–Leading Republican Presidential Candidate Backs Entitlement Reforms
–Backs Sweeping Overhauls To Medicare, Medicaid
–Supports Renewal of Bush Tax Cuts, Corporate tax Reform

By John Shaw

WASHINGTON (MNI) – Former Massachusetts Gov. Mitt Romney, the
Republican frontrunner to oppose President Barack Obama in the November
election, has said overhauling American fiscal policy would be one of
his central goals if he is elected president.

In a slew of policy proposals on his campaign website and in a
major budget speech in November, Romney has detailed plans to cut
federal spending, reform expensive entitlement programs and overhaul the
federal tax code.

Romney also pledges to renew the Bush era tax cuts, a policy action
that would cost more than $4 trillion over a decade and cancel out any
budget savings he is able to generate in the first decade of his
program.

Romney’s fiscal agenda is packed with scores of specifics, but
provides no cost estimate for his blend of spending controls and deep
tax cuts.

“Under my administration, we will level with the American people
about it will take to truly cut spending and balance our budget. We are
going to set honest goals and present a credible plan to achieve them,’
he said in a Nov. 4 budget speech to the “Americans For Prosperity”
summit.

Romney calls for cutting federal spending to 20% of gross
domestic product by the end of his first term in office, arguing that
this is in line with the recent historical norm of federal spending in
the 18% to 20% of GDP range. It has risen to over 24% in the aftermath
of the most recent recession.

Romney argues that non-defense discretionary spending should be
capped at below 2008 levels. If elected he would send Congress
legislation on “Day One” that reduces non-defense discretionary spending
by 5% through across-the-board spending cuts.

He outlines some specific spending cuts, but these appear far less
than the size of savings that would be needed to achieve his fiscal
goals.

For example, he calls for the repeal of President Obama’s health
care law, saying this would save $95 billion. He also seeks to privatize
Amtrak, a policy that would save only about $1.5 billion, and reduce
$600 million in funding for programs often targeted by conservatives:
the National Endowments for the Arts and for the Humanities as well as
the Corporation for Public Broadcasting and the Legal Services
Corporation.

Overhauling American fiscal policy will require entitlement
reforms, he said, including sweeping changes to Medicare and Medicaid
and some adjustments to Social Security.

“We must honestly and seriously deal with the future of Social
Security and Medicare. Unlike President Obama, our next president must
protect these programs, improve them, and keep them sustainable for
generations to come,” Romney said.

On Social Security, Romney said he supports gradually raising the
retirement age and slowing the growth in benefits for higher income
retirees. “No one at or near the retirement age will see any changes and
tax hikes cannot be on the table. Instead, Social Security can be placed
on a sustainable trajectory with commonsense reforms.”

Romney has proposed more sweeping changes to Medicare, saying the
system should be restructured so that each beneficiary be given a fixed
amount to purchase an insurance plan. He said his program would keep
traditional Medicare available as one of the insurance plans that
seniors can choose among.

He has proposed turning Medicaid into a block grant program
administered by the states, arguing that this could save more than $200
billion a year by the end of the decade while also giving state
governments much needed flexibility.

Romney also supports cutting the federal workforce by 10% through
attrition.

He also said he supports a balanced budget constitutional
amendment.

On the tax front, Romney said he supports extending the 2001 and
2003 Bush era tax cuts, overhauling the corporate tax code and lowering
rates from 35% to 25%, eliminating taxes on dividends, capital gains and
interest for anyone who earns under $200,000 and shifting to a
territorial tax system which would tax only income earned within the
United States.

The Tax Policy Center, a non-partisan research group, has said the
Romney tax plan would “reduce federal tax revenues substantially,”
including by about $600 billion in 2015 compared with current law.

During the various Republican presidential debates, Romney has
focused on spending cuts and tax reform. He has opposed deficit
reduction plans that include both large spending cuts and substantial
revenue increases.

In one debate, Romney said he would reject a deficit reduction deal
if it included a mix of $10 in spending cuts for every $1 in revenues
increases.

** Market News International Washington Bureau: (202) 371-2121 **

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