By Nick Mann | 4 October 2012
US presidential candidates Barack Obama and Mitt Romney have set out their opposing plans for tackling the country’s $1.1 trillion budget deficit, with big differences over tax increases and spending cuts.
During the first televised debate between the two hopefuls last night, the Democratic incumbent Obama said he would continue the lower tax rates he had already put in place for small businesses and families, but would increase the taxes paid by high earners.
‘For incomes over $250,000 a year, we should go back to the rates we had when Bill Clinton was president, when we created 23 million new jobs, went from deficit to surplus and created a whole lot of millionaires to boot,’ he said.
‘By doing that, we can not only reduce the deficit, we can not only encourage job growth through small businesses, but we're also able to make the investments that are necessary in education or in energy.’
The economy worked best, Obama said, when middle-class families were given tax breaks and those who have done ‘extraordinarily well’ did ‘a little bit more to make sure we’re not blowing up the deficit’.
He added: ‘The way we do it is $2.50 for every cut, we ask for a dollar of additional revenue, paid for, as I indicated earlier, by asking those of us who have done very well in this country to contribute a little bit more to reduce the deficit.’
Obama originally set out a plan to reduce the US budget deficit by $4 trillion between now and 2022 in his February budget speech, but Republican candidate Romney said figures from the Congressional Budget Office had shown the US still recording $1trn deficits in the future. The national debt is currently over $16trn.
‘You've found $4trn of ways to reduce or to get closer to a balanced budget, except we still show trillion dollar deficits every year. That doesn't get the job done,’ he said.
Ruling out tax increases, Romney instead reiterated plans to cut non-essential government programmes. He explained: ‘I will eliminate all programmes by this test — if they don't pass it: Is the programme so critical it's worth borrowing money from China to pay for it? And if not, I'll get rid of it.’
This would include ‘Obamacare’ ̶ the president’s federal health care law passed in March 2010 to reduce both the number of Americans without health insurance and the overall cost of health care.
Programmes that can be run more efficiently at a state level will be sent to states, he added, while government will be made ‘more efficient’ by cutting jobs through attrition and combining departments and agencies.
Romney said the US was now spending the same percentage of its total economy on government – 42% – as Spain.
‘I don't want to go down the path to Spain. I want to go down the path of growth that puts Americans to work, with more money coming in because they're working.’
He added: ‘The revenue I get is by more people working, getting higher pay, paying more taxes. That's how we get growth and how we balance the budget. But the idea of taxing people more, putting more people out of work — you'll never get there. You never balance the budget by raising taxes.’
