Massive tax cuts proposed by Republican presidential candidates Newt Gingrich and Rick Santorum would cause the national debt to explode while Mitt Romney’s budget plan could generate red ink in line with current projections, according to a new study released Thursday.
The nonpartisan Committee for a Responsible Federal Budget, a Washington-based budget watchdog group, estimates that the wrenching budget cuts proposed by Ron Paul would lessen the flow of red ink compared with current policies but still leave the government running a sizable deficit.
The Republicans’ plans translate into a tax code in which taxes on investments and capital gains are sharply reduced or eliminated. Each candidate would eliminate inheritance taxes on large estates. And tax rates on individuals would be cut as well - all in the face of deficits that economists say would eventually cripple the economy.
The results, according to the study, would be higher deficits, except in the case of Mr. Paul, whose spending cuts dwarf anything being considered by his three rivals.
According to the study, Mr. Gingrich’s plan would add $7 trillion to the nation’s debt over the coming nine years - almost doubling the deficits that would be recorded if the government basically ran on autopilot. Mr. Santorum’s plan would add $4.5 trillion over the period, or about $500 billion to the deficit every year on average.
By contrast, Mr. Romney’s proposal would add $250 billion to the deficit over nine years, though that estimate was generated before he unveiled a new tax reform plan this week that could add considerably to the deficit.
And Mr. Paul, whose budget plans include eliminating five Cabinet departments, immediately ending operations in Iraq and Afghanistan, and sharply cutting federal programs like Medicaid and food stamps, would reduce the deficit by $2.2 trillion. He is the only candidate whose spending cuts exceed the amount of revenue lost by cutting taxes.
The four Republican candidates vying to replace President Obama each promise sweeping tax cuts, even as the deficit under current policies would never fall below $600 billion over the coming decade.
Mr. Gingrich, for example, would give taxpayers the option of a 15 percent flat tax rate, while Mr. Santorum promises to reduce the current five-bracket system to two, with rates of 28 percent and 10 percent. Each idea would mean trillions of dollars less revenue for the government.
Mr. Romney’s latest tax plan would cut the top income-tax rate from 35 percent to 28 percent and the other rates by 20 percent each, paid for by broadening the tax base and eliminating numerous deductions. But the plan lacks sufficient specifics to be “scored” with any precision.
The candidates’ ambitious budget plans contrast with Republican leaders in Congress, who have focused on retaining the full menu of Bush-era tax cuts rather than attempting to cut taxes further - and have opened the door to higher tax revenues as part of a comprehensive deficit-cutting deal.
The budget group’s advisers include many Democratic deficit hawks and Republicans unafraid to advocate for higher taxes. The group acknowledged plenty of wiggle room in the study since many of the candidates’ proposals are vague or haven’t been reviewed by official sources, like the Congressional Budget Office.
The group offers three different scenarios for each candidate, which incorporated different assumptions that depend on how vague or specific a candidate’s proposals are. The group chiefly trumpeted an “intermediate” scenario that represented the group’s best estimate of the candidate’s budget plans.