Mitt Romney’s unfathomably large IRA was a big political liability for him in 2012.
Fortunately for other financial titans who hope to be president, it’ll be hard in the future to skirt the rules and amass such enormous, tax-deferred savings — if President Obama gets his way.
A new provision in Obama’s budget “[e]nds a loophole that lets wealthy individuals circumvent contribution limits and a cumulate millions in tax-preferred retirement accounts,” according to a budget summary released by the White House. The White House is unveiling its new budget Wednesday.
A senior administration official confirmed to TPM that the provision is a fresh addition to Obama’s budget, and intended to close the loophole that allowed Romney to amass upward of $100 million in his individual retirement account.
Grover Norquist’s iron grip over much of the Republican Party is somewhat puzzling. Why should Senators and other lawmakers listen to a guy caught laundering money for Jack Abramoff?
But consider Norquist’s tax pledge and political power another way: that he’s just a proxy for the powerful interest groups that finance him. In the nineties, it was big tobacco that used Norquist’s tax pledge as a cover to lobby lawmakers against cigarette taxes (Norquist still uses an e-mail system donated to him by Altria to send out Tea Party action alerts against tobacco taxes). Now, big PhRMA and other industry groups provide grants to Norquist while his foundation endorses other giveaways, like protectionist support against importing cheaper drugs from Canada and the classification of tax subsidies to refineries as “tax cuts” that must not be cut.
I took a look at the last available budget numbers for Americans for Tax Reform, Norquist’s group. Though they do not reveal their donors, we can cobble together much of Norquist’s donors using foundations and other nonprofits that donate money to him.
The disclosures show that only two billionaire-backed groups have provided over 66 percent of Norquist’s funding:
The worst thing about this whole debate: Obama got elected not once, but twice by saying he was going to raise taxes on the super rich. Nobody in the GOP got elected by saying that they were going to cut Medicare or home mortgage deductions, but that’s the corner this fiscal cliff debate puts them in.
Senate Majority Leader Harry Reid’s attempt to reform the filibuster probably won’t go as far as the Senate needs to end gridlock, but it could have one positive impact: making bipartisan cooperation on a solution to the so-called ‘fiscal cliff’ impossible, according to Mitch McConnell.
‘We have huge issues before us here at the end of the year, much of which will probably carry over into next year,’ McConnell said in a debate with Reid Tuesday. ‘It’s a time that we ought to building collegiality and relationships and not making incendiary moves that are damaging to the institution and could have serious ramifications on our ability to work together here at the end of the year.’
I think that’s good news.
I’m not going to go over a political cliff over David Plouffe’s remarks about the fiscal cliff. As has been widely reported, Plouffe told a college crowd earlier this month that the president was prepared to disappoint the left by making a ‘grand bargain.’
‘Democrats are going to have to do some tough things on spending and entitlements that means that they’ll criticized on by their left,’ Plouffe insisted. The White House knows, he added, that it must ‘carefully’ address the ‘chief drivers of our deficit’: Medicare and Medicaid. Plouffe even suggested the president might be open to lowering tax rates on the wealthy. ‘What we also want to do is engage in a process of tax reform that would ultimately produce lower rates, even potentially for the wealthiest,’ he said.
Chuck Rogers over at CFC worries that supposedly fiscally responsible Republicans are signaling a willingness to abandon their pledge not to raise taxes.
While, thankfully, most elected Republicans continue to honor their pledge to Grover Norquist that they will not raise taxes, seven key GOP congressmen and senators have broken ranks: Alan Simpson, Saxby Chambliss, Jeff Flake, Tom Coburn, Lindsey Graham, Peter King, and John McCain have stated that they would consider tax hikes as part of a deal to avoid the fiscal cliff.
This is, of course, unacceptable — now more than ever we should be lowering taxes, not raising them. Our government needs to raise revenue, but that’s accomplished by spurring the economy in the form of tax breaks for job creators. In short — if we take care of the job creators, they’ll take care of us.
— Chuck Rogers (@CheckFact) November 26, 2012
They’ve aimed their rescue efforts at fiscal nostrums that do nothing to address the truly urgent economic issues facing American workers and businesses today. They’ve confined the discussion of tax reform to tweaks that will leave virtually intact the most important tax break for the wealthy (the preferential treatment of investment income), while turning their gun sights on government programs that keep millions of Americans healthy and out of poverty (think Medicare and Social Security).
Make no mistake: The valiant budget negotiators at work in Congress and the White House are mapping out a plan for economic austerity under the guise of “getting our house in order.” This is despite blindingly obvious evidence that what’s needed in the U.S. today is the opposite — more stimulus to jump-start job creation, and more spending on infrastructure from roads and bridges to communications and electrical grids.
Do you doubt that? Then look at the paragon of post-crash austerity: Europe. Harsh budget cuts in Greece, Spain, Portugal and Italy, along with austere fiscal regimes in France and Britain, have pushed the Eurozone back into recession.
In the interest of national security, and the preservation of the world order the United States has upheld and benefited from since World War II, Republicans and Democrats must make the necessary compromises and agree on a deal to address the nation’s fiscal crisis in both the near and the long term.
I am not an economist or a budget analyst, so I don’t presume to know exactly what a “grand bargain” should look like. It seems pretty obvious that a compromise will require both tax reform, including if necessary some tax increases, and entitlement reform, since those programs are the biggest driver of the fiscal crisis. What I do know, as a national security analyst, is that our continuing failure to address the crisis in a way that makes possible a return to stable economic growth has become a serious foreign policy problem.
In a world that still looks to U.S. leadership on many issues, despite what some say, our utter dysfunction on matters involving the basic health of our economy does not inspire confidence. Nor will the United States act with confidence abroad while we are unable to address our problems at home. It is no accident that all the misguided talk of a “post-American world” came after the financial crisis exploded.
A principal victim in the absence of a deal to address the fiscal crisis has been and will continue to be the national security budget. Republicans and Democrats alike have been prepared to see hundreds of billions of dollars cut from the defense budget, with even more cuts coming if Congress fails to avoid the automatic “sequestration.” The already shrunken foreign-aid budget is also being cut at a time when, in the Middle East, for instance, we need to be spending more, not less, to support stable economies as the basis for democratic reform.
Romney’s got a gifting table scam going — those in at the top benefit while those at the bottom watch the whole pyramid scam collapse on them. The rich will get their tax break, but you can bet that congress isn’t going to have the real grit or determination to cut any deductions. So the rich will run away with yet another tax break to their banks in the Caymans while the deficit balloons like crazy if Americans are foolish enough to actually elect Romney.
The nature of campaigning is to make promises. The nature of governing makes it hard to keep all those promises. And so do unforeseen events, like recessions.
That may be why even those who broadly favor the kind of tax reform that Mitt Romney is proposing — lower tax rates, fewer tax breaks — worry that his $5 trillion plan might not deliver all that he’s promised.
If elected, Romney says he would work with Congress to lower income tax rates by 20%, repeal the Alternative Minimum Tax and make investments tax free for everyone except those making more than $100,000 ($200,000 if married).
The rich as a group, Romney says, would continue to pay the same share of revenue they pay today, and the middle class would see its tax burden lowered.
His plan wouldn’t add a penny to deficits, Romney promises, because his tax cuts would be paid for through a combination of reduced tax breaks and the economic growth his plans would generate.
Joel Prakken, chairman of the firm Macroeconomic Advisers, says it would be very difficult for Romney’s plan to work without ending some very popular deductions — “mortgage interest, health care benefits and the like.”
“And so, there’s some concern out there about whether it actually will be possible to engineer this kind of tax reform with such sharp cuts in marginal rates,” Prakken says.
Romney has recently suggested he might just cap taxpayers’ deductions to $17,000. But some analysts say it’s doubtful that would fully pay for the cost of Romney’s tax cut, either.
Prakken says the elimination of deductions and loopholes could lead to faster job creation in the long run, but in the short term it could eliminate jobs in industries like housing that are already struggling.
“Until we see precisely how the lower rates are going to be paid for, in terms of broadening the tax base, it’s very difficult, it’s just impossible, in fact, to make an unqualified statement about just how much growth we’re going to get from this kind of tax initiative,” Prakken says.
As for the 12 million new jobs Romney says his policies will produce in four years, Prakken says it’s not a very high bar.
“In our long-term forecast, in which we assume the continuation of current policies and an economy that’s recovering toward full employment anyway, we were able to create roughly 12 million new jobs without recourse to these policies,” Prakken adds.
But the president and his team believe that Romney, smooth onstage operator that he was, nonetheless opened himself to criticism that his tax reform, health care, and Wall Street regulation proposals are a smokescreen - all show, no substance.
Mr. Obama began prosecuting the case against Romney’s vague proposals at the debate, explaining, “He says he’s going to close deductions and loopholes for his tax plan. That’s how it’s going to be paid for but we don’t know the details. He says that he’s going to replace Dodd-Frank, Wall Street reform. But we don’t know exactly which ones. He won’t tell us. He now says he’s going to replace Obamacare and assure all the good things that are in it are going to be in there and you don’t have to worry.”
“And at some point I think the American people have to ask themselves: Is the reason that Governor Romney is keeping all these plans to replace secret because they’re too good?”
Citing statistics that some nine million evangelical and eight million Catholics did not vote in 2008, Reed said his group the Faith & Freedom Coalition will soon start targeting voters in Colorado, Iowa, North Carolina, Nevada, Ohio, Florida and Virginia.
He said that Faith & Freedom has a voter list of 17.3 million voters in 15 key states, and cellular phone numbers and emails for 35 percent of those, which it plans to tap to encourage evangelicals to both register to vote and go to the polls.
He outlined an effort that includes robocalls from Rick Santorum and Mike Huckabee, a massive mailing, door hangers and a mammoth email campaign. “We’re going to send up to 15 emails until they open them. And if they haven’t opened their email, we’re going to show up at the door and log into their laptop and help them open them,” he said at a meeting of conservative leaders hosted by Grover Norquist, president of Americans for Tax Reform