The First Presidential Debate.

I know, I know almost a full week late.

Last Wednesday the two contenders for the US Presidency faced off in the first televised debate which focused on domestic policy. As with the race itself the debate was very uninspiring and it was hard to choose a winner. It was also really not worth me staying up until near dawn to watch. However if I had to choose a winner I would say that the Republican challenger Mitt Romney slightly edged it. Rather then being the result of a strong performance by Romney this was mainly due to a poor performance by the Democrat incumbent Barak Obama. Clearly distracted by the latest developments in the unfolding confrontation between Turkey and Syria that overshadowed the debate Obama looked disinterested and seemed to be having trouble finding his words and voicing his thoughts. The main problem though was that he'd clearly been told by his campaign advisers to try and appear Presidential rather then confrontational. As a result he repeatedly failed to challenge Romney's denial that he intends to put in place $5 trillion of tax cuts. This was an open and blatant lie on Romney's part because if you look at Romney's own website; http://www.mittromney.com/sites/default/files/shared/TaxPolicy.pdf he clearly intends to dramatically cut taxes;

1. Romney intends to make the marginal rates introduced by George Bush (the Bush tax cuts) permanent. Although these tax reliefs have been in place since 2001 and 2003 as they are considered temporary tax reliefs they are still counted in the budget as money that the government has declined to collect and therefore are used to calculate the government's borrowing rates and credit rating. Making them permanent will cost the US $3.3 trillion over the next nine years.

2. Romney intends to end taxes on capital gains, share dividends and interest payments for households earning up to $200,000 per year. This will undoubtedly help some middle class families planning for retirement but it will give the most help to households closest to the $200,000 limit. With the average American earning in the region of $40,000 per year I would say that Romney intends to help the rich rather then the middle. Over the nine years between 2011 (the last year figures are available) and 2020 this tax cut will cost the US around $728 billion.

3. Romney plans to scrap entirely the Federal Estate tax which is a form of inheritance tax. To my mind this is the most pernicious and dangerous part of Romney's plan because while never popular almost all developed nations find some form of inheritance tax essential to prevent rich parents giving their money to their children who use it to get even richer without out doing any work before handing it down to their children. Allowed to continue unchecked this very quickly leads to a society where a very small group of people control all of the wealth and everybody else has no choice other then to work for them for whatever pittance they're prepared to pay. Therefore inheritance tax is essential to prevent this sort of patrimony and instead ensure a meritocracy where all can achieve provided they have the talent and are prepared to work for it - something someone once told me was the American dream. Apart from the damage it will do to American society scrapping the Federal Estate tax will cost the US around $171 billion over the nine year period.

4. Romney intends to cut the corporate tax rate by 10% from 35% to 25% which will be an absolute delight for his former colleagues in high finance but will cost the US around $172 billion over the nine years.

Taken together these four policies represent a tax cut of $4.3 trillion. However Romney doesn't intend on stopping there. He also intends to switch the US from a global tax system to a territorial tax system. This involves very rich people and corporations no longer having to pay the difference between US tax rates and the local tax rate where they earned that money. It only affects a very small number of people and it's complexity makes it's effects very difficult to calculate. However with the difference between American money earned in the UK being around $170 billion alone it's quite easy to imagine that it will cost the US in the region of $700 billion bringing the total of Romney's tax plan up to - yep you've guessed it - a $5 trillion loss.

When you take these $5 trillion of tax cuts and add them to the extra $2 trillion that Romney intends to spend on the military that creates a spending gap of $7 trillion that will have to be filled through extra borrowing. This strikes me as a particularly strange way of trying to reduce America's national debt but despite their campaign slogans and their massive debt clock that's never been the Republicans intention. Instead they want to increase America's debt so the dollar becomes so devalued that it ceases to be used as the global reserve currency. That way the former the former head of Bain Capital can make good on his promise of bringing jobs back to America. The catch he keeps forgetting to mention though is that those jobs will be like the jobs they have at the Foxconn factory in China or in the platinum mines in South Africa where workers on poverty wages are forced to pay extortionate rates for the privilege of living in workers dormitories under constant fear of getting beaten up by company security if they dare to step out of line. In short the Republicans want to drag America back to what it was like at the time of the Ludlow massacre.

Of course the Republicans wouldn't actually dare tell anyone that before the election otherwise no-one would vote for them. So instead they're making lots of vague claims about that $7 trillion spending gap being paid for by closing tax loopholes. Sadly though they won't tell anyone exactly what these loopholes are. The best I've been able to piece together is that the main 'loophole' they intend to close is the amount people can deduct from income tax in order to pay for health care/insurance. Of course Romney also intends to cut costs by scrapping Medicare/aid and replacing it with a voucher system that people can use to pay for private health care. The only problem is that the value of those vouchers will be tied to what the government is prepared to pay rather then what health care actually costs. Therefore it doesn't take a genius to work out that Romney's plan will leave millions of Americans unable to afford health care. So Romney's plan is clearly to make the rich richer while dumping the costs on the middle classes. It's just a shame that Obama failed to call him on it.

The other big disappointment of Obama's debate performance was that he seemed unable to defend his health care reforms from Romney's frankly laughable attacks. The thing you need to remember about Obamacare is that it basically just copies the system that Romney introduced when he was the Governor of Massachusetts. So surely Romney either needs to admit that it is a good idea that is much more cost effective and far less socialised the Medicare/aid or he needs to apologise for inflicting it on the people of Massachusetts long before Obama became President.

21:00 on 10/10/12.