02/23/2012 11:43 am ET Updated Apr 24, 2012

Romney the Unicorn

Tomorrow, Mitt Romney is set to speak at the Detroit Economic Club. Centuries hence, citizens of the moon colony Newtonia, studying Earth's former inhabitants, will marvel at the attention given these "major policy addresses." Usually no more than rehashed party pablum, this kind of campaign speech is a surefire way to get extended cable news coverage -- and nudge a cynical press corps to focus (however briefly) on policy over process.

Before any Romney speech, is it not worth wondering, what does this candidate believe? That is like asking the meaning of life. The key question is, what does his audience believe?

Part of Romney's audience is the people of Michigan -- whose presidential primary he won four years ago and must win again next week. But his audience is also the broader conservative movement. This is a group whose distrust of Romney is so profound that anytime he gets within range of the nomination, millions of Republicans -- like the girl in the kissing booth -- smooch whomever is next in line, no matter how revolting. And this is a group whose economic policy views are captured in the immortal words of Grover Norquist: "shrink [government] down to the size where we can drown it in the bathtub."

A more polite description of that philosophy is "starve the beast" -- deprive the government of tax revenue, and that will force cuts most politicians (and voters) would never otherwise accept.

Romney's tax and budget policies are a triumph of that philosophy. Whatever tax reform he proposes, aides have said it will not change the revenue and spending caps already announced in the candidate's economic plan. And those caps are simply ridiculous.

According to the Center on Budget and Policy Priorities (yes, a more liberal group, but scrupulous with its accounting), if Romney were to be taken at his word that a) total spending would be limited to 20% of GDP or lower, b) defense spending would be set at 4% of GDP or higher, c) Social Security -- but not Medicare -- would be spared any cuts, d) the 2001 and 2003 Bush tax cuts would be made permanent, e) new tax cuts would be enacted, and f) President Obama's health reform tax increases would be repealed, Romney would need a magic wand to make his numbers work.

Under those conditions, a balanced budget in 2016 would require an unprecedented 35% cut in all non-defense, non-Social Security spending and -- because of the baby boomer retirements -- a balanced budget in 2022 would require a 56% spending cut, including in Medicare benefits.

These cuts are dramatically deeper than what even Paul Ryan proposes, and would slash non-defense discretionary spending to just 1.7% of GDP by 2022. (To put that in perspective, for the last thirty years, non-defense discretionary spending has averaged 3.7% of GDP and has never fallen below 3.2%, even when the GOP controlled all three branches of government, and even when Ronald Reagan was president. The "moderate" Mitt Romney is proposing cutting that in half.)

Well, good, some readers might say. We have a huge debt problem; let's hack away at it. The trouble with this argument is, first, what Romney is hacking has nothing to do with the country's debt problem. Non-defense discretionary spending represents only about 12% of the federal budget. Adjusted for population and inflation, that spending is not out-of-control but absolutely flat over time. (In 2001, when the country ran a surplus, we spent $369 billion. In 2011, when the country ran a trillion dollar deficit, we spent $369 billion.)

Second, these programs -- for education, medical research, food safety, scientific R and D, infrastructure, environmental protection, law enforcement -- are critical drivers of long-term growth. Cutting them cuts the economic engine of America. And third, imposing austerity at the beginning of a fragile recovery is the opposite of what nearly every economic expert (many of them Republican) has recommended.

A better answer is contained in the work of the three major bipartisan debt groups: Bowles-Simpson, the Gang of Six, and, best of all, Domenici-Rivlin. All three recognize that health spending is the primary driver of debt; none repeals "Obamacare" because doing so would add hundreds of billions to the debt. All three reform entitlement and military spending -- the programs that have been growing at an unsustainable pace.

And all three recognize that the problem is so large, government cannot cut its way out. They each propose comprehensive tax reform that closes loopholes, cuts subsidies, actually lowers marginal rates--and, yes, raises revenue. All three suggest more new revenue than Obama proposed: Bowles-Simpson ($2.3 trillion), the Gang of Six ($2.1 trillion), and Domenici-Rivlin (a whopping $3.9 trillion over 10 years).

As the Center for American Progress notes, the White House, "appealing to its base," "engaging in class warfare," "returning to big government," and "appeasing liberal critics," has proposed $1.5 trillion.

Obama could move more aggressively to define his plan as a jumpstart for the economy, as tax and government reform -- rather than just new revenue from the rich -- but that is another column. The point here is that those who have a right to attack Obama for failing to embrace Simpson-Bowles are his critics on the left -- because Obama's opening offer on a debt deal is more conservative than Simpson-Bowles.

And the other point is that Mitt Romney is running not as a fiscal hawk but as a fiscal unicorn -- fluttering around, making magical things happen, in a world that doesn't exist.