Saturday, May 26, 2012

Romney's Heresy

In an interview with Time's Mark Halperin, Mitt Romney has essentially admitted that the entire Republican attack on President Obama's economic policies is based on a false premise. The Republican orthodoxy argues as follows: Obama's policies have caused a dramatic expansion of the deficit; the deficit is the primary cause of the country's economic problems; and the only way to fix the economy is to reduce federal spending as quickly as possible to eliminate the deficit as quickly as possible. (The Obama rebuttal to this false series of assumptions, and probably the mainstream economic position would be as follows: most of the dramatic increase in the deficit was built in by the time Obama came into office, but the deficit was not the primary cause of the economic crash, anyway. We need to increase the deficit in the short term to stimulate the company, but we recognize that the deficit is a long term problem, and it should be reduced over the long term by a combination of tax increases and spending cuts.)

Here's what Romney said in the Time interview, in response to being asked why not reduce the deficit even more quickly than is proposed in Romney's plan:

 Well because, if you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5%.  That is by definition throwing us into recession or depression.  So I’m not going to do that, of course.  What you do is you make adjustments on a basis that show, in the first year, actions that over time get you to a balanced budget.  So I’m not saying I’m going to come up with ideas five or ten years from now that get us to a balanced budget.  Instead I’m going to take action immediately by eliminating programs like Obamacare, which become more and more expensive down the road – by eliminating them, we get to a balanced budget.  And I’d do it in a way that does not have a huge reduction in the first year, but instead has an increasing reduction as time goes on, and given the growth of the economy, you don’t have a reduction in the overall scale of the GDP.  I don’t want to have us go into a recession in order to balance the budget.  I’d like to have us have high rates of growth at the same time we bring down federal spending, on, if you will, a ramp that’s affordable, but that does not cause us to enter into a economic decline.

How refreshing to hear some truth from challenger Romney. "Of course" nobody would be foolish enough to reduce federal spending by as much as Tea Party people are advocating, because that would throw the country into a recession. Instead we have to work on ideas that will reduce the deficit over time. Which is exactly what the Obama administration has been proposing. Mitt Romney's team might have somewhat different ideas about how to do that, but both agree that we have to tolerate large deficits in the short run to keep the economy growing. They must agree on that, because it is only common sense and common knowledge. Romney apparently forgot for an unguarded moment, that this truth is denied by most of his supporters, and that he has run his campaign thus far in denial of this fundamental truth. It's time to explain to your supporters, Mr. Romney, that the nonsense that you've been spouting in your stump speeches, trying to hold the president responsible for the entire increase in the federal deficit, and pretending that you would not have allowed that to happen, is just that: nonsense.

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