Friday, August 22, 2014
Inquirer Daily News

Romney budget plan 'a drag' on US growth: TD Bank

Planned cuts in non-defense spending to pay for investors' tax cuts will slow the US economy, writes bank's economist

Romney budget plan 'a drag' on US growth: TD Bank

Watching the US presidential campaign from Toronto, Craig Alexander, chief economist at TD Bank, one of the biggest banks doing business in Philadelphia and other East Coast cities, writes that "the gulf between the two parties is mainly over taxes. Democrats favor increasing taxes on the wealthy (or at least letting past tax-cuts expire) and Republicans do not...

"If Obama is re-elected, in all likelihood, [expect] higher taxes on dividends and capital gains. His deficit reduction plan calls for $1 in revenue increases for every $2.50 in spending restraint.

"If Romney is elected, taxes are more likely to fall. Romney’s plan calls for a reduction in marginal tax rates and the elimination of capital gains and dividends taxes on income below $200,000, to be paid for by eliminating deductions...

"Romney’s platform calls for federal spending to fall from 24% of GDP to 20% of GDP by the end of his first term, while holding defense spending at 4% of GDP (thereby reversing the cuts that have been proposed by President Obama). 

"This will mean outright reductions in non-defense spending that will pose a drag on the pace of economic growth over the next four years...

"There are areas of agreement... There is a broad acceptance of the principles for tax reform... that removes loopholes and deductions from the tax code, and uses some of this revenue to lower tax rates... 

"Working with Congress will be the biggest challenge facing the next American President. The task is large, but so too is the payoff. Achieving consensus on a prudent fiscal plan would go a long way to boost confidence, improving the prospects for economic growth."

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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