Thursday, July 12, 2012

Does Romney Lack a Coherent Economic Policy

At least, that's what people say. And it's a reasonable reaction, given that he hasn't disclosed an actual policy for boosting the economy. I agree with those who reject his prior offerings as representing an actual plan, as opposed to stringing together a list of promises and right-wing talking points:
The Romney campaign, of course, claims that it has presented an economic plan—and strictly speaking it is right. Last September, Romney unveiled “Believe in America: Mitt Romney’s Plan for Jobs and Economic Growth,” an economic manifesto that ran to more than a hundred and fifty pages. Even back then, though, Romney’s ragtag collection of proposals—fifty-nine of them, ranging from eliminating the inheritance tax, to capping federal spending at twenty per cent of G.D.P., to opening up America’s energy reserves for development—was widely dismissed as inadequate by his fellow Republicans.

In response to criticisms from his rivals in the G.O.P. primary, Romney subsequently unveiled a revised version of his plan, this one containing a twenty per cent cut in income-tax rates from top to bottom. More recently, in a series of ads, his campaign has said that in his first hundred days he will move to repeal Obamacare, cut taxes, and balance the budget. “By day one hundred,” the ads say, “President Romney’s leadership brings new certainty to our economy, and the promise of new banking and high-tech jobs.”

By no stretch of the imagination could the hastily revised tax proposals or the promises contained in the new ads be described as a credible, fully-costed economic plan.
Romney has apparently reduced his "plan" to five talking points, which he presented to the NAACP:
I know what it will take to put people back to work, to bring more jobs and better wages. My jobs plan is based on 25 years of success in business. It has five key steps.

First, I will take full advantage of our energy resources, and I will approve the Keystone pipeline from Canada. Low cost, plentiful coal, natural gas, oil, and renewables will bring over a million manufacturing jobs back to the United States.

Second, I will open up new markets for American products. We are the most productive major economy in the world, so trade means good jobs for Americans. But trade must be free and fair, so I’ll clamp down on cheaters like China and make sure that they finally play by the rules.

Third, I will reduce government spending. Our high level of debt slows GDP growth and that means fewer jobs. If our goal is jobs, we must, must stop spending over a trillion dollars more than we earn. To do this, I will eliminate expensive non-essential programs like Obamacare, and I will work to reform and save Medicare and Social Security, in part by means-testing their benefits.

Fourth, I will focus on nurturing and developing the skilled workers our economy so desperately needs and the future demands. This is the human capital with which tomorrow’s bright future will be built. Too many homes and too many schools are failing to provide our children with the skills and education that are essential for anything other than a minimum-wage job.

And finally and perhaps most importantly, I will restore economic freedom. This nation’s economy runs on freedom, on opportunity, on entrepreneurs, on dreamers who innovate and build businesses. These entrepreneurs are being crushed by high taxation, burdensome regulation, hostile regulators, excessive healthcare costs, and destructive labor policies. I will work to make America the best place in the world for innovators and entrepreneurs and businesses small and large.

Do these five things – open up energy, expand trade, cut the growth of government, focus on better educating tomorrow’s workers today, and restore economic freedom – and jobs will come back to America, and wages will rise again. The President will say he will do those things, but he will not, he cannot, and his record of the last four years proves it.
Let's call that "The Five Platitudes of Mitt":
  1. "Take Full Advantage of Our Energy Resources", apparently a signal to the fossil fuel industry that he'll back away from policies to reduce carbon emissions, and perhaps go back to the heady days of G.W. Bush and his massive subsidies, but there's no connection between "I'll make the energy industry richer than ever" and "bring[ing] over a million manufacturing jobs back to the United States". Mitt needs to connect the policy with the supposed outcome. What jobs does he imagine will come back to the United States if we burn more fossil fuel, and on what basis? What will those jobs pay?

  2. "Open Up New Markets": How exactly will Romney identify and "open up" the "new markets"? What American products does he believe will be received by the "new markets" he opens up, and in what quantity? Exactly what does he believe that China is doing that makes it a "cheater" - is he talking about financial gamesmanship resulting in a devalued Renminbi, akin to the games he, himself, plays to avoid taxes - and once he defines the problem exactly what will he do to rectify it?

  3. "Reduce Government Spending" - Romney personifies the modern Republican demagogue when it comes to government spending. He identifies no targets for his cuts other than the first serious federal effort to limit the healthcare inflation that seriously threatens our nation's financial stability - a program so "wasteful" that while attempting to reduce that serious economic threat it reduces the deficit.

    Romney endorses the Ryan Plan - a nebulous proposal that cuts government spending by hammering the middle class, but then increases the deficit by slashing taxes for people like Romney. Worse, while Ryan is happy to be specific about the tax cuts he's giving to the wealthiest Americans, he refuses to specify the cuts he's proposing to partially offset the economic catastrophe he proposes.

  4. "Nurturing and Developing the Skilled Workers our Economy Needs" - What workers? Through what policies? To what effect? It's a "Chicken in Every Pot"-type statement - twaddle.

  5. "Restore Economic Freedom" - More twaddle. It's the type of line that might get him a cheer from the most ignorant participants at a Tea Party rally. (I'm curious, also - when he enacted "Romneycare", did he take the position that he was knowingly harming small businesses? No, of course not. He's simply coughing out a focus-group vetted applause line that has nothing to do with any policies he would care or dare to articulate in public.)

He's running for office, and the mainstream media on the whole appears satisfied that in a political campaign, something a candidate purports to be a policy but is in fact nothing more than populism, demagoguery, ridiculous promises and absurd overstatements is sufficient. "How can we press for more - we might hurt the candidate's chances in the election if we made him share genuine policy proposals." But when Romney says things like "I have no hidden agenda", is it not fair to ask him, "So that means you have no actual agenda"? (The question can be rephrased to be more delicate, if you wilt at the thought of being somewhat sarcastic when questioning a political candidate.)

So yes, as John Cassidy pointed out in the article linked above, Romney's promises fall far short of a "credible, fully-costed economic plan". Cassidy accepts the cynical explanation that if Romney were to be specific it would cost him votes. But Cassidy also points out that Romney is not being advised by stupid men:
The academic economists advising Romney—a group that includes Harvard’s Greg Mankiw and Columbia’s Glenn Hubbard—are moderate conservatives: they don’t believe in right-wing fairy stories about tax cuts being self-financing and budget cuts stimulating the economy. If Romney enters office and slashes tax rates without pushing through offsetting spending cuts, the budget deficit will shoot up—just as it did following the Reagan and Bush tax cuts. If he cuts government spending without stimulating demand in other ways, the unemployment rate will rise even further. In addition, the entire situation is greatly complicated by the so-called “fiscal cliff”: the fact that on January 1, 2013, the Bush tax cuts are due to expire and the automatic spending cuts agreed upon by both sides during last year’s debt-ceiling debacle are due to be introduced.
Let's back up for a minute here - way back to the days when Romney was advancing a Mssachusetts-style health insurance mandate for the nation, and speaking positively of federal legislation that would have created such a mandate. What else was he doing at that time? He was endorsing stimulus spending - and stating that as a Republican governor he would happily have taken stimulus money.

Here's a radical idea for you: Perhaps the reason Romney refuses to be specific about his economic policies is that he agrees that President Obama is doing all a president can do - and perhaps more than a Republican president could do - to revive the economy. Perhaps his economic advisors agree with him (the 2009 model) that the stimulus bill was sound economic policy and that, were it not made politically impossible by Romney's own party, another stimulus bill would be a really good idea.

Mankiw wrote an editorial some years back that could be interpreted as a suggestion that we use inflation or tax penalties to boost consumer spending. Perhaps Mankiw is now explicitly among those who argue that low, sustained inflation would be a good approach to dealing with debt overhang issues and pulling the nation out of the recession.

When he has unguarded moments, Romney appears to understand that, assuming he could actually identify targets for cuts, even when times are good you cannot significantly cut government spending without causing serious harm to the economy:
... because, if you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5 percent. That is by definition throwing us into recession or depression. So I’m not going to do that, of course.
Various right-wingers call that a "gaffe", but to the extent that's a fair characterization it would be a Kinsey Gaffe (a politician accidentally telling the truth). It suggests that Romney is the inverse of the old "I'm not a doctor but I play one on TV line" - "I actually understand economics, but I play an idiot on TV". And note, consistent with his endorsement of stimulus spending back in 2009, the same logic he expresses in opposing tax cuts can be applied in favor of stimulus spending.

If Romney knows his "day one" promises are largely a lie - that if implemented they will actively harm the economy - then it shouldn't actually be a surprise that he won't state an actual policy. Because odds are it would end up sounding like, "My solution would be to do what President Obama is doing, but maybe I would have more success with my own party in terms of getting more stimulus spending or convincing them to pass the proposals the President has been pushing for the past year to boost employment. Significant spending cuts on my first day in office? Do I look like an idiot?"

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