Wednesday, July 31, 2013

The Economist Magazine Wonders What if Mitt Romney Had Won – Sees Reform and Progress

 In Reality It Would Have Been Fantasy, Delusion and Catastrophe

The political gods spared, or at least postponed America’s tragic meeting of Republican governance and economic reality (see what's going on in North Carolina if there are any doubts about the disaster of Republican rule.).  But in a recent issue of the great British news mag, The Economist, their American columnist Lexington speculates (with help from the Romney transition team) what might have happened had Mr. Romney prevailed last November.  The writing is a mixture of falsehoods and delusions.

For example, there is this.

Michael Leavitt, the former Utah governor who chaired Mr Romney’s transition team, describes plans to deliver a “jolt of confidence” by showing seriousness in a few big areas. He would simplify America’s spaghetti-spill of a tax code. He would grapple with the deficit; expand domestic energy production; and reduce the role of government in health care by hollowing out “Obamacare” reforms. Success was to be measured by bosses releasing cash they were hoarding when Mr Obama was president, and rushing to join a Romney-led American revival.

Much of that wishful thinking revolves around what Paul Krugman derisively and correctly dubbed the “Confidence Fairy”, that business investment would be stimulated not by increased demand for goods and services but by ‘confidence’ in the national goavernance.

Here how this might be accomplished, according to the fabulists of a would be Romney administration.

Team Romney’s 200-day plans included immediate, 5% cuts to public spending excluding security and social payments (though more money for defence), a weakening of the rules that Republicans say favour trade unions, a squeeze on public-sector jobs and pay, and a global push for free trade. Mr Romney would also have proposed lower income- and corporate-tax rates, offset by closing loopholes. Abolishing the Environmental Protection Agency, a conservative dream, was not on the cards. But “personnel is policy”, notes Glenn Hubbard, Mr Romney’s chief economic adviser. Those chosen to regulate energy and tackle climate change would have weighed costs against benefits minutely. A long-term squeeze on welfare and health spending was a priority: wholesale immigration reform was not.

Okay, let’ see.  Cutting domestic spending by 5% would result in massive harm to millions of people and retard rather than stimulate growth.  Changing rules on labor unions is useless.  Labor unions have not been a factor in the economy for decades, their risk to the economy exists only in the minds of people like Mitt Romney whose collective consciousness resides in the 1950’s and 1960’s.  Lower and flatter tax rates would have reversed the reduction in the budget deficit now being achieved by the Obama administration.  How that would stimulate a Confidence Fairy is unknown because it would not.  Lower spending on welfare and health care would have accelerated the division of America into two groups, a small one with massive wealth and a large one living lives of quiet economic desperation.

Still don’t believe Mr. Romney and his team were living on Fantasy Island.  How about this.

Romney aides wince at the comparison, but their 200-day plans sound like a Bain turn-around for America’s economy: a co-ordinated series of shocks aimed at impressing investors, but likely to startle and anger many ordinary folk. Democrats would have scorned it as a wish-list for bosses and billionaires. But Mr Romney believed his reforms would work, and work fast. Benefits would follow swiftly, in the form of private investment and job creation: persuading the wider public to trust in President Romney’s competence, if not to love him.

In truth the Romney plan has already been tried in Britain and Europe.  It has been an umitigated disaster.  Britain, France, Italy, Greece, Spain, Portugal etc all provide evidence that cutting government spending and believing in the Confidence Fairy results in stagnant economies at best, and massive unemployment at worse. 

That is the future that a Romney administration would have brought, and that is a future that has been hopefully eliminated but probably just postponed.

1 comment:

  1. "A Romney win would have shown that America is a centre-right country, says Lanhee Chen, Mr Romney’s chief policy adviser."

    So what does two Obama wins show? Cue the hackneyed response of Obama being a better "messager" than Romney.