Romney’s Pitch to S&P Included Tax Hikes

Ben Smith FOIA’d the 2004 presentation that Standard & Poors saw before deciding to raise the state’s credit rating from AA- to AA. It reveals the previously understood, yet still unseen, part of the pitch: Romney reminded the ratings agency that Massachusetts raised taxes. He mentioned the unpopular 2002 tax hike package (which preceded him in office) and his own reforms, such as: “Tax ‘loophole’ legislation added $269 million in recurring revenue.”

The “weird” thing, as a Democratic strategist might say, is that this is controversial at all. But it is, because the standard Republican line right now is that the S&P downgrade of America’s credit rating was entirely due to spending worries – despite what S&P said. I asked Tim Pawlenty this week about S&P’s worry that political sclerosis, on the part of the GOP, made them worry that Congress could never raise taxes and close the budget gap that way.

“As I understand it,” Pawlenty told me, “S&P was agnostic about how we should get the fiscal situation under control.”

That’s the line: We have a spending problem, not a revenue problem. Romney could finesse this by talking up the tax reform that Republican negotiators are likely to include in their joint committee problems. Or he could adopt the Democrats’ line that Massachusetts was only 47th of 50 states in job growth when he was governor! See! Tax hikes don’t work!

On reflection, no, he probably shouldn’t say that.