I pored through Mitt Romeny's jobs plan last night -- it's a comprehensive piece of work, worth a look. Unfortunately, Mr. Romney offers no solutions for our most pressing short-term problem: high unemployment and the weak job growth. And his long term strategy is based on supply-side measures that have long been associated more with budget deficits and upward wealth redistribution than with job creation.
Despite evidence to the contrary, part of his case is that stimulative measures haven't worked, so he has to oppose such ideas in his plan.
That's a big problem for someone running for President in a climate of highly elevated unemployment. He argues that since it's fruitless to attack the short run economy, the only way forward is to focus on longer-term reforms to the tax and regulatory structure, along with some trade deals.
In fact, his main short term ideas are quite dangerous to the economy: an immediate "move to cut spending and cap it at 20 percent of GDP." That's actually worse than a punt on short-term; it's a 3% cut in next year's GDP and a touchdown for the team recession.
His longer term measures consist of supply-side tax cuts to corporate rates, though without any loophole closing, and locking in the full range of the Bush tax cuts, so expect big revenue losses. Moreover, this supply-side, trickle-down stuff simply doesn't generate job gains.
On this point, Republican candidates refuse to accept the lesson of the GW Bush years--a solid test, compared to the Clinton years, of trickle down. Annualized job growth in the Clinton years, under a more progressive tax structure was about four times that of the Bush years.
One wrinkle here is interesting and noteworthy: while Mr. Romney proposes to eliminate capital gains taxes, he only does so for households with incomes below $200,000. I've argued that favorable treatment of cap gains is misguided, but Romney will probably get beat up by the other Republican candidates for not just zeroing out this tax for everyone.
I suspect Mr. Romney would argue that he differs from the most recent President Bush in that he'll hold down spending. In fact, he argues for a balanced budget. Not only does this have the contractionary impact noted above, but it of course takes away the ability of the federal government to do countercyclical policies (here's some CBPP analysis of the cuts associated with a balanced budget amendment). But, as I noted, he's in a box where he has to argue that such policies don't work.
There's a bunch of other standard pabulum about whacking the EPA and labor unions--none of that matters for job growth...just standard R candidate box-checking. He argues for achieving Social Security solvency with benefit cuts alone--no revenues from increasing the maximum taxable level of earnings. There's the standard pledge to get rid of the Affordable Care Act, matched with turning Medicaid into a block grant and (sort of) embracing Rep. Ryan voucher's plan on Medicare ("Romney's own plan will differ, but it will share those objectives").
Put these health care ideas all together and you have the classic R strategy to deal with rising federal health care costs: shifting them onto states and families. There's no savings here...nothing that will begin to deal with the American problem -- it's not not just the government problem -- of rising health costs. This is a very significant shortcoming of Mr. Romney's plan, and I suspect of his colleagues' as well. Just shifting the burden elsewhere doesn't do anything to attack the growth of health-care costs, and that, along with the radical budget cap, may be the most anti-growth part of Mr. Romney's agenda.
There are two quite good ideas in the document: going after China on unfair trade practices and supporting more high-skilled immigration. The former is targeted at China's currency management and is essentially a strategy to weaken the US dollar in export markets (if China allowed the value of their currency to be set in markets, as opposed to managing it, the yuan would rise relative to the dollar), something that could get the former governor some bad press in conservative places but could potentially help boost manufacturing exports fairly quickly (note that liberal economist Dean Baker makes a similar argument here).
By locking in the Bush high-end cuts, cutting the corporate tax, capping spending at 20% (implying large entitlement cuts), shifting health costs, cutting Social Security benefits, and punting on short-term job creation, this is far from a jobs plan that could help the middle class. It's more likely to prolong the downturn, hasten the growth of income inequality, and increase economic insecurity.
This post originally appeared at Jared Bernstein's On The Economy blog.
Wendell Potter: Insurers' Allies in Congress Trying to Dismantle Reform Piece by Piece
Susanne Goldstein: Shut Up Washington! I'm Gonna Get A Job Without You.
"President Barack Obama’s stimulus package may have created or saved as many as 3.3 million jobs last quarter and lowered the unemployment rate by as much as 1.8 percentage points, the Congressional Budget Office said."
http://www.bloomberg.com/news/2010-08-25/obama-s-economic-stimulus-program-created-up-to-3-3-million-jobs-cbo-says.html
As for taxes, the biggest burst of tax revenue for Clinton came AFTER he cut them after having raised them earlier. The revenues from the reduction in the Capital Gains rate had a massvie impact on Clintons projected surplus prior to Tech's collapse in '99 inot 2000..when the NASDAQ was cut in half. The lesson there was by cutting taxes people were more willing to pay, rather than hang onto investments longer they should.
As for last evening, a one year Stimulus plan based on taxes which won;t find it's way into the economy for another several months even idf it IS passed "Right Away"..and an infastructure plan which will take a minimum of 6 to 12 months to implement fully will do little for another year or more. Mr. Obama should have made jobs his First Priority upon entering office, not something he's now working on 12 months before then end of his time in office.
What is telling (and thanks to Rachel Maddow), is that he has enlisted the help of R. Glenn Hubbard, aka author of the 2003 Bush Tax cuts.
More jobs were created under the Clinton tax rates, than under the COMBINED presidencies of Reagan, Bush Sr., and Bush Jr.
Conservatives don't want you to know this. They will try to deceive you until your dying day. Deception is their bread and butter.
http://blogs.wsj.com/economics/2009/01/09/bush-on-jobs-the-worst-track-record-on-record/
I would advise everyone to quit talking about GPD in relation to our economy. I read a lot and study a lot, and the GPD flies right over my head. And if it flies right over my head, you can imagine what it does to the average American. Save it for the economist and I'm aware of you being an economists.
It is simple enough to talk about Reagan's voodoo and that R's worship at his feet or tombstone, where they forget that he raised taxes something like11 times.
It is legitimate to talk about the lost decade of Bush and Republicanism and loss of 8 MILLION JOBS and 10 TRILLION in deficits, and it is right to talk about Clinton's record of surplus and new jobs and how Bush/Republicans lost our economy with huge tax cuts for the rich, two wars unfunded.
F&F&B (you are truly hip to what matters!).
Let's all dance out the outworn muck, and dance in a new and transformed humanity!
Aho!
Barnacles are what I imgine those loons to be, like attaching themselves to a big whale :-)
We have to get rid of these monsters ! Thanks again.
Where are those jobs Mr. President?
In India and China.
Ask any person or small business who earned up to $250 K a year, if they didn't pay less taxes since Obama has been in office.
So quit with your cute remarks which are ignorant and ask Republicans where the jobs are, since they were going to focus "like a laser" on job creations. Seen any ???
We still have one of the finest educational systems in the world but the rest of world is ready to surpass us. We have to make high-skilled labor here. Importing it from other places is worse than importing high end goods from other countries. We have a massive trade imbalance, let's not create a massive education imbalance as well.
Every highly skilled immigrant that comes in lowers the value of that labor and directly displaces an American that should have that skill set. Quality American education is going the way of quality American manufacturing. We have to stop outsourcing the most important jobs. We have to insure that Americans get the best education and training possible if we want to stay competitive.
We can't survive with an unskilled labor force and 40% underemployment. America's middle class will disappear if we can't do better than minimum wage jobs. If we want to end poverty and improve the economy and save the middle class and improve corporate profits, there is only one answer: education.
Education is the foundation for any modern economy.