Balancing the Budget

I heard a radio spot for Romney this morning, saying how great he was as governor, lowering taxes and balancing the budget. It wasn’t hard to find out how inaccurate the ad was. He raised lots of taxes, excuse me, fees. From Wikipedia: “According to an analysis by the Tax Foundation, from 2002 to 2006 the average rate of state and local taxes in Massachusetts rose from 9.6 percent to 10.2 percent.”

Giving Us the Business

Business climate under Romney wasn’t great, either. He sought an exemption to a 2004 federal law that mandated lower corporate tax rates, eliminated corporate “loopholes,” which tea partiers would call tax increases. “Job growth in Massachusetts rose at a rate of 1.5 percent (compared to the national average of 5.3 percent), placing Massachusetts 47th of the 50 states in new job creation over the course of Romney’s term. The annual rate of job growth was improving by his last year in office, moving Massachusetts up from last place nationally to 28th.” That’s not great—it’s at best mediocre.

The Balancing Act

“The additional revenue from the tax increase that had been enacted prior to Romney’s taking office (and which Romney had opposed during his campaign for the governorship) reduced the deficit, previously projected to be $3 billion, by $1.3 billion. Unanticipated federal funds reduced the budget gap further still; and in combination with funding cuts, fee increases, collection of more business tax revenue, and reliance on funds in the state’s “rainy day fund” (more formally known as the Stabilization Fund), Romney and the legislature were able to balance the 2004 budget.”

Balanced it technically. Successor Governor Deval Patrick, in order to avoid a catastrophic deficit in fiscal 2008, restored $384 million of the emergency spending cuts for fiscal 2007 that Romney had made. By doing that, imposing $515 million in additional spending cuts and $295 million in new corporate taxes, managed to end up  with only a $307.1 million deficit in fiscal 2007 and a $495.2 million deficit for fiscal 2008.

A Little Slight of Hand

I’m not denying that Romney is a successful businessman. He has a long record of turning profits in the private sphere. As governor, it was more of a mixed bag. Romney’s “balanced budget with no tax increase” was smoke and mirrors, raising fees in lieu of taxes, transferring taxes to local government, taking a little from Uncle Sam, and moving the rest of the deficit into next fiscal year.

No, I think Obama has done a reasonably good job of dealing with the economic mess he inherited, especially considering the level of opposition he has faced. Presidents don’t have total control of economic realities. Bush wasn’t responsible for 9/11 (clearly, I’m not a truther), or Hurricane Katrina. Obama wasn’t responsible for the hatred directed at him by the tea party, or a dysfunctional Congress. More needs to be done in terms of trimming waste and unnecessary programs, as well as increasing revenue. Between the two candidates, Obama seems to have a much better grasp of what it will take. Ryan’s budget plans are unrealistic, and Romney’s consist of “trust me.”

Credit for title Image: Radio The Voice of Russia.

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