Keyword: act.
I see no substance to Mitt's economic policy whatsoever, regardless of what he says in flowery speeches. Let's look at what Mitt's official campaign cite says: How I'll Tackle Spending, Debt
As is typical, most of this platform position statement is fluff. The real numbers, the money shot, is in the 4th paragraph:
Any turnaround must begin with clear and realistic goals. By the end of my first term, I will bring federal spending as a share of GDP down from last year’s staggering 24.3 percent to 20 percent or below. This level is in line with the historical average and nears the tax revenue our economy generates when healthy. With economic growth of 4% a year, meeting this goal will require approximately $500 billion of spending cuts in 2016, and that would still allow us to undo the Obama administration’s irresponsible defense cuts.
This sure sounds good to anyone not really paying attention, but it is riddled with false assumptions and bad math.
He starts off with 2 accurate numbers: current spending IS running at 24% of GDP, and his 20% target IS in line with the historical average of spending vs. GDP. However, his next statement is a stretch: "This level is in line with the historical average and nears the tax revenue our economy generates when healthy".
That last bit in bold is the problem. Our tax revenue right now is $2.3 trillion, only 15% of GDP. Granted, the economy is extremely weak, but the 76-year average for revenue is still only 17% of GDP, so he's still off by $450 billion. The only time our revenues hit 20% of GDP in the last 30 years were the 3 years 1998-2000 - the peak of the dot com bubble, which was an aberration not likely to be repeated.
He also fails to account for the fact that since government spending is a component of GDP, reducing Federal spending will also reduce GDP and will, at least for a short to medium term, reduce revenues further. Not that this is a reason NOT to cut spending, just an accounting fact he ignores.
Then we go on to another HUGE false assumption, which completely blows his math out of the water: "With economic growth of 4% a year".
Full stop.
His numbers, much like Paul Ryan's budget plans, are entirely based on this assumption of sustained 4-5% economic growth. Why is this a problem? Because it's fantasy, and he gives us no clue as to how he's actually going to create this 4% growth.
Why is it fantasy? You only have to look at the history of the past 30 years. When you subtract out debt expansion, we have had NO net economic growth!
No net economic growth in 30 years?! Really? Really!
In 1980, GDP was $2.72 trillion and total outstanding public debt was $0.91 trillion. In 2011, GDP was $15.09 trillion, but public debt swelled to $14.79 trillion! We added $12.37 trillion in GDP at the expense of $13.88 trillion in new debt!
So no, you can't just go throwing around assumptions like "4% economic growth". The bottom line is, Romney's economic plan is smoke and mirrors and still dependent on continuing to run structural budget deficits forever.