The economic program of Mitt Romney:
The backbone of the economic policy of Mitt Romney.
5. Reducing the deficit and put America on the path to a budget balanced
The vision of Romney on this point is dual. In the short term it will reduce the State budget deficit. In the long term this should lead in his view to a balanced budget. Before continuing I believe that we need to clarify things. What is the budget of a State? The deficit or budget balanced?
A State budget (SB) is defined as the difference between its revenues and expenditure.
(1) SB = Revenues-Expenses.
When revenues exceed spending then the State has a budget surplus. In 2001 the SB in the United States was $127 trillion surplus. When however the expenses are higher than income, it is said that the State runs a budget deficit. In 2003, the United States had a deficit of $400Billions. This year 2012 revenues are estimated at 2.5 trillion when the expenses will be 3.8Trillions.
SB = 2.5 – 3.8 = – 1.3 trillion (trillion deficit of 1.3)
To return to the topic, according to the definition (1) the best way to reduce the deficit would be to either
( a) reduce spending or
( b) increase revenue
Tackling the substance of the budget which has a heavy contribution in the deficit seems to be the starting point.
If Romney wants to reduce the deficit it must tackle the heavy weight of expenditure/income. The spending levels that Romney must therefore revise downward are expenditures of the State defense (24%), health care (22%) and pensions (22%). Romney objects by all mean to interfere with the 24% of defense spending. Under Romney this position may even increase. He said in his own words: “Rather than completing nine ships a year, I would complete 15.” “I would add more F – 22 s and add more than 100,000 active duty personnel to our military team.” The idea of shrinking our military to try to get closer to the budget is the wrong place to look,” he continued “. In this context Mitt Romney intends to reinstate $489 billion defense spending that Obama want to wipe from the budget.
Romney still opposed to ten-year reduction of expenditure programmes ($ 500billions) of the Department of defense (Pentagon). And he wants to allocate the $716Billions for reimbursement to public health care providers, funds that Obama is going to delete. Romney program is designed to reduce pension spending, which has catalogued it as being against the interests of the aging population. On income, the economic policy of Romney seems less eloquent. Romney want to remove all tax benefits of political nature (loopholes) that the State grants. This will allow to increase the volume of the tax base. If we on rely on Romney to increase taxes in order to raise revenue, we will be disappointed. For Romney it is not a question to increase taxes for anyone specifically for the “rich”. The dilemma of Romney would be how to reduce the deficit while not touching at the defense spending and without increasing taxes?