Lifes Worth Knowing

On Sesame Street

In Current events, Economics, Government, Justin, Politics on October 5, 2012 at 9:42 pm

You know that a presidential debate has been interesting when the prevailing topic dominating social media throughout the even was Big Bird. When Romney came out and stated that he would cut funding to PBS, the big bird trend took off and it became one of the few “missteps” that Romney made on the night, angering millions of Sesame Street Moms and Downton Abbey fans in the process.

In fact, it was the one line of the night that drew the strongest reaction from my wife (and Mother of our one year old son). For a few hours at least, Big Bird became the new Seamus, or Jeremiah Wright – a peripheral but emblematic figure of a minor, but highly charged issue. Now, focusing on a single remark from Wednesday’s wandering and poorly moderated debate would be to miss the forest for the trees, so don’t take this to be an exhaustive recap. However, the Big Bird controversy is representative of a larger issue that Romney will have to overcome to win the White House.

For those watching the debate, it was hard to miss Obama’s assertion that the Romney plan would add $8 trillion to the deficit. In fact it became almost nauseating to listen to Obama as he circled practically every topic back towards that $8 trillion number. It was clearly supposed to be a point of emphasis for the President, and he kept pounding on that point like a boxer going after an opponent’s cut. The problem was that in this case, Obama was shadow boxing.

To parse out the argument, I will use the candidates own words from the debate:

Obama asserts that Romney will be fiscally irresponsible:
“Governor Romney’s central economic plan calls for a $5 trillion tax cut, on top of the extension of the Bush tax cuts, so that’s another $2 trillion, and $2 trillion in additional military spending that the military hasn’t asked for. That’s $8 trillion. How we pay for that, reduce the deficit and make the investments that we need to make without dumping those costs on the middle-class Americans I think is one of the central questions of this campaign.”

Romney counters by stating:
“First of all, I don’t have a $5 trillion tax cut. I don’t have a tax cut of a scale that you’re talking about…We ought to bring the tax rates down…both for corporations and for individuals. But in order for us not to lose revenue, [and] have the government run out of money, I also lower deductions and credits and exemptions so that we keep taking in the same money when you also account for growth.”

To me, this tax issue was the central issue of the debate, so it is worth checking out an unbiased third party opinion on it to try to cut through the noise. The Tax Policy Center did their best to try to analyze the Romney tax plan, which includes cutting tax rates across the board by 20 percent and maintaining the Bush era tax cuts that are set to expire. The Tax Policy Center estimates that this will cost the Federal government $900 billion annually. However, Romney claims that this action would be entirely revenue neutral (illustrated by his remark that “I don’t have a $5 trillion tax cut). He claims that he will make up that $900 billion by eliminating tax exemptions and write offs in the current tax code.

So here is an opportunity for us to objectively look at what the candidates are saying and try to derive some level of truth. Does Romney have a $5 trillion dollar tax cut, or is his plan revenue neutral? The answer is that we don’t know, because Romney hasn’t told us enough yet. While Romney keeps insisting that his plan will raise enough money from eliminating loopholes, he hasn’t told us what those loopholes are. The conclusion from the Tax Policy Center was this: “Because Gov. Romney has not specified how he would increase the tax base, it is impossible to determine how the plan would affect federal tax revenues or the distribution of the tax burden.”

In short, we just don’t know what Romney plans on doing. When Fox News Sunday asked Paul Ryan about the same issue earlier this week, Ryan did not begin checking off the deductions that are on the table for elimination, instead he told America that “it would take me too long to go through all the math.”

So how does this all tie in to big bird? Well, when Romney told us that he would cut funding to PBS, it was literally the only specific detail that he offered in the entire debate about how he would save the Federal government money (for the record, the Corporation for Public Broadcasting receives about $400 million a year from the public). When Romney made the comment, twitter erupted. Most everyone under the age of 40 was weaned on Sesame Street and were voicing their displeasure that their kids might not have the same opportunity. Admittedly, in the grand scheme of things, Big Bird is a little issue. In comparison to larger economic issues, it is a barely footnote.

Now imagine that Romney and Ryan actually did lay out the specifics of their plan, and told us that the loopholes they would eliminate in the tax code included the student loan interest deduction, the mortgage interest deduction, or the deduction for health insurance premiums. Imagine if Romney actually gave us the math as to how he would pull off this remarkable feat of lowering the tax rate without reducing government revenues. In order for him to accomplish what he says…every single tax break written into the code would have to be on the table.

In order to stay true to his word, at some point, a President Romney would have to tell the American people that he was eliminating the child tax credit, the mortgage interest deduction, the charitable tax deduction and possibly many more. If people were upset about the loss of big bird, how do you think they would respond to the loss of those cherished tax breaks? The reason that Romney came off so well in the debate was that he was able to say that he would do these wonderful things without explaining what he would do to prevent it. Obama had nothing to shoot at because Romney wouldn’t go on record for a single spending cut, except for PBS.

The lesson to glean from Big Bird-gate is pretty simple. As soon as Romney gets specific about what he plans on doing, he ends up angering an interested segment of society.  So instead, he engages in a type of economic McCarthyism promising that in his briefcase he has hundreds of tax loopholes that will make up revenue without affecting the middle class. In doing so, he can continue to throw stones at Obama’s glass house of economic recovery without revealing any sort of blueprint outlining his plan.

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