10/12/2012 09:04 am ET Updated Dec 12, 2012

The VEEP Debate

I understand the Republicans are calling it a draw, which should tell you that Vice President Biden (my former boss, full disclosure) did very well Thursday night against Representative Paul Ryan in their first and only debate.

I did pre- and post-debate commentary on CNBC and before the debate I said the VP needed to clarify the waters that newly moderate Mitt had muddied. And that he did. Especially on the economic and fiscal material, he wouldn't let Ryan get away with the misleading claims that too often went unanswered in the first debate.

Two examples that stuck out to me were:

- On the stimulus, Ryan tried to argue it was a failure and a waste of taxpayers dollars yet had no coherent response when Biden pointed out that Ryan himself had made various successful requests for stimulus funds (see here).

- On their $5 trillion tax cut, Romney/Ryan really need to either start naming the loopholes they'd close to pay for it or just admit they can't make it revenue neutral without whacking the middle class. The VP was appropriately relentless on this point. Even I'm starting to feel sorry for them every time someone brings up this little flaw in their plan. I suspect I'm not alone in realizing that this country simply can't afford to elect people promising a tax cut of this magnitude who, when it comes to paying for it, essentially say "trust us, we'll find a bipartisan solution."

One final revealing point on this: In our post-debate discussion on CNBC, Larry Kudlow and I had a friendly argument about the following (we strongly disagree, but I respect and like Larry a great deal). He claimed, correctly, that you could offset the full cost of the Romney cuts by cutting tax expenditures (i.e., loopholes, base broadeners) because the Treasury forgoes about $1 trillion per year in these measures (while their tax cut costs $5 trillion over 10 years).

But, as I pointed out, Gov. Romney has already taken capital gains and dividends-for example-off the table. Now, here's the revealing part: Larry said, and I know many in the investment community, including Mitt, feel exactly the same way, "I don't consider those loopholes."

And therein lies the problem. First, the $1 trillion includes these very tax expenditures, so you can't say that amount is available to offset the tax cut and in the same breath take a chunk off the table. Second, to the investment community, this isn't a loophole at all -- it's a job-and-growth-creating incentive. To the housing industry -- and many in the middle class -- the mortgage interest deduction isn't a loophole: It's a ticket to the American dream of home-ownership (and, in fact, as quoted here, Mitt alludes to protecting the mortgage interest and charitable deductions as well).

Gov. Romney and Rep. Ryan may want to keep these waters as muddy as they can in order to sell yet another massive tax cut we don't need and can't afford. Moreover, they want to sell in a way that seems costless. But VP Biden was having none of it tonight and as a result, the electorate is better informed.

And somewhere in those 90 minutes, I suspect he also re-energized a bunch of recently dispirited Democrats.

A fine day's work, Mr Vice-President.

This post originally appeared at Jared Bernstein's On The Economy blog.