WHAT’S AT STAKE
Getting our fiscal house in order has become more than just an economic issue; it’s a moral imperative. Every dollar of deficit spending must be borrowed, with the bill sent to our children to pay back. As president, Mitt Romney will ask a simple question about every federal program: is it so important, so critical, that it is worth borrowing money from China to pay for it?
Excessive government spending is also harming the economy by skewing the market place and creating high levels of uncertainty. As federal funds slosh through the economy, they lift up some enterprises at the expense of others. In an environment where the government is picking winners and investing huge sums in projects of questionable value, private entrepreneurs across the economy cannot have confidence that their own investments will pay off. Aware that such spending cannot continue indefinitely, business owners also have a difficult time predicting how demand will shift from year to year and how to invest accordingly. The only recipe for fiscal health and a thriving private economy is a government that spends within its means.
OBAMA’S FAILURE
Since President Obama assumed office three years ago, federal spending has accelerated at a pace without precedent in recent history, taking us from an already staggering $3.5 trillion in federal spending in 2010 to a projected $5.6 trillion within the next decade. This sharp rise has been entirely a matter of choice. Even as federal spending remains wholly within our control, Washington is spending money in an out-of-control fashion.
One traditional yardstick for gauging whether government is living within its means is spending as a percentage of GDP. Since the 1950s, federal spending as a percentage of GDP has hovered around 20 percent. When President Obama took office, it shot up to 25 percent, a level not seen since World War II. Before the recession, the federal government spent $25,000 per household. That number has now soared past $30,000 and is on track to hit $35,000 within the next decade.
Our untenable spending habits were at the root of this past summer’s crisis over the debt ceiling. President Obama’s insistence on a “balanced approach”—by which he meant a combination of spending cuts and tax increases—would have put a seal of congressional approval on a baseline level of spending significantly higher than when he took office. That is precisely why the President’s approach had to be soundly rejected. He wanted to move the country in the wrong direction of more taxes and more spending at a time when both are smothering the economy.
MITT’S PLAN
After three years of President Obama, many now question whether we can ever return to fiscal sanity, let alone fiscal strength. A point of no return may well be approaching — a decade of huge deficits could drive our principal payments and interest rates beyond our reach while starving the economy of the capital it needs to grow.
Fortunately, the American economy’s tremendous capacity for growth gives the country one more chance to correct course. Mitt Romney has spent his career executing turnarounds in the private sector, the Olympics, and state government. He will bring to Washington the turnaround philosophy it so badly needs.
Set Honest Goals: Cap Spending At 20 Percent Of GDP
Any turnaround must begin with clear and realistic goals. Optimistic projections cannot wish a problem away, they can only make it worse. As president, Mitt’s goal will be to bring federal spending below 20 percent of GDP by the end of his first term:
- • Reduced from 24.3 percent last year; in line with the historical trend between 18 and 20 percent
- • Close to the tax revenue generated by the economy when healthy
- • Requires spending cuts of approximately $500 billion per year in 2016 assuming robust economic recovery with 4% annual growth, and reversal of irresponsible Obama-era defense cuts
Take Immediate Action: Return Non-Security Discretionary Spending To Below 2008 Levels
Any turnaround must also stop the bleeding and reverse the most recent and dramatic damage:
- • Send Congress a bill on Day One that cuts non-security discretionary spending by 5 percent across the board
- • Pass the House Republican Budget proposal, rolling back President Obama’s government expansion by capping non-security discretionary spending below 2008 levels
Follow A Clear Roadmap: Build A Simpler, Smaller, Smarter Government
Most importantly, any turnaround must have a thoughtful, structured approach to achieving its goals. Mitt will attack the bloated budget from three angles:
1) The Federal Government Should Stop Doing Things The American People Can’t Afford, For Instance:
- • Repeal Obamacare — Savings: $95 Billion. President Obama’s costly takeover of the health care system imposes an enormous and unaffordable obligation on the federal government while intervening in a matter that should be left to the states. Mitt will begin his efforts to repeal this legislation on Day One.
- • Privatize Amtrak — Savings: $1.6 Billion. Despite requirement that Amtrak operate on a for-profit basis, it continues to receive about $1.6 billion in taxpayer funds each year. Forty-one of Amtrak’s 44 routes lost money in 2008 with losses ranging from $5 to $462 per passenger.
- • Reduce Subsidies For The National Endowments For The Arts And Humanities, The Corporation For Public Broadcasting, And The Legal Services Corporation — Savings: $600 Million. NEA, NEH, and CPB provide grants to supplement other sources of funding. LSC funds services mostly duplicative of those already offered by states, localities, bar associations and private organizations.
- • Eliminate Title X Family Planning Funding — Savings: $300 Million. Title X subsidizes family planning programs that benefit abortion groups like Planned Parenthood.
- • Reduce Foreign Aid — Savings: $100 Million. Stop borrowing money from countries that oppose America’s interests in order to give it back to them in the form of foreign aid.
2) Empower States To Innovate — Savings: >$100 billion
- • Block grants have huge potential to generate both superior results and cost savings by establishing local control and promoting innovation in areas such as Medicaid and Worker Retraining. Medicaid spending should be capped and increased each year by CPI + 1%. Department of Labor retraining spending should be capped and will increase in future years. These funds should then be given to the states to spend on their own residents. States will be free from Washington micromanagement, allowing them to develop innovative approaches that improve quality and reduce cost.
3)Improve Efficiency And Effectiveness. Where the federal government should act, it must do a better job. For instance:
- • Reduce Waste And Fraud — Savings: $60 Billion. The federal government made $125 billion in improper payments last year. Cutting that amount in half through stricter enforcement and harsher penalties yields returns many times over on the investment.
- • Align Federal Employee Compensation With The Private Sector — Savings: $47 Billion. Federal compensation exceeds private sector levels by as much as 30 to 40 percent when benefits are taken into account. This must be corrected.
- • Repeal The Davis-Bacon Act — Savings: $11 Billion. Davis-Bacon forces the government to pay above-market wages, insulating labor unions from competition and driving up project costs by approximately 10 percent.
- • Reduce The Federal Workforce By 10 Percent Via Attrition — Savings: $4 Billion. Despite widespread layoffs in the private sector, President Obama has continued to grow the federal payrolls. The federal workforce can be reduced by 10 percent through a “1-for-2” system of attrition, thereby reducing the number of federal employees while allowing the introduction of new talent into the federal service.
- • Consolidate agencies and streamline processes to cut costs and improve results in everything from energy permitting to worker retraining to trade negotiation.
If pursued with focus and discipline, Mitt’s approach provides a roadmap to rescue the federal government from its present precipice. But that respite will be short-lived without a plan for the looming long-term threat posed by the unsustainable nature of existing entitlement obligations. Learn more about Mitt’s proposals for entitlement reform: Medicare and Social Security
Governor Mitt Romney and Spending Press Releases
2007
2006
2005
- 06-30-2005; Governor Romney signs into law $23.8 billion budget for fiscal year ‘06; budget maintains balance, restores spending to key accounts
2004
- 06-03-2004; Romney delivers first dividend on reform; announces $500m estimated budget surplus for fy04, files supplemental spending bill
- 06-25-2004; Romney signs $22.402b fiscal year 2005 'no new tax' budget; takes fiscally conservative approach by issuing $108.5m in vetoes
2003
Governor Mitt Romney and Spending Quotes
The Federal government must stop its borrowing and spending binge. The debt is a burden on our economy, our currency, our foreign policy, and our future. This is beyond pork barrel spending. We must address entitlement programs - not just to save money - but to give Americans confidence in their future.
2006
- “While Massachusetts regained its economic strength, we resisted new spending we could not afford and avoided tax increases that could damage our recovery. Choosing fiscal discipline and reform has paid off, and we are now in a position financially to make important new investments in areas that will improve the lives of all of our citizens.”
- "I don't want to add entitlements. I want to find ways to reform our entitlement programs."
- "It struck me that there were three courses to take; two easy, one hard," Romney said of his fiscal crisis. "Those courses included simply raising taxes or alternatively, borrowing money. I rejected both of those as being too hard on working families and too punitive to future generations. Instead, I chose the third, more difficult course, which was finding ways to reduce spending, cutting back government, and using every vehicle imaginable to restore fiscal discipline, allowing us in the future to invest in education, healthcare, and the environment and job creation."
- Mighty Mitt Romney, By Shawn Macomber, 04-21-2006 Interview
- “I cannot in good conscience agree to spending money from the rainy day fund in a year of record high revenues. The spending in these bills would put Massachusetts on the same road to ruin we’ve been down before Most of the cuts I have made are for projects that would be nice to have, but which we cannot justify paying for out of rainy day funds. A smaller number of these projects are just pure pork. Four years ago, we had a serous budget crisis in this state, and a lot of hard work went into putting Massachusetts back on solid footing. For this, the Legislature deserves credit. But if we don’t maintain fiscal discipline today, big problems are sure to follow tomorrow. A 15 percent retroactive pay raise for judges is excessive. I am proposing a more modest increase that is fair to both the judges and to the taxpayers.”
- "Every legislator and politician knows this spending can't be justified, so why do they do it? Because it gets politicians praised -- and re-elected. There's no courage involved in spending more money. Drawing a line on spending is hard and fraught with criticism. When I vetoed $458 million of excessive spending in the budget this spring, I knew that community newspapers across the Commonwealth would decry my elimination of local pet projects. And, I knew that the Legislature would over ride most of my vetoes. In fact, they over rode all of them, to a chorus of community acclaim. But someone has to say no."
- "Domestically, we’re going to have to stop spending too much money. And we’re also going to have to stop using so much oil that we’re getting from countries that don’t like us. And, of course, our spending problem is related to our entitlement problem. So we’ve got a lot on the table. My approach on each of these issues would probably be a little different than the other folks who are looking at the race, but that’s something time will tell."
- Governor Mitt Romney, 12-28-2006 Interview with Robert B. Bluey, Mitt Romney Discusses Iraq War, Reagan's Influence and Gay Marriage
- “After taking office nearly two years ago facing a $3 billion budget deficit, we had to make some difficult decisions to restore fiscal balance in Massachusetts without raising taxes. While we still have more work to do, we are on the right track. As a result, we can now add spending in those key areas that we all agree are priorities.”
2005
- “Our unemployment rate is low, jobs are being created and the economy is getting stronger. Massachusetts state government is in a position to increase spending on vital programs and still keep our promise to the voters by lowering the income tax.”
- "We changed that with time and began looking for regional strategies. I think we're doing a better job. But if you look at where the money has gone, the tens of billions that have gone out to states and localities overwhelmingly has gone to where we could spend it, and that's on first response and communication systems, command centers and so forth. We need those things, but it has not been a spending strategy based on a completely layered view of how we can protect the homeland, and that's something we have time to do now."
- Governor Mitt Romney, 09-07-2005, Homeland Security: Status of Federal, State, and Local Efforts
- “No matter how you look at it, this is extremely positive news for the people of Massachusetts. Revenues were up across the board in every single category. There are more people working, our business sector is healthy and creating jobs and consumers are spending money.”
2004
- “We are on a mission to double housing starts in Massachusetts and this is one approach to help get us there without spending new taxpayer dollars. These new resources are critical at a time when public funds are limited, but the need for new housing is enormous.”
2003
- "Our problem is simple: spending is high and cash is low. When we began our transition two months ago, every indication was that the current budget was balanced. That is not the case, and immediate, hard action is required to achieve fiscal balance."
- "A true partnership means sharing in good times and bad. In good times, the Commonwealth shared its prosperity with cities and towns. Now that the state has hit hard times, we need cities and towns to join us in tightening their belts. Our problem is simple: spending is high and cash is low. When we began our transition two months ago, every indication was that the current budget was balanced. That is not the case, and immediate, hard action is required to achieve fiscal balance," said Romney. According to Romney, his current "9C authority" would force disproportionate cuts on the elderly, poor and disabled. "If we are forced to balance this budget on the backs of our seniors and the poor, we will expose the core services of government to disproportionate cuts," said Romney. "That is not fair. The best solution is to spread the burden."
- Governor Mitt Romney, 01-10-2003 Press Release
- An address to the Massachusetts Municipal Association.
- “Figures like these highlight the serious need for improved statewide coordination and better allocation of our resources. It’s not simply a matter of spending money – it’s a matter of spending it smartly. To the maximum extent possible, public agencies and departments have to work together more closely to better assist homeless individuals and families as they try to transition out of shelters and into permanent housing.”
- "Tonight, we stand at a crossroads. On the one hand, we can take the same way we've tried before, raising taxes to keep up with our spending. Frankly, I don't like what I see at the end of that road. Raising taxes again hits working families hard. It scares off employers, both new and old. It's time to declare that the road to Taxachusetts is a dead end street."
- Governor Mitt Romney, 02-25-2003; Massachusetts State of the State Address 2003
- "The first is Common Sense for the Commonwealth that I have just described. The second brings spending programs to levels we can afford. When it comes to caring for the poor, the disabled and the elderly, Massachusetts is one of the most generous states in the nation. And despite facing the worst fiscal crisis in a generation, we will stay one of the most generous. Even more remarkably in light of the record budget gap, our total state spending for Health and Human Services will GROW next year under my budget. Let me say that again: Health and Human Services will actually GROW next year."
- Governor Mitt Romney, Massachusetts State of the State Address 2003 02-25-2003
- “That is why we are going to hold the line on taxes and spending, cut red tape, and keep our budgets balanced without overburdening the engines of commerce.”
- "Two, we reform. Yes, we reduce spending in some areas. That’s unavoidable. But we do so as part of a process of broad-based restructuring. We preserve core services now, and position ourselves to better realize the promise of state government in the long term."
- Governor Mitt Romney, 06-02-2003, TESTIMONY ON AN ACT TO REFORM, RESTRUCTURE, AND REVITALIZE GOVERNMENT
- "I commend you for completing this budget in a timely manner without raising taxes and without using our dwindling Stabilization Fund reserves. However, because I believe that available revenues will not be enough to support the level of expenditures you have recommended, I am vetoing $201 million to ensure that the Fiscal Year 2004 budget is balanced and that we maintain a more sustainable level of government spending."
- "However, in austere fiscal times, we cannot spend more than we have. Therefore, I have reduced spending to a level that is immediately necessary."
“Binge Spending Days are Over”
by Mitt Romney
“When I took office, the Massachusetts economy was down. My team and I went to work to find ways to economize and to eliminate duplication and waste. We cut back on ‘nice to have’ spending that we just couldn’t afford.”
“Over the past three years, Massachusetts has come back. Businesses are hiring again… Our state and local tax revenues are going through the roof… On June 30 the Legislature passed a budget that spent not only all of the record tax revenues and all of the billion-dollar surplus, but also $500M from the rainy day fund. Every legislator and politician knows this spending can’t be justified, so why do they do it? Because it gets politicians praised—and re-elected. There’s no courage involved in spending more money.
Drawing a line in spending is hard and fraught with criticism. When I vetoed $458M of excessive spending in the budget this spring, I knew that community newspapers across Commonwealth would decry… and that the Legislature would over ride most of my vetoes. But someone has to say “no.”
Spending Data
- The budget’s bottom line is $23.22 billion, a 2.4 percent increase over anticipated current year spending. Romney also filed a $93.7 million supplemental budget for Fiscal Year 2005, which includes $28 million to replenish the snow and ice removal account. 01-26-2005 Press Release
- New budgetary spending is paid for by growth in tax revenues and savings from reforms instituted over the last two years. In the Medicaid program, the growth rate has been significantly slowed due to better management, efficiencies gained through new drug formularies and increased federal support. 01-26-2005 Press Release
- Romney vetoed just over $200 million from the spending plan to meet his constitutional requirement to balance the budget. The budget proposes to spend $300 million less than the $22.4 billion that is projected to be spent in the current fiscal year. 06-30-2003 Press Release
- Because of faulty revenue assumptions and because the Legislature did not adopt all of his reform proposals, Romney vetoed $201 million in spending, the largest of which was a $23 million reduction in the Additional Assistance category of local aid. He also rejected several items in the budget, saying they take the state in the wrong direction. 06-30-2003 Press Release
- Romney said the transfer is possible because of the success in reducing spending with the Governor’s Office, freeing up funds for other purposes. Spending in the Governor’s Office has dropped from $5.6 million in FY02 to $4.6 million in FY06. Spending is anticipated to drop again in the current fiscal year. 11-03-2006 Press Release
Also See
Governor Romney's Five Factors That Accelerate Growth And Assure Economic Leadership:
- Skilled, Educated, Motivated People
- Free Trade, On The Level
- Capital And Savings
- Innovation And Technology
- Consumer Freedom
Governor Romney's Five Braking Factors That Decelerate Economic Growth:
- Excessive Taxation And Spending
- Excessive Regulation
- Excessive Burdens On Business Activity
- Excessive Health Care Costs
- Excessive Energy Costs
Governor Romney's Initiatives To Ensure America's Continued Economic Growth:
Below are excerpts of Governor Romney's remarks as prepared for delivery.
MAKING THE 2001 AND 2003 TAX CUTS PERMANENT: "Which course is better for America? A European model of high taxes and regulations? Or, low taxes and free trade - the Ronald Reagan model? That's the choice the next President will make. Some are already fighting to implement a massive tax increase. Instead, we should make the tax cuts permanent."
- REFORMING THE TAX CODE: "However, making the tax cuts permanent is only the first step. We also need reform of the tax code that moves towards a tax system that encourages growth, fairness, and simplicity."
TAX FREE SAVINGS: Governor Romney Proposes Allowing People To Save Tax Free. "It is time to make saving easy in America. I believe people should be allowed to earn interest, dividends and capital gains up to a certain amount a year, tax free and without restrictions on how or when their savings and investments are spent. As an example, let's say we chose $5,000 for joint filers as the annual tax free figure for dividends, interest and capital gains. This would help middle class families to be able to save and to invest - and spend their savings the American way: any way they want."
FISCAL DISCIPLINE: Unless Given The Line-Item Veto, Governor Romney Would Veto Any Appropriations Bills If They Exceed Spending Targets. "I have a fairly simple idea for keeping spending in check. Give Congress a spending target and then insist that it is met. If Congress does not meet the spending targets, then its appropriations bills should be vetoed. I regularly exercised my veto power while governor. The alternative is for the Congress to vest the President with a power held in some form by 43 governors, including this Governor - the line-item veto."
REGULATORY RELIEF: Governor Romney Would Reinstitute A Regulatory Relief Board To Cut Back Regulations That Choke Off Growth. "Our regulatory burden is also overbearing. I'd re-institute a regulatory relief board to cut back the regulation weeds that choke off growth. One that deserves pruning is Sarbanes Oxley - it's driving away IPO's, depressing jobs, and requiring billions of unnecessary cost. Executives who violate the law should go to jail, but the entire economy shouldn't have pay an inordinate price for the sins of the few bad actors."
NATIONAL TORT REFORM: Governor Romney Believes America Needs National Tort Reform, Not Reform State-By-State. "Another burden on our economic future is our out-of-control tort system. Last year, U.S. corporations spent more money on tort claims than they did on R&D. If innovation is the key to our long term leadership, then some tort lawyers are cashing out our country's future. I spoke with one member of the plaintiff's bar the other day. He said that the tort lawyers are ok with state reform, but not national reform. You know what state level tort reform means - it means that as long as there is one lawsuit-friendly state, they can sue almost any major, deep-pocketed company in America. No thanks, America needs national tort reform."
FUEL EFFICIENCY: Governor Romney Would Evaluate Reforms To CAFE Standards To Develop A Better Way To Get Higher Fleet Mileage Without Market Distortions. "What does this mean for Detroit? Well, it means that the automotive fleet will have to become more fuel efficient. CAFE improved mileage initially, but the consumer has gotten around it over the last couple of decades. CAFE has some real problems. It distorts the market. It penalizes the domestic automakers. It can ignore technical realities. So before I would change the CAFE standards, I want to sit down with every major knowledgeable party and evaluate each of the alternatives. A good number have been proposed; let's decide which is the best course by looking at the data and analysis, rather than by playing to the TV cameras Let's not forget that a far more fuel efficient fleet must be part of our energy future. The issue is which is the least distorting way to achieve it."