The budget and spending proposals released last week by former Massachusetts governor Mitt Romney offer a stark illustration of both the promise and peril associated with a Romney candidacy. It's almost as though there are two Romneys: Good Mitt, the smart, serious policy wonk, who — in contrast to some of his opponents — has obviously thought through the details of his positions; and Bad Mitt, the timid politician, afraid to offend any potential voting bloc, someone so firmly in the middle of the road that he risks being run over.
On Social Security, for example, the Good Mitt proposes two benefit cuts: a gradual increase in the retirement age and a technical change known as "progressive wage-price indexing" that would effectively hold future Social Security benefits constant in inflation-adjusted terms for all but low-income retirees (currently, benefit levels are linked to wage growth rather than to inflation. Because wages generally grow faster than inflation, this means future retirees will receive higher real benefits than today's retirees.) These changes would restore Social Security to solvency, but at the cost of making the program an even worse deal for younger workers, and it would do nothing to fix Social Security's other problems such as ownership, inheritability, or wealth accumulation. That makes it disappointing that the Bad Mitt continues to resist the idea of allowing younger workers to privately invest a portion of their payroll taxes through personal accounts.
On Medicare, Good Mitt has generally endorsed the Paul Ryan approach to reform. He would allow seniors to use government subsidies (effectively a voucher) to purchase private health insurance. Because the vouchers would have a limited value, it offers the potential for controlling costs, while giving seniors more choices. But the Bad Mitt included a critical distinction. Unlike Ryan, Romney would leave traditional Medicare in place. Nor does it appear that he would make any significant cuts to traditional Medicare. This allows him to avoid any charges that he would "throw Granny off a cliff," but a Medicare program with unlimited benefits will almost certainly be more appealing than a private alternative that caps spending. That means that either seniors will stick with traditional Medicare or there will be pressure to increase the level of subsidies in the private program. Either way, Medicare costs will continue to grow at unaffordable levels.
On Medicaid, Romney would block-grant Medicaid and return it to the states, a position that has pretty much become orthodoxy among Republicans, and has been endorsed by most of his rivals.
Overall, both the Good and Bad Mitts would cap total federal spending at roughly 20 percent of GDP, slightly higher than most of his rivals, but well below current levels of nearly 25 percent, or projected levels that, according to CBO, could reach 42 percent of GDP by mid-century. Getting there during his first term would require roughly $500 billion in spending cuts, an amount that might have seemed bold at one time but is really far less than what we need to get our fiscal house in order.
Because Romney actually wants to increase defense spending and faces huge interest payments on the debt (and because his changes to Social Security and Medicare won't phase in for several years), he will be forced to rely heavily on cuts to domestic discretionary spending. Here Romney proposes the usual grab-bag of cuts to conservative bugaboos such as Planned Parenthood, NPR, and Amtrak. But even here, Bad Mitt can't quite push himself to go all the way, talking in terms of "cuts" to programs, rather than eliminating them entirely. Moreover, given that domestic discretionary spending amounts to just 17 percent of the federal budget (all domestic discretionary spending — everything from the Department of Education to the Department of Commerce, from the FBI to the FDA — amounts to roughly $650 billion this year), Romney is eventually going to have to spell out much bigger cuts.
Romney's primary opponents have so far avoided both Bad Mitt's flaws and Good Mitt's strengths. Herman Cain, Rick Perry, and Newt Gingrich offer proposals that are far bolder and more sweeping, but often lacking in details. Where Romney would tinker, they promise to overturn the status quo, but without telling us how they would do it. (Ron Paul, of course, offers a very detailed plan, but does not yet appear to be a threat to Romney's nomination.)
For example, Cain, Perry, and Gingrich all favor Chilean-style personal accounts for Social Security. But none has provided details about such issues as the size of the personal accounts, the age at which workers would be eligible to participate, whether the changeover would be accompanied by reductions in benefits under the current system, or how they would manage this transition (which, though it would reduce long-term liabilities, would increase short-term budget deficits).
Likewise, on spending, they call for much deeper and more dramatic cuts, but provide no details of what those cuts would be. Cain, for example, has suggested that he would submit a balanced budget his first year in office, a feat that would require an immediate 44 percent cut in spending. But he has not provided any specific cuts to get there. Instead, he promises that "every federal agency, every government program and expenditure must be reviewed and revised with a keen eye and a red pen." That sounds a lot like President Obama's long-abandoned promise to "go through the federal budget line by line" looking for cuts.
Unfortunately there doesn't seem any way to divorce Good Mitt from Bad Mitt. As a result, Republican primary voters are going to continue to have to decide between a candidate that offers timid but practical policies and candidates that offer bold but vague ones.