Republican presidential hopeful Mitt Romney on Tuesday came out against the tax deal reached between President Obama and congressional Republicans, saying the temporary nature of the tax rate extension would limit the positive economic impact and correspondingly make the deficit worse.
Romney’s move has the potential to spur broader opposition to the deal among Republican lawmakers than has previously been seen, and is clearly intended by the former Massachusetts governor as a play for support from Tea Party and grassroots conservatives.
“What some are calling a grand compromise is not grand at all, except in its price tag,” Romney wrote in an op-ed published by USA Today. “The total package will cost nearly $1 trillion, resulting in substantial new borrowing at a time when we are already drowning in red ink.”
Romney argued that while “in many cases, lowering taxes can actually increase government revenues,” because the extension of current tax rates is only for two years, the economic growth that would have been created by a permanent extension would fall far short of producing the kind of tax revenues needed to reduce the deficit and debt.
“While the tax deal will succeed in temporarily putting more money in the hands of consumers, it will fail to deliver its full potential for creating lasting growth,” Romney wrote.
Romney also staked out an unmistakably hard line conservative position on unemployment benefits, which the tax deal would extend for 13 months. While he acknowledged that joblessness can produce “heartbreak,” he said that longer term government benefits “actually serve to discourage some individuals from taking jobs, especially when the benefits extend across years.”
He proposed to establish “employment savings accounts” to replace government-provided benefits. And he took clear aim at the component of the deal that is most egregious to many conservatives: the unpaid for unemployment insurance spending.
“In spending $56.5 billion to extend benefits, the deal is sacrificing the bedrock Republican principle that new expenditures be paid for with offsetting budget cuts,” he said.
Prior to Romney’s bombshell on Monday, House leaders from both parties told The Daily Caller that the tax deal would clear the House as soon as the end of this week by a relatively slim margin, with a margin for error of roughly 20 votes or so.
The Senate voted overwhelmingly, 83 to 15, to end debate on the measure and move toward a final vote on passage, which will take place either late Tuesday or Wednesday morning.
In the House, the measure needs 218 votes to pass. Key Democrats and Republicans estimated that combined they will have about 240 votes.
House Democrats told TheDC they expect to have about 100 votes in favor of the measure, which is far less than half of the 255-member caucus. House Republicans are expected to support the measure in far greater numbers, with only between 20 and 40 of their 179 members voting against it, a knowledgeable Capitol Hill Republican said.
But if 40 House Republicans do turn against the bill, and support for the deal erodes with House Democrats under the 100-vote mark, the bill could potentially land in some hot water.
That scenario is now far more likely thanks to Romney’s break with the agreement.