Mitt Romney sat down for an interview with the Washington Examiner's editorial board this morning. Romney deserves credit for doing the interview, because the Examiner staff includes some of his toughest critics. Given the difficulty and wide range of the questions, Romney did well. It's worth reviewing some of the more revealing exchanges.
One highlight, on the question of eliminating some popular credits and deductions:
I say that what I'd like to see is a setting where we have a flatter, lower, tax rate. I do get some inspiration from the Bowles-Simpson work where they did not eliminate those mortgage deductions and the like, but they eliminated them -- excuse me, they limited them. And by virtue of the limits they put in place, they were able to bring down the rates and make the system flatter and simpler. That has some merit. But one of the things that I did not support in their plan was to raise the capital gains tax, as you may recall, they lowered taxes on ordinary income. They raised the tax on capital gains interest and dividends. That's not the direction I'd head, but the concept is saying, let's limit deductions and deductibility of certain expenses, had merit in my view. But in my view the process of actually changing the tax code and going toward a system of that nature is going to take something more than a president saying this is what I want to do in my first 100 days.
Romney's right to point out that it's very unlikely that the next president will have a chance to totally overhaul the tax code. Romney's tax plan is less ambitious and less appealing than some of his competitors', but it is more likely to be achievable.
In response to a question about immigration from David Freddoso, Romney declared that he had a plan for illegal resident immigrants, but that revealing the specific plan could incentivize more foreigners to enter the U.S. illegally:
DAVID FREDDOSO: Governor, in a recent debate you argued that Newt Gingrich had gotten behind amnesty because he talked about legal status for roughly 11 million people residing illegally in the United States. What is your alternative? Do you support deportation of all of them, all of those residing and working illegally in the United States?
ROMNEY: What I support is focusing on securing the border and when we secure the border and have convinced the American people that we do not have a flow of illegal aliens coming into the country, then we can address what we're going to do with the 11 or 15 million that are here. I don't think that there is a call for rounding people up and taking them out of the country. I don't think that that's the process that's necessary to maintain our system. I don't want to, however, during this process, say anything that encourages another wave of illegal immigration. And so by as Speaker Gingrich did, that he thinks at some point during this process anything that encourages another wave of illegal immigration. And so by saying, as Speaker Gingrich did, that he thinks at some point people should be entitled to stay here permanently, if you will, a form of amnesty, then I think that he encourages another wave of people coming in and saying, "Hey if you get there and if you hang on long enough, you get to stay."
FREDDOSO: Have you not said enough to encourage that just now, simply by saying, "Well, once we've secured the border, we can do something?" Is that...
ROMNEY: I don't think so. I think, in fact, that virtually every Republican I know that's spoken about illegal immigration says the same thing. I listened to Lindsey Graham the other day and he said, "secure the border, stop the flow of illegal aliens into the country, and then we can address the issue of what to do with the people who are here illegally today." I do have my own thoughts on that. I actually have a plan in mind, I haven't unveiled it. There are other people I'd like to sit down with and review it with me.
I went down to Florida and met with Jeb Bush six, seven months ago, laid out what I thought would be a complete plan to deal with permanent immigration policies with regards to our legal system to simplify it. Number two, how to deal with those who are here illegally today. And then number three, how to secure the border. And every piece of advice I've received from people who talk about this topic say get the first job done first, because if you talk about the other jobs you get highly confused with whether you are going to create incentives for people to come here illegally to take advantage of whatever program you might describe.
In response to a question from Philip Klein about how to keep Medicare spending from rising too quickly, Romney suggested that the federal government maintain a budget for Medicare, instead of simply paying out whatever costs it incurred:
I think it's unlikely that Medicare will remain an open-ended fee-for-service-type product that it is today but I think its more likely to take on a capitated rate or more extensive managed care provisions than you're seeing currently employed.
So my view is your going to limit the growth -- as a principle you're going to limit the growth in the subsidy that goes to this retirement healthcare system based upon the competition that exists in the market and a determination by Congress of the budget amount that can be applied to subsidy.
KLEIN: So you are saying, just to clarify, you would leave it up to Congress to determine it each year or that's one idea that --
ROMNEY: That's one, that's one principle. I think the key principle is this: It's not going to grow at an open-ended rate driven only by medical inflation.
Tim Carney asked Romney about which government subsidies are justifiable:
CARNEY: What role should government have in promoting certain industries or economic activities such as homeownership, or manufacturing, renewable energy or fossil fuel energy, exports, or just advanced technology? What sort of subsidies and incentives do you favor? You had some of these in Massachusetts, I know.
ROMNEY: Very limited -- my answer to your first question. I'm not an advocate of industrial policy being formed by a government. I do believe in the power of free markets, and when the government removes the extraordinary burdens that it puts on markets, why I think markets are more effective at guiding a prosperous economy than is the government.
So for instance, I would not be investing massive dollars in electric car companies in California. I think Tesla and Fisker are delightful-looking vehicles, but I somehow imagine that Toyota, Nissan, and even General Motors will produce a more cost-effective electric car than either Tesla or Fisker. I think it is bad policy for us to be investing hundreds of millions of dollars in specific companies and specific technologies, and developing those technologies.
I do believe in basic science. I believe in participating in space. I believe in analysis of new sources of energy. I believe in laboratories, looking at ways to conduct electricity with -- with cold fusion, if we can come up with it. It was the University of Utah that solved that. We somehow can't figure out how to duplicate it.
But basic science, in my view, is a way that research can encourage our entire economy. And so, for instance, in Michigan, some years ago -- I think it was in 2007 -- I spoke there and said, you know, I think we ought to embark upon an effort to do analysis on energy research, transportation research, materials research. But again, basic research which could then be either purchased by or licensed by companies foreign and domestic.
This question is an important one for Romney, as he's generally regarded as a pro-business politician. I think he mostly gets it right in this answer. Whether he would live up to his response in practice is another questions.
Romney's follow-up answer on nuclear subsidies was also good:
CARNEY: For instance, nuclear power right now is getting loan guarantees under both Bush and Obama policies to help develop nuclear power more rapidly. Is that the sort of thing that you would support?
ROMNEY: My inclination would be to do this: It would be to say that - if we went to the nuclear people and they say that, you know, if you could give us our permits in three years, then we wouldn't need any help. And so what I might be willing to do is say we will either give you your permits in three years or refund the money to you we've invested to build the facility or to reach this point. We will, in effect, give a guarantee that you will not be prevented from developing nuclear power by virtue of government's malfeasance and ineffectiveness. And so rather than saying, here, we'll give you a bunch of money to build a nuclear facility, we would instead guarantee certain government action.
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