What kind of economic policy advice is Mitt Romney getting? One of the people doing some idea work for Romney, the former Massachusetts governor and current 2008 GOP presidential hopeful, is Cesar Conda. Conda is former assistant for domestic policy under Vice President Cheney and a longtime policy wonk around Washington, D.C.
Now Conda made it clear during our chat that he was speaking for himself and not the campaign, yet it is still interesting to get inside the noodle of one Romney's key advisers. (Two former chairmen of President Bush's Council of Economic Advisers, Glenn Hubbard and Gregory Mankiw, are also helping out Team Romney.) One thing I asked Conda about was whether tax policy should focus on growth and economic efficiency vs. producing certain social policy outcomes. Here is his answer:
"Even though the budget is moving into balance, there are fiscal constraints, so you have to ask yourself which one of these tax cuts will help you the most, which will produce some revenue feedback [to the government]. And that makes things like expanding the per child [tax] credit lower priority, as opposed to cutting the corporate rate or other pro-growth tax reform or cuts."
I also asked Conda what he personally would like to see done to increase U.S. productivity and innovation:
"Speaking just for me, reducing the corporate tax rate has got to be at the top of the list. We have the second-highest tax rate among [the major industrialized] nations, and it hampers our competitiveness, hurts wages. ... Back in 2004, even John Kerry came out for a slight cut in the corporate rate. ... It's a policy that could unite Republicans and at least some Democrats, and it's the right thing to do to keep businesses and capital here in the United States. ... And it could be argued that if you dropped it to just under 30 percent [from 35 percent today], it doesn't lose revenue."
Conda also mentioned two other ideas: 1) lifting income limits and increasing contribution limits to IRAs as a way of increasing savings and moving toward a consumption-based tax system where savings and investment are not double taxed; and 2) allowing businesses to immediately expense their investment in capital equipment instead of the "convoluted and lengthy depreciation schedules we have now."
Indeed, on that last point, it is worth mentioning that a recent analysis by Thomson Financial found that capital expenditures by S&P 500 companies surged 20 percent in the fourth quarter of 2006 vs. a year earlier. Since capital spending has been weak here at home, the data suggest that companies have been spending that dough overseas.