I have been tough on Mitt Romney’s economic plan, which is vague, lacking in important details, and centered around giving the richest Americans and biggest corporations another tax cut.
The plan has general themes that make sense for the long term, but it does not address the specific problem the US is currently facing, which is a lack of spending power and jobs in the middle class.
It’s no surprise that the highest-earning Americans would be eager to vote for someone who will reduce their taxes, but tax cuts for the wealthiest Americans will not solve the problem. Because the problem in our economy is not that the highest-earners don’t have money to spend and invest. It’s that the middle class–the customers–are broke.
So now it’s time to give credit where it’s due.
Mitt Romney has recently changed how he is presenting his economic plan, and the new story is likely to be far more persuasive to mainstream Americans than the old one.
Importantly, Romney’s new message also makes it sound as though he may be changing his economic plan in some key ways–ways that could have a more positive economic impact in the near term.
Specifically, it sounds as though Romney may now support:
- taking a more gradual approach to deficit reduction,
- postponing government spending cuts, and
- giving his tax cut to everyone in the country, instead of making it “revenue neutral” by eliminating tax deductions that disproportionately help poor and middle-income Americans.
Such an approach would obviously not help the deficit trajectory–in fact, it would make it vastly worse–but it acknowledges what many in the Republican Party have refused to acknowledge in the last few years, which is that “taking our medicine” immediately on the deficit will also clobber the economy. (Remember when the Republicans in Congress threatened to force the country to default rather than increase the debt ceiling?)
What’s more, after many years of campaigning, Romney has developed a highly Presidential demeanor. Given that very few people actually understand how the economy works (including, importantly, many economists), being demonstrably “right” about the economy is much less important than being confident and persuasive on the points that people care about–namely, income, taxes, and jobs. And Romney is now sounding not only confident on this, but persuasive.
Just as important, he is sounding reasonable. And that will go a very long way.
So this is going to be a tough fight for the next few months. It’s no surprise that the odds that Barack Obama will be re-elected have dropped slightly in recent weeks. (Poll guru Nate Silver of the New York Times now gives Obama a 69% chance of winning, down slightly from 70%).
Below is a link to an interview with FOX Business (from yesterday) in which Romney articulated his new economic message.
Here are the key points:
- There is no longer any mention of tax cuts for the richest Americans (previously described as “job creators”) and huge corporations. Rather, the emphasis is on tax cuts for the middle class. This is smart for two reasons: First, the richest Americans actually don’t “create the jobs”–a healthy economic ecosystem creates the jobs. Second, most Americans understand that the richest Americans and companies already have plenty of cash, while the vast majority of Americans do not. Importantly, this new message is very close to Obama’s plan, which also calls for extending the middle-class tax cuts.
- Romney outlines a very reasonable energy policy. This policy calls for America to move aggressively toward energy-Independence, including by building the Keystone oil pipeline that Obama has blocked. Obama’s stance on the pipeline has never sounded reasonable–we need oil, we already have thousands of pipelines, we’re currently still importing too much oil from fanatical people who hate us, and the Canadian oil sands will be developed whether we buy the oil or not–so this pragmatism makes sense.
- Most importantly, Romney sounds as though he is backing away from an immediate focus on deficit reduction in favour of near-term stimulus. Romney is now arguing for a moratorium on current tax rates and government spending to avoid the “fiscal cliff” that will otherwise hit the country on January 1–a cliff that, according to the Congressional Budget Office, will throw the economy back into a recession. Extending the current policies will vastly increase the projected deficit, but Romney no longer seems concerned about that. He makes vague references to minor future spending cuts on “discretionary non-defence spending” (a tiny portion of federal spending) and still suggests he might eliminate some tax deductions. But he refuses to say which deductions he might eliminate and now says he will make certain that his tax changes do not increase the middle-class’s tax bill or share of the overall tax burden. According to the Tax Policy centre, this will be impossible to do while also cutting taxes radically for the richest Americans, so it appears Romney is backing away from the idea that his tax cuts will be revenue neutral.
Overall, Romney’s new message on the economy is likely to be resonate much better than his old ones, which emphasised tax cuts for the richest Americans.
And Romney seems much less concerned about near-term deficits than he used to be.
Rather, he appears to be embracing the idea that stimulus that comes at least partially in the form of government spending is a good idea right now.
And that’s encouraging. Because he’s right.
Here’s a link to the interview on FOX Business (it’s not embeddable, unfortunately) >
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