation of an unsatisfying status quo, except that he would raise taxes on the wealthy. But Obama is right when he says that Romney's tax plan is "sketchy." It doesn't have to be, but Romney seems to have decided that the details are too devilish to deal with right now. So others are dealing with them for him.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.