Romney’s 4 Percent: A Goal not a Promise, but Still Expensive

The advisers who introduced Mitt Romney to the idea that he should spend at least 4 percent of GDP on the Pentagon’s budget are busy clarifying what he means. But “their comments,” conclude Bloomberg’s Gopal Ratnam and Tony Capaccio:

only add to the uncertainty about how much a President Romney might add to the Pentagon’s budget and when, what the additional spending would buy other than more warships and how he’d propose to pay for what analysts say may be as much as $2 trillion in added spending while also whittling down the federal deficit as he’s promised.

Dov Zakheim, a former Pentagon comptroller in George W. Bush’s administration, told Ratnam and Capaccio that Romney’s 4 percent promise is a goal that “is not going to be achieved overnight or perhaps even by the end of the first term.” How quickly Romney reaches his 4 percent target, Zakheim explained at an event last week organized by the group Military Reporters & Editors, “will very much depend on the state of the economy and very much depends on the offsets you’ll be able to find within the defense budget,” but he affirmed that “Every effort will be made to ramp up as soon as possible.”

Differing assumptions about the pace of Romney’s increase explain the continued confusion surrounding his 4 percent plan. Zakheim had earlier claimed that the $2 trillion estimate cited by Obama “is essentially an assumption that we go to 4 percent of GDP from the get-go.” The Romney campaign, he explained, doesn’t intend to “come in with a massive supplemental” to the current budget to boost defense spending.

Others, including vice presidential nominee Paul Ryan, have criticized the $2 trillion figure, but have failed to offer their own estimate of the likely costs of Romney’s promise. In particular, Romney supporters have singled out an analysis by Travis Sharp of the Center for New American Security (CNAS), and have accused Sharp and CNAS of running cover for Obama. In earlier remarks to reporters, Zakheim asserted that the $2 trillion was concocted by Democrats, for shock value, and that it should therefore be taken with a grain of salt.

As to the question of how the additional Pentagon spending would be paid for, James Carafano at the Heritage Foundation shared some ideas with Ratnam and Capaccio. Romney may be able to reach the 4 percent of GDP goal by the end of the first term and still cut deficits as he has promised “with two caveats,” Carafano explained. Romney would have to get “tax reform done and address long-term entitlement spending.”

Slowly but surely, we are starting to understand Romney’s promise. And who said presidential campaigns were a waste of time?

A few clarifications are still in order, however.

First, the claim that the $2 trillion figure was created by Democrats and the president’s supporters is false. I first estimated–before Travis Sharp did–the likely costs of Romney’s four percent pledge here. Since then, I have twice revisited my estimates (here and here), settling most recently on two figures: $1.85 trillion in additional spending if Romney reached the 4 percent target in 4 years; $1.7 trillion if he reached it at the end of his second term. I noted, also, the remaining unknowns: what is included within the base budget, and GDP (I have deliberately used CBO projections, the most conservative – Obama/OMB and Romney believe that GDP will grow faster). I also note that a number of others, none of them obvious “Obama supporters”, have questioned Romney’s 4 percent promise, including Byron Callan, a defense industry analyst with Capital Alpha Partners LLC, and the Center for Strategic and Budgetary Assessment’s Todd Harrison.

Second, the two “caveats” at the center of Carafano’s supposition that Romney could achieve his goal by the end of his first term without increasing the deficit are more than that; on the contrary, the belief that Mitt Romney can achieve long-term entitlement reform and fundamental tax reform within the next four years strains credulity to the breaking point.

The fundamental reform of “long-term entitlement spending,” though badly overdue, is not seriously on offer by either Republicans or Democrats, and would not generate significant savings in the short term, in other words, by the time that Romney wanted to ramp up military spending. His spending, therefore, would grow the deficit, at least in the short term.

Equally dubious is the presumption that far-reaching tax reform – the elimination of some deductions in exchange for lower marginal tax rates – is likely any time soon. For starters, many fiscal hawks oppose any reform that results in higher revenue. More revenue, by definition, is a tax increase, something that is still verboten among most Republicans. And with good reason. “The American people know,” said Michelle Dimarob, spokeswoman for House Ways and Means Committee Chairman Dave Camp (R-Mich.), “when Washington politicians call for higher taxes it is to fuel more Washington spending.” “Americans,” Dimarob concluded, ”don’t want to pay more in taxes to bailout Washington.”

She’s right, and they don’t change their tune when the Pentagon is doing the spending. This study (.pdf, Q56) found that a plurality (including 52.2 percent of Republicans) are opposed to paying higher taxes in order to fund a still larger military. Other recent polls have found that Americans support military spending cuts (here, here and here), and barely one in four Americans (27 percent) believe that we should be spending more, according to a recent Rasmussen survey. In short, Pentagon spending boosters might succeed in pushing through a tax increase, but this would likely be unpopular with voters.

So, after all of this, I’m still left with two nagging questions: will Mitt Romney’s promise to spend more on the military win him votes? And, if he is elected, can he achieve his goal of spending 4 percent of GDP on the Pentagon without raising taxes or increasing the deficit?