Romney has much to gain from a deal with Ron Paul

Paul could aid Romney's attempt to win over sceptical conservatives.

We have now entered the stage of the presidential election season in which reporters are getting bored. They have started playing a game called Find the Gaffe.

Here's how you play: When a candidate speaks publicly, pay attention to every sentence, phrase and clause that could be used against him by the opposing campaign.

For instance: Last week, President Barack Obama was explaining why the unemployment rate ticked up to 8.2 per cent in May, thus raising fears that the recovery is stalling and talk of a dip into another recession. His conclusion was that the public sector has seen significant job loss while the private sector has shown incremental gains. "The private sector is doing fine," he said.


"Are you kidding?" said House Majority Leader Eric Cantor. The private sector is not doing fine. "Did he see the job numbers that came out last week?"

Mitt Romney rejected the idea increasing the size of government by creating more public-sector jobs:

"He says we need more firemen, more policemen, more teachers. Did he not get the message of Wisconsin? The American people did. It's time for us to cut back on government and help the American people."

Fire the beloved firemen! Blammo!

"I would suggest [Romney]'s living on a different planet if he thinks that's a prescription for a stronger economy," said David Axelrod, the president's senior political adviser.

And on it goes. It's enough to make you forget there are other people, other candidates, involved in the election.

You don't hear much about third parties inside or outside the US, but they exist. They are tiny compared to Republicans and Democrats yet they can be game-changers by pulling votes from one of the other candidates. The Green Party's Ralph Nader is perhaps the most famous example. In 2000, he peeled enough Florida votes from Al Gore to give George W. Bush the win.

Gary Johnson is another. He's the former Republican governor of New Mexico and current nominee for the Libertarian Party. He couldn't gain entry into an over-stuffed roster of GOP candidates, because, well, except for fiscal matters, Johnson isn't much of a Republican: He's pro-pot, pro-gay marriage, pro-choice. He supports the Tea Party and the Occupy Movement. But! He does want to slash the federal government's annual budget by $1 trillion. For this and (hopefully) other reasons, the Libertarian Party tapped him last month.

When it was clear he wasn't going anywhere as a Republican, Johnson launched a bid for the Libertarian Party's nomination. That meant notifying the Secretary of State of each state in the union that he'd no longer pursue the GOP's nomination. In Michigan, he missed the deadline for withdrawal by three minutes, thus violating a law that bars candidates who lose primaries from switching parties so they can run in the general election.

As of now, Johnson won't appear on the ballot. That's why the Libertarian Party of Michigan is poised to file a lawsuit next week alleging that Republicans in Michigan are reading the law too narrowly (three minutes!) in order to keep Johnson off that state's presidential ballot. The reason, they say, is that Romney fears a libertarian candidate will siphon off votes in a swing state where the margin of victory is likely to be slim. They might be right.


Meanwhile, another libertarian has set off a firestorm by endorsing the candidacy of Mitt Romney. That would be US Sen. Rand Paul of Kentucky, the son of Ron Paul. The endorsement came on Fox News when Rand Paul called for greater "kinship between our families." That was kinda weird but kinda weirder was that Rand's announcement occurred while Dad Paul was technically still running for president. The Revolution was not pleased.

But unlike Obama's saying the private sector is doing fine and unlike Romney's saying the American people want fewer firefighters, Rand's endorsement wasn't a gaffe.

Ron Paul has a history of breaking from GOP ranks when he believes the party is going in the wrong direction. He did it in 1988 when he ran on the Libertarian Party ticket (as Johnson is now) against the Republican Party's Anointed One, George H.W. Bush. This time, it's an inside fight where Paul has captured gads of delegates in caucus states even though he didn't come close to winning the popular vote in those states. With the delegates, Paul hopes to influence the party from its libertarian flank, though no one is sure how he plans to do that. More certain is that Paul has much to bargain with and Rand's endorsement may be a signal that Dad is ready to deal.

Romney, for his part, stands to gain a lot from an association with Paul. For one thing, Romney continues to struggle with conservatives. He can't sway independent voters without getting hammered by conservatives sceptical of his bona fides. No one, however, doubts Paul's conservatism. For another, Romney does not inspire voters, even Republicans. Paul, on the contrary, has built a voracious following.

Time will tell, of course, and the national convention is still a long way off. Meanwhile, it's good reminder that sometimes a gaffe is just a gaffe, except when it isn't.

Republican presidential candidate Mitt Romney speaks during a campaign rally in Las Vegas, Nevada. Photograph: Getty Images.

John Stoehr teaches writing at Yale. His essays and journalism have appeared in The American Prospect, Reuters Opinion, the Guardian, and Dissent, among other publications. He is a political blogger for The Washington Spectator and a frequent contributor to Al Jazeera English.


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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.