Economist: Obama misrepresenting my study on Romney tax plan

[_bcspace]

Last night, the Obama campaign blasted out another email claiming that Mitt Romney's tax plan would either require raising taxes on the middle class or blowing a hole in the deficit. "Even the studies that Romney has cited to claim his plan adds up still show he would need to raise middle-class taxes," said the Obama campaign press release. "In fact, Harvard economist Martin Feldstein and Princeton economist Harvey Rosen both concede that paying for Romney’s tax cuts would require large tax increases on families making between $100,000 and $200,000."

But that's not true. Princeton professor Harvey Rosen tells THE WEEKLY STANDARD in an email that the Obama campaign is misrepresenting his paper on Romney's tax plan:

I can’t tell exactly how the Obama campaign reached that characterization of my work. It might be that they assume that Governor Romney wants to keep the taxes from the Affordable Care Act in place, despite the fact that the Governor has called for its complete repeal. The main conclusion of my study is that under plausible assumptions, a proposal along the lines suggested by Governor Romney can both be revenue neutral and keep the net tax burden on taxpayers with incomes above $200,000 about the same. That is, an increase in the tax burden on lower and middle income individuals is not required in order to make the overall plan revenue neutral.

You can check the math that shows Romney's plan is mathematically possible here.

http://www.weeklystandard.com/blogs/princeton-economist-obama-campaign-misrepresenting-my-study-romneys-tax-plan_653917.html

[_Bob Loblaw]

But Romney is the liar, right?

[_bcspace]

Doesn't appear to be so far. No one in the mainstream media calls Obama a liar for promising in 2008 to cut the deficit in half or close Gitmo do they?

[_beastie]

Is Romney saying he's going to RAISE taxes on those making more than 200,000 a year?

[_Bob Loblaw]

Is Romney saying he's going to RAISE taxes on those making more than 200,000 a year?

Nope, he's saying he's lowering marginal rates on everyone, but eliminating deductions for the wealthy.

[_beastie]

by the way, it looks like Obama is not the only one misrepresenting a study.

http://www.washingtonpost.com/blogs/fac ... _blog.html

First, the Romney ad. The “independent, nonpartisan” organization cited by the Romney campaign is the American Enterprise Institute, which bills itself as “committed to expanding liberty, increasing individual opportunity and strengthening free enterprise.” A who’s who of Republican heavyweights — such as Richard Cheney, Paul Wolfowitz, Marc Thiessen, Danielle Pletka, John Yoo, and John Bolton — is affiliated with it, but in order to maintain its tax status as a 501(c)3 organization it cannot proclaim any political affiliation.

AEI is one of the top think tanks in Washington, and its scholars are respected and not ideologically consistent. But most people would regard it as right-leaning.

The Romney campaign probably wants to tag AEI as nonpartisan because the group that produced the study that Obama cited, the Tax Policy Center, often is described as nonpartisan. The Tax Policy Center is affiliated with the Urban Institute and the Brookings Institution — and Brookings is frequently seen as the left’s counterpart to AEI. The Tax Policy Center has staff who have served in administrations of both parties. Indeed, the Romney campaign once referred to another Tax Policy Center study as an “objective, third-party analysis.”

The first study mentioned in the Romney ad — supposedly showing “Barack Obama and the liberals will raise taxes on the middle class by $4,000” — is actually a very dry report titled “A Simple Measure of the Distributional Burden of Debt Accumulation.” The study tries to calculate the burden of servicing the national debt by various income groups, examining what would happen under current law, current policies and Obama’s budget. (Current law refers to policies that are supposed to happen, such as expiring tax cuts; current policy reflects the fact that Congress has said it will not let certain tax cuts expire.)

Among the three scenarios, there’s actually not much difference — for households making between $100,000 to $200,000, the burden would be between $2,800 to $5,400 a year through 2022 — and the administration’s budget falls right in the middle. In other words, the study shows how much lower taxes could be if the nation did not keep adding to the debt load; it does not show, as the ad claims, that Obama has some sort of secret plan to raise taxes.
Presumably, a Romney budget would fall in the same range, but he has not provided detailed plans. “We aren’t really able to run the overall numbers for Romney because we were trying to use the plans for which we had good budget projections,” said Matthew Jensen, one of the co-authors.
Indeed, the study also looks how the distributional burden rose under George W. Bush — and he of course cut taxes, repeatedly. So just because the debt burden rises, that is not proof that a president will raise taxes.

“The ad correctly states what was outlined in the American Enterprise Institute’s study,” a Romney spokesman said.

The second study mentioned in the ad is actually an article for AEI’s online magazine, titled “The Romney Tax Plan: Not a Tax Hike on the Middle Class.” Author Alex Brill said he was motivated to write it because he believed “all the ads the Democrats are running are false” because they claim Romney plans to raises taxes on the middle class. In the article, Brill tries to discredit the Tax Policy Center study.

The difficulty is that there is no fully detailed Romney plan that explains how he would reconcile his twin goals of reducing tax rates across the board and then closing enough loopholes to make it revenue neutral. The Tax Policy Center concluded it could not be done without raising taxes on the middle class — hence the Democratic ads — but the head of the Tax Policy Center cautioned: “I don’t interpret this as evidence that Governor Romney wants to increase taxes on the middle class in order to cut taxes for the rich, as an Obama campaign ad claimed. Instead, I view it as showing that his plan can’t accomplish all his stated objectives.”

This is where the new Obama ad falls short, because it states as a fact that he will “give the wealthy huge new tax breaks.” He says that is not his plan, though he has not shown how he will achieved his claimed goal of not giving large tax cuts to the rich.

Moreover, Romney has been inconsistent in describing the impact of his tax plan on the wealthy. In this week’s debate, he declared, “I will not reduce the taxes paid by high-income Americans.” But in the GOP Arizona debate in February, he said: “We're going to cut taxes on everyone across the country by 20 percent, including the top 1 percent.”

Obama got one Pinocchio, while Romney got 3.

[_beastie]

I just read his study, and while the Obama camp may have misrepresented him if they claim he said Romney's plan is mathematically impossible, but I don't see how this study helps Romney.

https://www.princeton.edu/ceps/workingp ... 8rosen.pdf

In his chart, the "base broadening" that he includes for both groups making over 100,000 and the subset of that larger group making more than 200,000 includes the loss of home deductions, charitable giving, health deductions, and state and local taxes. The proposal of taking away those deductions for anyone making more than 100,000 is never going to fly, and we all know it. I doubt it would even fly for incomes above 200,000. So if Romney's tax deductions take place the government loses revenue anywhere from 143 to 216 billion per year. If you remove those deductions only for incomes above 200,000, you still end up with a deficit, even with a projected increase in incomes. (and there's no guarantee those increases will take place)

If I'm reading the chart wrong, feel free to correct me. Math's not my strongest point, but it seems pretty simple.

[_Kevin Graham]

But Romney is the liar, right?

Absolutely. Bob, did you really just take for granted a bald assertion by the Weekly Standard? Not a single citation provided, as usual.

[_Bob Loblaw]

Absolutely. Bob, did you really just take for granted a bald assertion by the Weekly Standard? Not a single citation provided, as usual.

So, the economist who wrote the study says that the Obama campaign is misreading it, and that counts for nothing because it's quoted in the Weekly Standard?

[Tator]

Oh, I believe the economist says he was misrepresented. But I just don't see, after having read the study, how it helps Romney at all, even if the Obama camp was careless in using it as support. But I haven't seen the exact quote to which Mr. Rosen was objecting. Was it a reference during the debate, or somewhere else? I'd like to see the exact reference from the Obama camp.

never mind, I found it:

Even the studies that Romney has cited to claim his plan adds up still show he would need to raise middle class taxes. In fact, Harvard economist Martin Feldstein and Princeton economist Harvey Rosen both concede that paying for Romney’s tax cuts would require large tax increases on families making between $100,000 and $200,000.

http://www.barackobama.com/truth-team/e ... s-tax-hike

Unless I'm completely misreading this study, I don't think that's a completely erroneous statement. Perhaps Mr. Rosen wasn't clear in this paper himself. He did say it's not mathematically impossible, but 'challenging'. But looking at his numbers does make it seem impossible, especially given the unpopular loss of deductions that Rosen including in his chart.

By the way, I would LOVE it if this once-named "voodoo economics" really worked. Who wouldn't like the idea of cutting taxes resulting in such astounding growth that government revenue actually increases? The problem is that history hasn't always born this out. We seem to have ended up with bigger deficits when it was tried in the past.