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Romney: cut federal programs, reduce spending by $500 billion

BY CHASTITY DILLARD | NOVEMBER 08, 2011 7:20 AM

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DAVENPORT— Republican caucus candidate Mitt Romney vowed to reduce federal spending by $500 billion annually by cutting federal programs.

And though some interest groups have argued his fiscal plans are out of touch, experts are split on whether his plan would work.

Romney's plan is three-prong and includes eliminating unnecessary programs, moving necessary programs down to the state-level, and making the government more efficient and productive by cutting the federal payroll by 10 percent through attrition.

"I don't think people who are public servants should get a better deal than the taxpayers who are paying for them," Romney told a crowd of roughly 150 at the Iowa American Water Co. in Davenport on Monday.

Romney said he plans to target and cut "unessential" programs such as Amtrak and the National Endowment for the Arts under his fiscal policy plan.

 

"I don't want [federal programs] to go away, but I don't want to borrow $1 billion from China to pay for them," Romney said. "I think it's time for programs that we like that we simply can't afford to be stopped or to be cut back and are to make it on their own."

But Laurence Kotlikoff, a professor of economics at Boston University, said cutting these programs would not be enough to solve the problem.

"I think we need to get the governments finances under control, we need to look at where the problem is, and it's not the National Endowment of Arts or National Public Radio," Kotlikoff said. "It's not the programs."

Kotlikoff said Romney and other candidates should instead focus on controlling health-care costs and making sure Medicaid and Medicare spending don't skyrocket by providing a basic plan for every American.

He also said candidates should examine the effect of eliminating programs such as Amtrak.

"We have to be very careful about taking away the infrastructure," he said. "… the highway doesn't pay for itself."

In addition, Romney's tax policy would seek to reduce spending by cutting corporate income taxes, according to his website.

But the Iowa Citizens for Community Improvement Action Fund, a nonprofit organization, said Romney's plan is "woefully out of touch with the 99 percent."

"It's a revenue crisis, not a spending crisis," said Hugh Espey, executive director for the organization, and he believes Romney should tackle the deficit by further taxing corporations. "We are not going to cut our way to prosperity; we need to raise our revenue."

But University of Iowa economics Professor Forrest Nelson said Romney's plan could work.

"Incentives work if you lower taxes. It encourages people to work harder than they did before because they increase revenue," he said. "There's no debate that cutting taxes will incentivize people to do more — the question is how much more will they be willing to do."

But Andrea Saul, press secretary for Romney's campaign, said Romney's tax and economic plan is aimed to help the middle class.

"[Romney] is going to target his plan so that people can get back to work," Saul said. "He can reduce spending in Washington and actually turn around this economy."


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