“Romney’s Optimism Cure”: Are You Feeling Reassured By The Confidence Fairy?
Mitt Romney is optimistic about optimism. In fact, it’s pretty much all he’s got. And that fact should make you very pessimistic about his chances of leading an economic recovery.
As many people have noticed, Mr. Romney’s five-point “economic plan” is very nearly substance-free. It vaguely suggests that he will pursue the same goals Republicans always pursue — weaker environmental protection, lower taxes on the wealthy. But it offers neither specifics nor any indication why returning to George W. Bush’s policies would cure a slump that began on Mr. Bush’s watch.
In his Boca Raton meeting with donors, however, Mr. Romney revealed his real plan, which is to rely on magic. “My own view is,” he declared, “if we win on November 6, there will be a great deal of optimism about the future of this country. We’ll see capital come back, and we’ll see — without actually doing anything — we’ll actually get a boost in the economy.”
Are you feeling reassured?
In fairness to Mr. Romney, his assertion that electing him would spontaneously spark an economic boom is consistent with his party’s current economic dogma. Republican leaders have long insisted that the main thing holding the economy back is the “uncertainty” created by President Obama’s statements — roughly speaking, that businesspeople aren’t investing because Mr. Obama has hurt their feelings. If you believe that, it makes sense to argue that changing presidents would, all by itself, cause an economic revival.
There is, however, no evidence supporting this dogma. Our protracted economic weakness isn’t a mystery; it’s what normally happens after a major financial crisis. Furthermore, business investment has actually recovered fairly strongly since the official recession ended. What’s holding us back is mainly the continued weakness of housing combined with a vast overhang of household debt, the legacy of the Bush-era housing bubble.
By the way, in saying that our prolonged slump was predictable, I’m not saying that it was necessary. We could and should have greatly reduced the pain by combining aggressive fiscal and monetary policies with effective relief for highly indebted homeowners; the fact that we didn’t reflects a combination of timidity on the part of both the Obama administration and the Federal Reserve, and scorched-earth opposition on the part of the G.O.P.
But Mr. Romney, as I said, isn’t offering anything substantive to fight the slump, just a reprise of the usual slogans. And he has denounced the Fed’s belated effort to step up to the plate.
Back to the optimism thing: It’s true that some studies suggest a secondary role for uncertainty in depressing the economy — and conservatives have seized on these studies, claiming vindication. But if you actually look at the measures of uncertainty involved, they’ve been driven not by fear of Mr. Obama but by events like the euro crisis and the standoff over the debt ceiling. (O.K., I guess you could argue that electing Mr. Romney might encourage businesses by promising an end to Republican economic sabotage.)
You should also know that efforts to base policy on speculations about business psychology have a track record — and it’s not a good one.
Back in 2010, as European nations began implementing savage austerity programs to placate bond markets, it was common for policy makers to deny that these programs would have a depressing effect. “The idea that austerity measures could trigger stagnation is incorrect,” insisted Jean-Claude Trichet, then the president of the European Central Bank. Why? Because these measures would “increase the confidence of households, firms and investors.”
At the time I ridiculed such claims as belief in the “confidence fairy.” And sure enough, austerity programs actually led to Depression-level economic downturns across much of Europe.
Yet here comes Mitt Romney, declaring, in effect, “I am the confidence fairy!”
Is he? As it happens, Mr. Romney offered a testable proposition in his Boca remarks: “If it looks like I’m going to win, the markets will be happy. If it looks like the president’s going to win, the markets should not be terribly happy.” How’s that going? Not very well. Over the past month conventional wisdom has shifted from the view that the election could easily go either way to the view that Mr. Romney is very likely to lose; yet markets are up, not down, with major stock indexes hitting their highest levels since the economic downturn began.
It’s all kind of sad. Yet the truth is that it all fits together. Mr. Romney’s whole campaign has been based on the premise that he can become president simply by not being Barack Obama. Why shouldn’t he believe that he can fix the economy the same way?
But will he get a chance to put that theory to the test? At the moment, I’m not optimistic.
By: Paul Krugman, Op-Ed Columnist, The New York Times, September 23, 2012
“The Grandfather Of Obamacare”: How Mitt Romney Paid For Romneycare With Federal Help
Republican presidential candidate Mitt Romney told Univison in an interview Wednesday that he did not mind when President Obama called him the “grandfather” of Obamacare when referring to the program Romney instituted when he was governor of Massachusetts. Quite the opposite. Romney thought other states might take a page from the Massachusetts playbook.
We didn’t have to cut Medicare by $716 billion. We didn’t raise taxes on health companies by $500 billion, as the president did. We crafted a program that worked for our state. I believe the right course for health care reform is to say for each state we’re going to give you the Medicaid dollars you’ve had in the past, plus grow them by 1 percent. And you, as the states, are now going to be given targets to move people to insurance, and you craft programs that are right for your state. Some will copy what we did; others will find better ideas.
Romney is right: The state of Massachusetts did not cut Medicare to finance health care (nor could it have, as states don’t have a say in the federally financed entitlement budget). Whereas the Affordable Care Act levies a tax on insurance companies and makers of medical devices, the Massachusetts law has no similar provision.
But could a state with a capped Medicaid budget, as Romney has proposed, copy what Romney did in Massachusetts and end up with universal coverage? Romney’s own experience suggests probably not: His state a special pot of federal money, alongside a preexisting assessment on hospitals and insurers, to expand insurance coverage to 98 percent of its population.
Way back in 1985, under then-Gov. Michael Dukakis, Massachusetts set up a program called the Uncompensated Care Pool. Much like the name suggests, the pool is used to finance health care for those without insurance. Massachusetts financed the plan largely through assessments on hospitals and insurers. Under Romney’s administration In 2004, each industry paid in about $157 million to keep the pool running. That plan still operates today — under the name Health Safety Net – and covers health care needs that Massachusetts residents cannot afford.
Since the late 1990s, Massachusetts has also received additional Medicaid funds to enroll populations that other states traditionally do not cover. In 2005, when Romney was governor, the federal aid amounted to $550 million. As former Romney adviser John McDonough explains in his book “Inside Health Policy,” the funds were crucial to laying the foundation for universal health coverage. He takes us back to 2005, when the George W. Bush administration was getting ready to end that special funding arrangement:
“In Masachusetts, $350 million is a lot of money, and the news set off alarm bells. Governor Romney reached out and formed a partnership with Senator Kennedy to scheme how to keep the extra federal dollars coming. At that moment, the state’s mundane desire to retain federal dollars merged with the policy goal of universal coverage to create a new policy imperative. Romney and Kennedy proposed that Massachusetts keep receiving the extra payments and in return the state would shift the use of those dollars [to] subsidies to help lower-income individuals purchase health insurance coverage.”
Ryan Lizza recounts a similar version of events in his New Yorker article on Romneycare. That state ultimately secured three years of additional Medicaid funding, $1.05 billion, which largely financed the Massachusetts expansion. Both accounts suggest that it was a special commitment from the federal government, rather than a capped budget, that spurred Massachusetts’ success.
Since then, employers and individuals have chipped in to keep the universal coverage program afloat. The Blue Cross Blue Shield Foundation of Massachusetts saw spending by both of those groups increase in the year after Romneycare became law, which they attribute to rising medical costs and the insurance expansion.
Five years later, it’s largely federal funding that keeps Massachusetts’ universal coverage afloat. Since 2005, the state has twice renewed that federal waiver — the one Lizza and McDonough wrote about — to provide additional Medicaid dollars to the state.
The most recent renewal was last December 2011, when the state secured $26.75 billion in federal funds over the course of three years. It will, among other programs, continue to finance the universal coverage program.
“The milestone agreement also ensures the ongoing success of Massachusetts’ historic health care reform initiative, through which more than 98 percent of the Commonwealth’s residents, and 99.8 percent of children, have health insurance,” Massachusetts Health and Human Services Secretary JudyAnn Bixby wrote at the time. “The waiver fully funds our ongoing health care reform implementation.”
So Massachusetts used not just federal Medicaid money but federal dollars above and beyond that Medicaid money to finance their health reforms. It is difficult to see how Romney’s proposal to cut Medicaid spending and hand that reduced share over to the states would allow other states to follow Massachusetts’ example. It might not even permit Massachusetts to continue following Massachusetts’ example.
By: Sarah Kliff, The Washington Post, September 21, 2012
“Bain-Like Bonuses”: A Leveraged Romney Campaign With Nothing For The Troops
Mitt Romney’s campaign is in a bit of trouble. No, not poll numbers, or internal disputes, or the candidate himself, though those are all problems too. Rather, the Romney campaign, which outraised President Obama for four consecutive months this summer, is in money trouble. Campaign finance disclosures released yesterday show the campaign has only $35 million in the bank — a relatively low amount this close to the election — and is $15 million in debt. The campaign has been forced to scramble to find new big donors, something you don’t want to have to do this late in the game, because its other donors are maxed out.
The problem is not Romney’s fundraising abilities — he’s unquestionably adept at bringing in big checks — but rather with quirks in campaign finance law, his reliance on big donors, and perhaps some mismanagement. The loan was needed as a bridge before he could access his general election fund, which candidates can’t touch until after their nominating conventions. The low cash on hand is because much of the money he raised went to the Republican National Committee to help pay for other races and not to the Romney campaign (he redistributed the wealth, if you will). And the need for new contributors is a byproduct of relying on high-dollar donors, who max out after contributing $2,500 and thus can’t be returned to for a consistent money stream throughout the campaign like smaller donors (John McCain had the same problem in 2008).
Given all that, not to mention the other problems the campaign is facing, this is a bit unexpected. The Washington Post’s Dan Eggen:
Mitt Romney’s campaign handed out more than $200,000 in bonuses last month to senior staffers, according to new disclosure records filed Thursday. Richard Beeson, Romney’s national political director, received a $37,500 payment on Aug. 31 in addition to his salary, according to records filed with the Federal Election Commission. In addition, records show at least six other top staffers each received $25,000 bonuses on the same date: campaign manager Matt Rhoades, general counsel Kathryn Biber, policy advisor Lanhee Chen, communications director Gail Gitcho, digital director Zach Moffatt and advisor Gabriel Schoenfeld. Two other employees received $10,000 bonuses.
“Win bonuses” are pretty common on political campaigns, though President Obama’s campaign did not hand out any after its convention this year. And $200,000 isn’t a ton of money for a campaign that will spend close to a billion dollars. But one has to wonder if it’s really a good idea for a struggling campaign that’s already in debt to hand out cash to its top executives while the candidate is fighting a perception of being a corporate raider .
The comparison to Bain Capital, though imperfect, is almost too obvious to make. Bain often bought companies, leveraged them with massive debt, and then paid the executives big bonuses regardless of whether the company succeeded. Something not entirely dissimilar happened to Bain & Co., the consulting firm that Bain Capital spun off of, when Romney went to rescue it.
And while the very top echelon of his campaign got bonuses, there was nothing for the ground troops. The field staffers who work too many hours manning lonely remote offices for the reward of meager pay and doors getting slammed in their faces didn’t get a bonus. Neither did drivers or clerks or janitors or opposition researchers forced to cable news 24 hours a day.
Again, this isn’t entirely unusual for any political campaign. People sign up knowing they’ll be worked hard for no money because they believe in their candidate and maybe hope they have a shot at a job if their guy or gal wins. But one can’t help wondering if the bonus model sheds some light on Romney’s view of the world and how businesses are run. It’s the people at the top who make it happen and deserve the bonuses, not the ones down below who are actually doing the work.
By: Alex Seitz-Wald, Salon, September 21, 2012
“A Luxury Reserved For The Wealthy”: Taxes Are Not A Charitable Donation
Almost all federal taxpayers who itemize their charitable deductions on their returns deduct the full amount, in order to keep their tax burden as low as possible. Mitt Romney didn’t do that in 2011, according to tax returns released today, leaving $1.8 million un-deducted so he could tell voters he paid a federal tax rate of at least 13 percent. That’s a luxury reserved only for wealthy politicians who can afford to pay an extra few hundred thousand for image purposes.
But one unfortunate line on a memo from Mr. Romney’s lawyer, accompanying the tax returns, suggests that Mr. Romney really doesn’t see much difference between giving to charity and giving to the government.
“Over the entire 20-year period, the total federal and state taxes owed plus the total charitable donations deducted represented 38.49% of total AGI,” the memo said, referring to Mr. Romney’s adjusted gross income. In his mind, apparently, you can just add up the two figures into a new hybrid column, perhaps called, Total Obligation to Society, and make yourself look even more generous.
It doesn’t work that way, however; charity and taxes cannot be conflated to make it sound like you are “giving away” a larger portion of your income than you are. Conservatives can hate paying taxes, and Mr. Romney in particular appears to hate having tax money spent on the “dependent class,” but that doesn’t make the government a charity.
Taxes represent the obligations citizens have to each other and to society, fostering physical safety with defense and law enforcement spending, economic safety with public works, and personal welfare for the needy. Charity is entirely voluntary, even for those who, like Mr. Romney, are asked by their religious authorities to tithe a fixed portion of their income. Those donations play a vital role in every American community, but they can never take the place of a firm government safety net, as much as they are preferred by the right to taxes.
One would think that someone running to be the government’s chief executive would be proud to make tax payments, and would not try to reduce them through exotic foreign tax shelters and an outsized IRA, as Mr. Romney has done for years. But the announcement today that he had deliberately “overpaid” his taxes was grudging and entirely for show. He overpaid them only so that he couldn’t be accused of paying far less before the election.
Despite his accountant’s statement today that he had never paid less than 13.66 percent of his income in taxes over the last 20 years (a level that would make many middle-class taxpayers jealous), it is still an assertion that has not been backed up by the release of actual tax returns for that period. For all the highly trumpeted discretionary donations he has made, Mr. Romney apparently still doesn’t want the public to see how assiduously he has worked to lower his most important social obligation.
By: David Firestone, The New York Times, September 21, 2012
“High Noonan”: Mitt Romney Needs A New Biography, A New Personality, And A New Party
The latest intramural brouhaha in the GOP centers on the unlikely figure of my favorite columnist, the ineffably successful Peggy Noonan.
Earlier this week, you may recall, she penned a column (or a blog post, as it was styled, presumably because her rambling comments could not be edited, or were so urgent as to require immediate publication) that lashed Mitt Romney’s campaign for “incompetence” and then wandered around whatever keyboard or cocktail napkin she was drafting it on before settling on the suggestion that Romney deliver a “big speech” in Brooklyn. Yes, Brooklyn.
Anyhow, this act of heresy produced sufficient heartburn in the Romney campaign or amusement among her superannuated Republican cronies that she followed up today with a new blast at Team Mitt. This time around, perhaps with the aid of an editor, she produced an actual on-the-record quote from a “corporate strategist” who analyzed Romney’s mistakes at considerable, if unoriginal, length. Having teed up this moment (like all moments for many MSM pundits) as crucial, Noonan delivered herself of another Big Idea for Mitt, which is about as plausible as a redefining speech in Brooklyn: Romney needs his very own Jim Baker to take control of his campaign. Indeed, she may be (her crystalline prose leaves this unclear) be urging Romney to bring on the actual Jim Baker to take control of his campaign. Since Baker is 82 years old, I don’t think that’s happening. But putting that aside, the idea that Mitt Romney is going to bring in some Yoda to turn his campaign upside down with just over six weeks until election day is, well, the sort of thing only Peggy Noonan could say.
More generally, this Aging Republican Establishment obsession with alleged staff errors is a pretty good indicator these folks haven’t a clue about the structural problems facing Mitt, who rendered himself virtually immobile in winning the GOP nomination over a weak field and now has no record to run on, and an agenda he’s afraid to talk about–totally aside from having the least attractive persona of any GOP nominee since Nixon. Mitt doesn’t need a “new CEO,” Peggy; he needs a new biography, a new personality, and a new party–you know, one that doesn’t either demand he loudly promote a suicidal policy agenda, or sit around carping about how he doesn’t do things like Ronnie.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, September 21, 2012
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