Mitt Romney likes to brag that Massachusetts received an increase in its bond rating under his leadership, but the former governor leaves out a small, but crucial, detail: The state raised tax revenues to do it.
According to documents first reported by Ben Smith of Politico, Romney's pitch in 2004 to convince Standard & Poor's to raise the state's bond rating included revenue increases of $1 million in 2003 and another $1 million in 2004. The tax increases, which also included $269 million in revenues from "closing loopholes" that were passed before Romney entered office, boosted the state's revenue intake from $1.1 billion to $1.6 billion during his tenure. As a result of those actions, coupled with spending restrictions, S&P raised the state's credit rating to double-A in 2005.
The state's efforts to increase its rating through tax increases contrasts with the Republican refusal this year to consider revenue increases of any kind on the federal level during the debt ceiling debate--a strategy that Romney supported. The final deal to raise the debt limit not only slowed the growth of spending, but, at Republican insistence, did not raise a dime of revenue. When S&P downgraded the nation's credit rating last week, Romney called President Obama's efforts a "failure."
Even though Romney touted the revenue increases while serving as governor in 2004, he blasted Obama's calls to increase revenue by closing loopholes, and praised the GOP "Cut, Cap and Balance" plan that focused only on reducing spending in 2011.
"When I was governor, S&P rewarded Massachusetts with a credit rating upgrade for our sound fiscal management and the underlying strength of our economy," Romney said. "That didn't happen by accident. The president's failure to put the nation's fiscal and economic house in order has caused a massive loss of confidence that resulted in an embarrassing downgrade. In the Carter era, it was called 'malaise.' Under President Obama, it's called meltdown."
Romney never did sign a tax increase into law--the 2003-4 tax hikes in Massachusetts were enacted by state legislators before Romney took office in 2003. But his opponents in the race for the White House will be sure to cite the Massachusetts upgrade for entirely different purposes than Romney has--to tar him as a state executive taking credit for a tax increase.