The Lie Alibi

Obama supporters have been whining that Romney “lied” his way to victory during the debate. It hasn’t stemmed the Romney “bounce” from the debate and that shouldn’t be a surprise. The lie gambit is lousy politics and lazy analysis. Saying that your guy lost the debate because the other guy lied probably plays well on MSNBC, but it comes across as sour grapes to people who recognize that policy differences often revolve around different expectations of the impact of public policies.

Take the Obama campaign’s complaint that Romney lied about his tax plan. Put simply, Romney argues that his tax cut plan can cut marginal income tax rates by 20% across-the-board (among other tax cuts) and still be revenue neutral. The Obama people think that isn’t just mistaken, but a lie. So now we have Princeton professor Harvey Rosen arguing that a combination of base broadening (reducing or ending tax exceptions) and the “plausible” economic growth effects of Romney’s proposal would add up to a revenue neutral tax rate cut plan that would not raise taxes on the middle-class. Is Rosen lying too? This is a case where shouting “liar” in the face of disagreement is a demand for agreement even if the relevant experts are divided and you can’t come up with convincing explanation why you are right and the other guy is wrong. It is saying “Shut up and trust me and anyone who disagrees with me is a liar and I don’t have to explain myself anymore.” Obama doesn’t have that kind of credibility and he doesn’t deserve to have it. Neither does anybody else on these sort of issues.

But what is worse for the Obama team is that they are missing a chance to launch real attacks on Romney’s tax plan. The amount of base broadening that it would take to make Romney’s plan revenue neutral would be huge. That means that major tax exemptions like the mortgage interest deduction, the health insurance deduction and the tax preference for municipal bonds would have to take a hit. You could insulate the middle-class by capping rather than eliminating those deductions, but the changes would hit the housing market and municipal finance and probably make for some major changes to employer-provided health insurance. I think most economists would argue that the growth effects of lower marginal rates would far outweigh the impacts of the base broadening, but people are risk averse and I’m not sure they would want to trade lower home values and a higher risk of municipal bankruptcy for the promise of higher growth. That is a more complicated tactic than screaming “liar”, but it would be more rooted in reality and it would show that Obama had actually read and thought about Romney’s plan before condemning it.