Gov. Mitt Romney lobbied the credit ratings agency Standard & Poor’s in 2004 to raise his state’s credit rating in part because Massachusetts had raised taxes during an economic downturn two years earlier...

The presentation to the ratings agency reveals that Romney’s administration made the case to Standard & Poor’s that his state was creditworthy because of both spending cuts — the current preferred GOP method — and new revenues, including fees he imposed and tax “loopholes” he closed. The presentation also prominently cited a controversial set of tax increases in the summer of 2002, which Romney, then a candidate, had opposed.
Taxes key to Mitt Romney's '04 pitch to Standard & Poor's - Ben Smith -

IMO, this is exactly the kind of approach that will be required if the nation is to embark on a credible fiscal consolidation path. Whether Presidential Candidate Romney will offer a policy platform that features a fiscal consolidation program that includes entitlement reform, discretionary spending savings, and revenue increases/tax reform remains to be seen. Given the dynamics in the Republican primary process, an emphasis on "tax reform" (which would close various loopholes to broaden the tax base) might be the strongest position he could offer without undermining his nomination prospects, but even such a commitment could be present risks. Hence, there is a chance that he might do even less e.g., mention little or nothing about a revenue component while merely avoiding iron-clad Americans for Tax Reform-style pledges not to raise taxes, but such silence could also lead his rivals to try to paint him as willing to raise taxes.

Given the nation's great fiscal challenges, the most cautious path might actually be the riskiest. Empirical evidence strongly backs fiscal consolidation efforts that are mostly expenditures-driven but have a modest revenue component. He will need to emphasize that his business experience and political success in improving Massachusetts' credit rating demonstrates that successful fiscal consolidation requires putting best practices (the empirical evidence I noted above) ahead of ideology Such a line of argument could differentiate him from the current hyper-partisanship that prevails in Washington. If he does so, he could point to Canada's success in improving its fiscal balance by 10.4% of GDP over a 14-year span, much of it concentrated over a smaller window during the 1990s. Just under two-thirds of the Canadian savings resulted from expenditure-related savings. Finland and Sweden both achieved savings of 13.3% of GDP during the 1994-2000 timeframe. Taxes accounted for around 20% of the savings in both countries. In addition, Finland's and Sweden's reforms included pension system changes. Finland raised its retirement age and slashed benefits for those choosing to retire early. In Sweden,while that country did not raise the pension eligibility age at the time, the reforms created financial incentives that were skewed so greatly that it discouraged retirement before age 67. All of this fiscal consolidation data is taken from IMF analyses.

In the end, it will be interesting to see how Governor Romney campaigns on the fiscal consolidation issue. He can differentiate himself by pointing to his governing over a credit upgrade not downgrade. He could emphasize best practices to Washington's ideologically-driven approach. But there are no guarantees he will do so, even as medium- and long-term fiscal consolidation is becoming increasingly urgent.