The budget and tax proposals put forth by Republican presidential nominee Mitt Romney would not lead to the economic prosperity and job growth he has claimed, according to a new study released this week. In fact, the Economic Policy Institute found that Romney’s plans would actually lead to a net loss of jobs over the first two years of his administration, and the losses could grow even larger if Romney were to stick to his promise of reaching a balanced budget.
EPI had to make assumptions about Romney’s plan because of its lack of specificity, but according to its analysis, Romney’s plan to lower taxes and cut spending would cause a net loss of 554,000 jobs over the next two years if Romney abandons his plan to pay for the massive tax cuts he has promised. But if he maintains his promise to balance the budget while also providing the huge tax cuts, his plan would “lead to employment losses of 608,000 in 2013 and roughly 1.3 million in 2014”:
The deep spending cuts Romney has promised are the primary reason for the job losses, EPI’s analysis found. If Romney does pay for the tax cuts, as he insists he will, the spending cuts would get even deeper and thus cause the loss of even more jobs. Another independent analysis, meanwhile, found that fully paying for Romney’s tax cuts would require raising taxes on the middle class.
Romney’s call for a Balanced Budget Amendment would cause even more problems. “Government spending cuts of this magnitude would constitute an economic shock even larger than the one inflicted by the bursting of the housing bubble — a shock that led to the worst recession since the Great Depression,” EPI wrote. But because that shock would be so large, EPI concluded that passage of such an amendment is “exceedingly unlikely” and it chose not to include it in the analysis.