There's basically one big question hanging over the 2012 campaign: If
he wins and takes over a country with a large budget deficit and high
unemployment, will Mitt Romney actually attempt to slash spending and close loopholes aggressively enough to pay for his huge reductions in tax rates?
Economics says he shouldn't. Slashing federal outlays and rescinding
tax expenditures at a time of low interest rates and a large output gap
would kneecap the economy.
But history also says that newly elected presidents usually try to
implement the agenda they campaigned on. They're often stymied by
Congress, but in this case we know the votes are there in the House to
pass the Paul Ryan budget. They already took the vote! And it's
extremely likely that if Romney wins, the GOP will also have a majority
in the Senate. There's not much precedent for a party running on an
agenda, winning the election, and then just abandoning it. There's no
particularly good reason to have spent all this time talking about
spending cuts unless Republicans really want to cut spending. But at the
same time, all their talk seems very calculated to avoid specifics as
if they don't really want to do the cuts.
The result: It's all a bit of a mystery. A Romney administration will
either spend 2013 enacting a gigantic increase in the budget deficit,
or else major cuts in domestic spending. In economic terms, there's a
big different between those policies. And since both campaigns have
decided it's in their interest to say the cuts version is what's going
to happen, we're not going to have a debate about what's likely to actually happen. But that's what I'd like to know.