“To summarize, then, the true Romney plan is to create an economic boom through the sheer power of Mr. Romney’s personal awesomeness.” ~Paul Krugman
As another presidential election reaches its climax, the polls in the country have tightened up dramatically. Barack Obama and Mitt Romney find themselves in a virtual dead heat in many national polls. This in due in part to what is the dampening of enthusiasm among many former Obama supporters. Add in the tendency by many independents to “throw the bums out” when thing don’t improve quickly and dramatically and it is no wonder Mitt Romney is threatening to end the Obama presidency at one term. However, the idea Romney’s proposed economic policy to reduce tax rates for everyone (including the very rich), reduce the deficit, and eliminate regulations are fresh ideas beyond the failed economic policies of his Republican predecessor just does not add up.
Take the first, and arguably most central tenet to the Romney campaign’s plan for creating jobs: tax cuts. Throughout history, Republican politicians have argued cutting taxes are the key to economic recovery. Furthermore, they have aimed those tax cuts at the higher income earners in some misplaced belief that by reducing taxes on the very rich the economic benefits will trickle down to the rest of society. However, according to a recent study, the increase in GDP from tax cuts on the very rich is statistically insignificant. Furthermore, it was similar economic policy to this that lead the country into the most recent economic recession in the first place. Hardly a fresh idea.
Another cornerstone of the Romney/Ryan proposed economic plan, is the need for deficit reduction. Not only is this not a new idea (deficit reduction has been a part of the federal policy conversation in every election over the past decade or so), the aforementioned tax cuts do nothing to help reduce the deficit. In fact, according to some, these tax cuts could amount to as much as $5 trillion addition to the national debt. While the final number regarding the amount added to the debt is not a certain, no matter how you look at it, cutting taxes will need to be paid for. As one can see, thanks to this handy tool from the New York Times, one can not reduce the deficit significantly through cuts alone without severe ramifications for programs that benefit millions of Americans. Rather than a boon to the economy, this is a merely a recycled proposal to use deficit reduction as a guise to shrink the social safety net. Once again, nothing fresh about that.
The final central, albeit somewhat vague, proposal being put forth by Mitt Romney in order to stimulate the economy is to reduce regulations in order to allow to small business to prosper. There are number of problems with this idea. First, among the regulations he has targeted as needing to be eliminated or reduced are those recently placed on the financial industry by the Dodd-Frank Reform and Consumer Protection Act, a bill meant to prevent another banking crisis. This is a backwards thinking at best and could lead the economy right back to the brink of collapse. Also, treating regulatory agencies as an impediment to economic gain, rather than the protection against irresponsible business practices they are, does our society a disservice and can lead to dire consequences for the environment and health of our communities. Going after regulations, rather than acknowledging their importance in society is hardly a new proposal that will lead to massive benefits to the economy.
While there are many reasons to be dissatisfied with our current president, the reality is things have been getting progressively better. Furthermore, an economic policy focusing on reductions in the tax rate, the deficit and regulations is neither new nor the answer going forward. We must instead invest money in infrastructure, education, and energy. While Obama has not fulfilled all of his promise, I believe he has done enough to deserve another term. One thing is clear, while his vision may not be “fresh” it is the better prescription for what this country needs going forward.