More Mitt Missteps

Falsifying History

Romney has been rewriting the past. He has repeatedly given a bogus description of recent history by accusing former President Clinton of initiating a decline in military spending.

Romney: After President George H.W. Bush left office, in 1993, the Clinton administration began to dismantle the military, taking advantage of what has been called a “peace dividend” from the end of the Cold War (July/August issue of Foreign Affairs).

Romney: Following the end of the Cold War, President Clinton began to dismantle our military. He reduced our forces by 500,000. He retired almost 80 ships. Our spending on national defense dropped from over 6 percent of GDP to 3.8 percent today. He called it a “peace dividend” (Frontiers of Freedom, April 18, 2007).

This is untrue. The peak in defense spending that Romney speaks of was in the Reagan administration. It is not correct to say that the Clinton administration began to cut U.S. military forces. No matter how you measure defense spending, President George H.W. Bush had significantly trimmed it by the time Clinton was sworn in. And it was Bush’s administration, not Clinton’s, that first boasted of a “peace dividend.”

Measured in what economists call “constant dollars,” adjusted for inflation, defense spending declined by nearly 15 percent between Reagan’s last budget (for fiscal year 1989) and the elder Bush’s last budget four years later. The decline was just under 13 percent between Bush’s last budget and Clinton’s final fiscal year (2001). In other words, the buying power of the dollars spent for defense declined more during Bush’s four years than during Clinton’s eight.

Source: OMB historical tables

The decline in defense spending under Bush is even more dramatic when measured in what economists call “nominal dollars,” with no adjustment for inflation. For example, in testimony given January 31, 1992, before the Senate Armed Services Committee, Bush’s secretary of defense explained that “overall, since I’ve been secretary, we will have taken the five-year defense program down by well over $300 billion. That’s the peace dividend.… And now we’re adding to that another $50 billion … of so-called peace dividend.” That defense secretary, of course, was Dick Cheney.

Romney chose to look at spending in another way, as a percentage of U.S. economic output as measured by gross domestic product (GDP). By that yardstick, the decline actually began in Ronald Reagan’s last term. The 6.2 percent peak that Romney refers to was in fiscal 1986. The percentage declined to 4.4 percent in the elder Bush’s last year and continued to slide to 3 percent in Clinton’s last three years.

Whether or not the U.S. military has been “dismantled,” as Romney claims, is a matter we won’t debate here. The U.S. certainly devotes much less of its economic output to defense now than at the peak of the Reagan military buildup, but in inflation-adjusted dollars spending is currently more than it was under Reagan. The U.S. accounted for just under half of all the world’s military spending in 2004, according to the most recent tally by globalsecurity.org, which cites public figures from the Central Intelligence Agency. An earlier study by the U.S. State Department also found that in 1999 the U.S.

Romney is entitled to argue that the U.S. should be spending even more on defense. That’s a matter of opinion on which we take no position. But when he accuses Clinton of starting a process that began years earlier, Romney is falsifying history.

The Disappearing Deficit

Romney falsely implies that he was able to close a $3 billion budget gap without raising taxes and by cutting “duplicate agencies and wasteful programs.”

Romney: As governor, I saw the power of fiscal conservatism. The state budget was $3 billion short. Liberals wanted to raise taxes, but I cut government instead. I eliminated and combined duplicate agencies and wasteful programs, and I balanced the budget four years in a row (Miami-Dade Lincoln Day Dinner, March 7, 2007).

For one thing, as we discussed in our analysis of the second Republican presidential debate, Romney raised nearly $500 million by doubling fees for various services and “closing loopholes” in the corporate tax structure. Whether or not one considers those to be tax increases, they did add substantially to state revenue. Furthermore, Romney’s signature cuts in wasteful programs and duplicate agencies saved only about $10.5 million dollars, according to an estimate by the independent, nonpartisan Massachusetts Taxpayer Foundation. The foundation states that these cuts were only marginally useful in closing the budget gap. More significant was the $277 million that Romney cut from the state’s local education aid budget and the $130 million cut from higher education, moves that shifted at least part of the tax burden onto towns and counties.

His statement that “the state budget was $3 billion short” when he took office isn’t the whole story. The state budget was indeed projected to be $3 billion short. But as it turned out, the projection was way off. The state eventually took in about $1.3 billion more in capital gains taxes than had been expected. In addition, $500 million in unanticipated federal grants further reduced the predicted shortfall. Thus, the $3 billion shortage turned out to be only $1.2 billion. Closing such a gap is still a respectable achievement, but not as grand as Romney claims.

We also note other statements by Romney that are literally true but need additional context for voters to properly evaluate. One of the candidate’s domestic policy proposals sounds like a grand promise but lacks specifics.

Romney: If I am elected president, I will cap non-defense discretionary spending at inflation minus 1 percent. That alone will save $300 billion over 10 years (Conservative Political Action Conference, March 2, 2007).

To be sure, Romney’s proposal would indeed slow real spending growth by $300 billion over the 10-year time frame. But Romney avoids saying which parts of non-defense discretionary spending he would cut.

For 2007, non-defense discretionary spending will total about $511 billion. That includes such programs as education, veterans’ benefits, public highway funds and national parks. According to his staff, Romney would make no exception for those popular programs, nor would he spare law enforcement, farm aid or scientific research. The Romney campaign says he would make an exception only for “one-time spending for natural disasters and other catastrophic situations.”

By promising a spending slowdown without saying which programs would be affected, Romney is asking voters to buy his proposal without being able to examine it, like buying the proverbial “pig in a poke.”

The Tax Cut That Wasn’t

Another possibly misleading claim that is artfully phrased to be literally true is this one:

Romney: That’s why in each of my last three years [as governor], I submitted a budget that cut the income tax (Miami-Dade Lincoln Day Dinner, March 7, 2007).

It is true that Romney submitted budgets that cut the personal income tax. But none of those budgets actually passed. Massachusetts’ flat 5.3 percent income tax rate remained constant throughout Romney’s term as governor, as the Legislature consistently refused to cut the rate.

Romney would be accurate to say “I submitted a budget that would have cut the income tax,” and he could honestly blame the Legislature for failing to enact those cuts. But Romney’s careful phrasing could lead listeners to the false impression that his budgets actually resulted in a tax cut.

Voters deserve to hear those details – and the others we’ve discussed here – in addition to what Romney says on the stump.