Unpacking 'Romneyomics': how Mitt would adjust dials on the US economy
MItt Romney offers a prescription for the ailing US economy that hews to Republican principles. But it also has some unorthodox differences. Well-off Americans could get fewer government benefits and pay more for Medicare.
Mitt Romney’s prescription for the sluggish US economy looks to be straight from the traditional Republican mold: Cut taxes to stimulate growth, and cut spending to shrink the federal deficit. Pour more money into defense. Promise to root out waste in government.Skip to next paragraph
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That means well-to-do Americans would eventually get a lesser share of benefits from those big government entitlement programs than they do now. “We don’t need Social Security to provide retirement income for upper-income people,” says Glenn Hubbard, a top economic adviser to Mr. Romney and the dean of the Columbia University Business School here, in an interview. “The nation can’t afford a very large program that’s across the board. What we can do is focus on people who really need help.”
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The solution under Romneyomics? Future retirees who are well off would see their benefits rise at a slower pace than would be the case for current retirees – and at a slower pace than for their middle-income peers, says Mr. Hubbard. Likewise, higher-income Americans might be required to pay for private insurance or to pay an additional premium if they want to remain in the Medicare system.
It may seem an unorthodox proposal for the standard-bearer of the Republican Party, which likes to castigate President Obama for “class warfare” over his desire to end the Bush-era tax cuts for the rich. But to hear Hubbard tell it, the wealthiest citizens of America could expect, under a Romney White House, to see less generous benefits from government programs, including Medicare, and, if Romney could get tax reform through Congress, they would lose many tax deductions and exemptions as well.
“Romney says everything [on tax reform] is on the table, and it has to be done so most of the burden is borne by upper-income people,” says Hubbard.
Who would qualify as upper income? That’s up to Congress and the president, says Hubbard, declining to name a dollar amount.
Of course, no one would ever describe the Romney plan as an assault on high-income wage earners. Those Americans would benefit, for instance, from Romney’s proposal to drop the top tax rate on their income from 35 percent to 28 percent. Mr. Obama, by way of contrast, wants to push the top marginal rate to 39.6 percent – and as high as 43.4 percent on unearned income such as dividends (compared with 15 percent now).
And Romneyomics would certainly pinch people in other income classes. One change would be to raise the retirement age at which workers could collect full Social Security benefits, Hubbard says – a move that would affect most US families.