“Out Of Egypt, Into The Red Sea”: Romney’s Cowardly Speech On The Deficit
Another day, another economic speech by Mitt Romney. Romney is constantly trying to refocus the campaign on the economy. After being sidetracked by President Obama’s announcement that he supports gay marriage speech last week, and Romney’s appeal to the religious right at Liberty University on Saturday, Romney is once again on the attack against Obama’s economic record. Romney’s Tuesday afternoon speech in Des Moines, Iowa, was nominally focused on deficit reduction.
There are plenty of reasons to worry about the rate of job growth in the short term and federal debt accumulation in the long term, but unfortunately Romney’s proposals would make both problems worse. Rather than offer specific investments or incentives to hire now and plausible plans to reduce the deficit later, when the economy is strong enough to withstand spending cuts, Romney offers the same austerity measures that have crippled the recovery in much of Europe.
It’s worse than just that. If Romney specified which tax loopholes he would close and spending he would cut, at least we’d get deficit reduction, if nothing else. It would also allow for an honest debate about the American people’s priorities on taxes, spending and deficit reduction. But he stubbornly refuses, out of cowardice. Specific cuts could trigger opposition, so Romney offers only bromides.
Romney compared the rising federal debt to a “prairie fire” sweeping the nation. “The people of Iowa and America have watched President Obama for nearly four years, much of that time with Congress controlled by his own party. And rather than put out the spending fire, he has fed the fire,” said Romney. “He has spent more and borrowed more.”
While technically true, this is a bit misleading. Obama inherited an imbalance between spending and revenue because of tax cuts and wars started by George W. Bush and congressional Republicans. Much of the increase in the deficit since Obama took office can be attributed to increases in mandatory spending such as food stamps and decreases in tax revenue that were caused by the recession he also inherited, rather than any of his policies. While Obama did sign some new spending bills, he also signed the Affordable Care Act, which would reduce the deficit. Romney pledges to repeal the ACA and complains that it cut spending on Medicare.
“The time has come for a president, a leader, who will lead. I will lead us out of this debt and spending inferno,” Romney promised. But how? Romney does not say. He wants to extend the Bush tax cuts, then cut taxes an additional 20 percent and raise spending on defense. All of this increases the deficit.
To pay for all of this and then reduce the deficit from current levels would require drastic cuts in domestic programs. But Romney knows that the American people like the idea of cutting domestic spending more than they like cutting actual programs they rely upon. So he avoids offering any specifics. “Move programs to states or to the private sector where they can be run more efficiently and where we can do a better job helping the people who need our help,” said Romney. “Shut down programs that aren’t working. And streamline everything that’s left.” None of this really means anything. No one is for programs that aren’t working or inefficiencies. Unless you say which programs you believe are not working, or which inefficiencies you will remove, you aren’t really saying anything at all. Romney says he will lead on this issue, but he offers no leadership at all.
By: Ben Adler, The Nation, May 15, 2012
“Right Wing Social Engineering”: What Romney’s Medicare Plan Actually Does
DC journos have spent much of the 2012 election trying to answer the question of how exactly a President Romney would govern. On one side, there are the skeptics who never bought into Romney’s rhetoric during the Republican nomination. They argue Romney is, at heart, still a moderate northeastern governor, a businessman unsuited for the extremism that has come to dominate his party. Others are equally convinced that Romney must be taken at face value. Sure he might have positioned himself in the middle while he governed a state dominated by Democrats, but he has spent the past five years running for president full-time, aligning himself with every right-wing whim over the course of his two campaigns. He’s the Republican who sought the endorsement of Ted Nugent, discarded a gay spokesman, and calls corporations people. Lest we forget, it was Romney who was poised to run as the right-wing challenger to John McCain and Rudy Giuliani in 2008 before Mike Huckabee swooped in to steal the evangelical vote.
The best measure to get at the real Romney is to read his actual proposals and ignore the standard posturing at campaign stops or TV interviews. These are the documents directed primarily at the obsessive political class, barely noticed by your average voter, thus freeing Romney to be closer to his true self. They’re probably the most important piece of evidence for any politician before an election. As Jonathan Bernstein has convincingly argued, presidential pledges should be taken at face value, as newly elected presidents are almost always constrained by the commitments they made during the campaign.
When weighed by this measure, Romney is undoubtably aligned with the far right-wing vision of his policy, particularly on budgetary and fiscal matters. He’s advocated not only for the extension of the Bush tax cuts, but has suggested even further reductions in the U.S. tax rate that would heavily benefit the wealthy. He’s endorsed the Paul Ryan budget wholesale, an Ayn Randian vision of the limited government that even Newt Gingrich termed “right wing social engineering” when it was initially introduced.
One of the key elements of the Ryan/Romney overlapping vision is how the government should handle the exploding costs of Medicare. The New York Times delved into Romney’s proposals in contrast with Obama’s in an article Tuesday. The piece unfortunately falls into the pitfalls of equivocating newspaper journalism, weighing both plans largely by the attacks poised by the opponent rather than independent descriptions of what each candidate is suggesting. Romney’s plan is introduced as “ending Medicare as we know it” in Obama’s words, while the article introduces the Affordable Care Act as such:
The president’s 2010 health care law, Mr. Romney says, “could lead to the rationing or denial of care for seniors,” as it will squeeze nearly a half-trillion dollars from the growth of Medicare over 10 years while putting the program’s future “in the hands of 15 unelected bureaucrats.”
Either side of the political divide can agree that Medicare is on a perilous path. Health care expenditures as a whole are eating up an increasingly large share of the country’s GDP, and the number of Medicare enrollees is set to jump as the Baby Boomers start to retire. The government has projected that by 2024 the Medicare fund will no longer be able to match the full cost of expected benefits.
This concern is one of the primary reasons Obama pushed health care reform early in his administration. Alongside the measures that make it easier for low and middle income Americans to purchase health insurance, the Affordable Care Act takes a first stab at tackling the looming problem. The bill included a variety of measures to incentivize cheaper, more effective health care to bring down costs throughout the health care market, along with a medical advisory board that will suggest best practices to keep the tab lower on Medicare.
Meanwhile, Romney and Ryan’s strategy is to largely ignore the general growing cost of health care, instead focusing on Medicare itself. They would turn Medicare into a premium support plan—essentially a voucher program that would shift the burden of health spending off the government ledger by forcing future retirees to spend far more of their own funds on health services. These vouchers would initially meet the value of buying insurance on the private market, but they would soon fall behind the actual cost for consumers if the general price of health care continues to rise unabated.
Romney has not yet released a proposal with all of the details, but it is safe to assume that his premium support plan would largely follow the model set forth by Ryan. Under that plan—which has already passed the Republican controlled House before it was blocked by Democrats in the Senate—all Medicare enrollees who enter the program beginning in 2023 would have to enter the voucher program, and, as the Center for Budget and Policy Priorities has highlighted, by 2050 Medicare expenditures would be 35 to 42 percent lower for each participant, primarily by shifting the cost burden onto enrollees rather than lowering the overall cost of the care they consume.
Yes, Medicare expenditures would be lowered—but on enrollees’ dime.
By: Patrick Caldwell, The American Prospect, May 15, 2012
“Creative Destruction Of Capitalism”: Mitt Romney Is No Economic Savior
Republicans say they’re eager for the presidential campaign to turn away from “distractions” and focus instead on the economy. Someone should warn them that if they’re not careful, they might get their wish.
It is true that voters’ unhappiness with high unemployment and slow growth poses a challenge for President Obama as he seeks reelection. But for Mitt Romney and the GOP to take advantage of this potential opening, they’ll have to do more than chant the word “economy” like a mantra. They have to make the case that their policies will work better than Obama’s.
And what might Romney’s proposed economic policies be? Why, they’re basically the same as those of George W. Bush, only worse.
Just as Obama owns the recession and the slow recovery, Bush owns the financial crisis that sent the slumping economy over a cliff. But for all his sins — the gratuitous tax cuts, the off-budget wars, the defiance of basic arithmetic — Bush at least demonstrated a certain empathy for Americans who struggle to make ends meet. One of his budget-busting initiatives, for example, was expanding Medicare to cover prescription drugs without worrying about how this much-needed new benefit would be paid for.
It’s safe to predict that Romney would never make such a gesture out of compassion for the beleaguered middle class. To this day, he refuses to take back his criticism of Obama for bailing out General Motors and Chrysler — even though letting the companies fail would have meant the extinction of the U.S. auto industry and the elimination of hundreds of thousands of jobs.
It is a measure of Romney’s ideological stubbornness that, even with Chrysler rebounding under new ownership and GM reporting record profits, he still insists that his view — let the companies go bankrupt so the “creative destruction” of capitalism could work its magic — was correct.
Romney is something of an expert on creative destruction, I guess, having orchestrated a good deal of it while running the private-equity firm Bain Capital. The Obama campaign recently released an ad about one of Bain’s less successful acquisitions, a small steel mill in Kansas City called GST Steel.
The company, which was more than 100 years old, failed after a decade under Bain’s ownership; GST’s 750 employees lost their jobs, pensions and health benefits. Bain, however, made money, investing $8 million in the company and taking out $4 million in profits and $4.5 million in management fees. The Romney campaign contends that GST, with its unionized workforce, could not compete with cheap foreign steel being dumped on the market. The Obama campaign alleges that Bain burdened GST with crushing debt while sucking the company’s coffers dry.
Is this the genius of free markets at work, or is it “vulture capitalism” run amok? Let’s have that argument. Please.
Let’s also have a long, detailed discussion of Romney’s economic plans versus Obama’s. Romney wants to make tax rates for the wealthy even lower than they are now; Obama wants a small increase for those making more than $1 million a year, whom he challenges to pay “their fair share.” Romney’s entire economic plan, basically, involves tax cuts and deregulation — in other words, a repeat of the Bush-era policies that led to the crisis.
Does Romney have any fresh ideas? Well, when he was governor of Massachusetts, he was smart enough to see that universal health coverage would not only improve the lives of the uninsured but also help rein in runaway medical costs. He found the solution in an innovative idea developed in Republican-leaning think tanks: an individual health insurance mandate.
It worked. In fact, it was Romney’s greatest policy success as a public official. But now he doesn’t talk about it much.
My guess is that Republicans won’t want to talk about the past or the future in much detail. They’d like to keep things blurry, so that we only see Romney in broad outline: a successful businessman who’ll put us back in business. For details, we’ll mail you the prospectus.
I can’t help but think of the “prosperity theology” movement, or scam, in which preachers persuade congregants that God’s will is for Christians to be rich — and that the way to become rich is to put lots of money in the collection plate. It’s not believable unless the preacher looks and acts the part. Maybe he lives in a mansion. Maybe his wife drives “a couple of Cadillacs.”
Actually, it’s not believable even then.
BY: Eugene Robinson, Opinion Writer, May 14, 2012
“Ignoring The Facts”: Romney’s Fiscal Fantasy Plan
Political arithmetic is always suspect, and one should always examine carefully the claims of those seeking votes. Smart observers have learned to distinguish between the claims of political candidates and their advisers and proposals that have been evaluated by independent scorekeepers such as the Congressional Budget Office (CBO).
This principle was aptly illustrated by the “budget analysis” Mitt Romney’s chief economic adviser, Glenn Hubbard, recently put forward. In a Wall Street Journal op-ed this week, Hubbard constructs a budget plan that he imagines President Obama might propose someday, engages in a set of his own extrapolations and then makes assertions about it. He does not discuss the actual Obama plan or how it has been evaluated by the CBO. Nor does Hubbard invest his credibility in defending the claims that Romney has made about his own fiscal plans. He simply states that “Yes, President Obama and Mitt Romney have budgets with competing visions. But Gov. Romney’s budget makes tough choices” — without delving into the specifics or trade-offs that Romney’s “tough choices” entail.
The president put forward a plan this year that would reduce deficits by more than $4 trillion over the next decade. It would bring federal discretionary spending to its lowest levels since the 1960s. It includes $2.50 in spending cuts for every $1 in additional revenue. It also asks everyone to pay his or her fair share of taxes, repealing the Bush tax cuts for families making more than $250,000 a year and closing loopholes and shelters such as preferences for private jets, hedge fund managers and offshore investments.
The independent CBO confirms that the Obama budget would stabilize the debt as a share of the economy — returning us to a tenable fiscal path. It would do that while allowing increased investments in education, research and infrastructure that are critical to stronger, shared economic growth in the years to come. By focusing on building a strong economy, the budget expands the tax base and reduces pressures for future tax increases.
Rather than criticize this approach, Hubbard ignores it — and instead chooses to invent assumptions that bear no relationship to the president’s actual policies. His figures are not explained, but they apparently arbitrarily assume that the president must raise taxes to pay for spending above a level of Hubbard’s choosing.
Rather than filling imaginary gaps in the president’s budget, which has been spelled out in sufficient detail to permit evaluation by independent experts, Hubbard should perhaps address some of the many gaps in Romney’s plans.
Start with the taxes. The Romney campaign has been very clear about what the former governor is promising: $5 trillion in tax cuts on top of extending the Bush tax cuts, with those benefits heavily weighted toward the country’s wealthiest taxpayers. Romney himself has acknowledged the lack of details, stating in reference to his tax plan that “frankly, it can’t be scored.” I have been party for many years to searches for “high-income tax shelters” that can feasibly be closed. I know of no reputable expert in either political party who would find that there is anything even approaching $5 trillion in potential revenue to be generated from this source.
Romney has also proposed a massive defense buildup, even while he says he will cut spending deeply enough to balance the budget. I think it’s clear why he won’t tell voters which cuts he would make: In the past, disclosing his planned budget cuts was politically damaging.
We have seen this movie before. When President Bill Clinton left office, our country was paying down its debt on a substantial scale. I was privileged as secretary of the Treasury to be buying back federal debt. George W. Bush campaigned on a program of tax cuts supported by economic advisers who were not subject to the rigors of official budget scorekeeping. The results — trillions of dollars of budget deficits — speak for themselves.
This is a consequential presidential election. As the country continues to recover from the largest economic crisis in generations, we need to strengthen the job market, address big fiscal challenges and build an economy that is based on sustainable, shared economic growth. Voters should have a chance to choose between clear alternatives. Obama — consistent with his obligations as president — has laid out a multiyear budget embodying his vision for the future, and it has been evaluated by independent experts. It is time for Romney to do the same.
By: Lawrence Summers, Opinion, The Washington Post, April 26, 2012
“Committed To Decline And Despair”: It’s Time For The GOP To Grow Up
The United States needs two responsible governing parties if it’s ever going to address its most pressing problems.
I’ve grown so used to dismissing Tom Friedman’s work for The New York Times that when he writes something genuinely good, it comes as a surprise. To wit, in his column for the Sunday paper, he aruges that our political system has devolved into a “vetocracy”—a system where “no one can aggregate enough power to make any important decisions at all.”
The culprits, according to Friedman, are polarization, broken institutional norms—in particular, filibuster abuse—the massive proliferation of special interests, and the growing importance of money in politics. The ultimate outcome of this, says Friedman, is governmental paralysis:
America’s collection of minority special-interest groups is now bigger, more mobilized and richer than ever, while all the mechanisms to enforce the will of the majority are weaker than ever. The effect of this is either legislative paralysis or suboptimal, Rube Goldberg-esque, patched-together-compromises, often made in response to crises with no due diligence. That is our vetocracy.
This dovetails with a problem that Friedman only alludes to:
[I]f you believe the fantasy that America’s economic success derives from having had a government that stayed out of the way, then gridlock and vetocracy are just fine with you. But if you have a proper understanding of American history — so you know that government played a vital role in generating growth by maintaining the rule of law, promulgating regulations that incentivize risk-taking and prevent recklessness, educating the work force, building infrastructure and funding scientific research — then a vetocracy becomes a very dangerous thing.
If there’s anything that defines the current political moment, it’s the fact that—of the two major parties—one has completely abandoned the American consensus that Friedman describes. In the mythology of the Republican Party, government has never played a part in the country’s growth or prosperity—the “free market” alone is responsible for the nation’s current prosperity. Not only does this run counter to the historical record—to say nothing of observable reality—but it has resulted in a world where one party refuses to accept a role for government in anything.
As Friedman (obliquely) points out, this is a recipe for disaster. The institutions of the United States aren’t built for one-party rule, and we can’t make progress on pressing issues—climate change, health care, aging infrastructure—without a mutual understanding between the two parties. Republicans don’t have to abandon their preference for small government or their skepticism for federal programs, but effective action requires the GOP to back away from its opposition to the public sector, and reconsider the role of government in solving the nation’s problems.
Between Mitt Romney and Paul Ryan, the Republican Party is committed to a radical attack on the size and role of government. The Romney economic plan, which draws its ideas from Paul Ryan’s budget, would eliminate most non-defense discretionary spending, and funnel the savings to tax cuts for the wealthiest Americans. Vital government functions like environmental regulation, scientific research, and poverty reduction would be sacrificed on the altar of small government. This isn’t a sustainable state of affairs. A world where government completely withdraws from the lives of ordinary Americans is one where we all but commit to a path of decline and disrepair.
If there’s anything that this country needs right now, it’s a responsible and functional Republican Party. I won’t hold my breath.
BY: Jamelle Bouie, The American Prospect, April23, 2012
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