Mitt Romney talks Medicare and taxes -- minus the details

On NBC’s “Meet the Press” on Sunday, Republican presidential nominee Mitt Romney deflected several requests for more specifics about his plans for taxes and Medicare. He’s already revealed about as much about his tax proposal as he’s going to: He’s outlined his goals but is leaving many of the important details to Congress. But on Medicare, he appears to be holding back a detail that could make his proposal more palatable to voters worried about the program’s future.

Romney has long advocated retooling Medicare so that its beneficiaries receive a subsidy they could use to purchase coverage either from private insurers or the government. The amount of the subsidy would be equal to the cost of the second-least-expensive coverage offering benefits equivalent to Medicare. He’s also endorsed a similar plan by his running mate, Rep. Paul Ryan (R-Wis.), that would cap the rate of Medicare growth at half a percentage point more than the annual increase in the gross domestic product.

The point of the proposed overhaul, which would go into effect in 10 years and apply only to newly eligible beneficiaries, is to hold down costs through competition. But there was one detail missing from Romney’s plan, and NBC’s David Gregory addressed it Sunday. “If competitive bidding in Medicare fails to bring down prices,” Gregory said to Romney, “you have a choice of either passing that cost on to seniors or blowing up the deficit. What would you do?”

Romney first tried to duck the question by saying, “There’s nothing about seniors in our plan ... because there’s no change for anyone who’s retired or is nearing retirement.” He then said, in essence, that future retirees have nothing to worry about because “competition works.”

That’s not responsive. And that’s a shame because Romney’s campaign has a better answer. According to the campaign, the Romney-Ryan plan doesn’t include Ryan’s caps on the rate of Medicare growth. The subsidies will grow as much as needed to keep up with the cost of the second-least-expensive coverage.

In other words, Romney doesn’t plan to end the defined benefit of Medicare -- that is, the guarantee of affordable insurance coverage. That’s a powerful answer to the Democrats’ argument that Romney wants to “end Medicare as we know it” and leave a growing number of retirees without access to insurance they can afford.

The drawback to such an approach, though, is that it doesn’t limit federal spending as surely as Ryan’s proposal. In fact, it wouldn’t match President Obama’s last budget proposal, which included a GDP-plus-0.5% cap, or the 2010 healthcare reform law that Romney wants to repeal. The 2010 law not only caps Medicare spending growth at 1 percentage point above GDP, it also includes numerous trials and experiments designed to cut costs by improving quality, spurring innovation and increasing efficiency.

As for taxes, Romney has promised to cut tax rates 20% lower than President George W. Bush did, but also eliminate enough credits, deductions and exemptions to raise the same amount of revenue that current rates generate. Prodded by NBC’s Gregory, Romney made it clear that his plan wouldn’t reduce the tax burden on upper-income households but would lower it on middle-income families.

Doing so would require the economy to grow faster than it does today, which is conceivable. The trick, though, is not to eliminate tax breaks that encourage investment and job creation. Yet when Gregory asked Romney to name one tax break he’d like to eliminate, Romney said, “Well, I can tell you that people at the high end, high-income taxpayers, are going to have fewer deductions and exemptions.” That’s non-responsive too.

Romney later seemed to contradict himself, saying, “[A]t the high end, the tax coming in stays the same. But we encourage small business, because small business is able to keep more of what it makes and therefore hire more people, which is my priority.” As Republicans have said repeatedly, the upper-income brackets are loaded with small-business owners -- a.k.a. “job creators.” So it’s not clear how Romney would reconcile the desire to let small business “keep more of what it makes” while still demanding the same amount of revenue from high-income taxpayers.

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