I'm warming to Romney

"Romney-Ryan Fiscal Policy – a Return to Reaganomics?
http://econospeak.blogspot.ca/2012/05/romney-ryan-fiscal-policy-return-to.html

"Brian Beutler offers a very good discussion on whether Obama or Romney is offering more austerity with Brian correctly noting the short-term fiscal restraint would be a disaster in terms of getting our economy closer to full employment. He notes the ambiguity of Romney’s proposals (no specifics on tax offsets or spending cuts) noting:

" Because we can’t know for sure what will become of the unknowns in Romney’s fiscal plan, it exists simultaneously on both ends of the Keynesian scale. If the offsetting base-broadeners never materialize, and the spending cuts don’t happen as advertised, Romney’s plan amounts to a hugely stimulative tax cut. “A large amount of stimulative tax cuts, and no contractionary spending cuts would suggest the true Keynesian in the race is Romney,” says University of Pennsylvania economist Justin Wolfers.

"In other words – a return to the spend&spend and borrow&borrow policies during Reagan’s first term. But we also get this from Paul Ryan:

" Paul Ryan — the GOP’s official spokesman on fiscal issues — boasted that a Republican victory in November will give his party a mandate to turn his controversial spending-slashing budget into law. “If we make the case effectively and win this November, then we will have the moral authority to enact the kind of fundamental reforms America has not seen since Ronald Reagan’s first year,” Ryan said.

"Funny thing – spending as a share of GDP never declined under President Reagan. Sure we got a few domestic spending reductions but they were offset by increases in defense spending. And Mr. Romney has already said he is for more defense spending. Short-term fiscal stimulus when we are in a liquidity trap may be a good thing but the lasting effects of the Reagan fiscal stimulus was higher real interest rates, less investment demand, and slower long-term growth."

 

"Romney Argues Big Spending Cuts Would Cause 'Depression,' Contrary To Tea Party Activists
http://www.huffingtonpost.com/2012/05/25/romney-spending-cuts-depression-tea-party_n_1545933.html

"Republican House Speaker John Boehner and GOP Presidential nominee Mitt Romney have, in the course of the past week, pushed starkly different approaches to fiscal policy and economic recovery, a window into a broader rift within the GOP between the Tea Party and less absolutist conservatives.

"Boehner, carrying the Tea Party line on spending, recently said that he would insist that the deficit be cut by a dollar for every dollar increase in the debt limit, or else he would refuse to raise it, helping drive the country toward default.

"When the time comes, I will again insist on my simple principle of cuts and reforms greater than the debt limit increase," Boehner said.

"Dealing with our deficit and our debt would help create more economic growth in the United States," Boehner told George Stephanopolous Sunday on ABC's "This Week." "The issue is the debt."

"Romney, however, said that pushing drastic spending cuts during shaky economic times is a prescription for "recession or depression."

"Asked by Time's Mark Halperin Wednesday why he wouldn't push major cuts in his first year, Romney responded with reasoning that would be largely uncontroversial if not for the past two years' mainstreaming of an economic philosophy that insists government spending actually costs jobs, rather than creates job.

"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 percent. That is by definition throwing us into recession or depression. So I'm not going to do that, of course," Romney said in an answer picked up by former bank regulator William Black, a HuffPost blogger.

"Boehner, by contrast, said cutting spending will spur the economy by giving "certainty" to the business community. "It would lift this cloud of uncertainty that's causing employers to wonder what's next. So dealing with our debt and our deficit are critically important," he said.

"Any spending cuts, Romney said, should come down the road, after the economy has improved.

"I don't want to have us go into a recession in order to balance the budget," he said. "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."

"Romney's reasoning accepts the basic premise that government spending adds to GDP and leads to economic growth, at least during times when consumer spending and private-sector demand is down.

"The economic assertion is supported by the post-recession job creation numbers. Under President Obama, government spending has grown at its slowest rate since the Eisenhower Administration, according to Politifact. Predictably, that has led to a slower recovery and -- ironically for a president who called for belt-tightening as a political response to the Tea Party -- political trouble for his reelection.

"In fact, adjusting for inflation, Obama has actually cut spending by 0.1 percent, according to a Politifact analysis.

"While rival schools of economic thought have never agreed on each other's fundamental principles, over the past several decades, the notion that more government spending helps during a recession had gained broad acceptance. But it has been rejected by Tea Party members of Congress and conservative interest groups like the Club for Growth, who have bemoaned Obama's stimulus package and other efforts to boost the economy as job-killing government spending. Club for Growth declined to comment for this article.

"The rhetorical thrust of a sharp distinction between the Tea Party's demand for big cuts and Obama's supposed propensity to spend has been a central tenet of the GOP's political messaging over the past two years. And Romney has run afoul of budget-cut purists before, recently over comments he made during a campaign stop in Michigan.

"If you just cut, if all you're thinking about doing is cutting spending, as you cut spending you'll slow down the economy," Romney said, according to MSNBC.

"That comment prompted this response from Club for Growth lobbyist Andy Roth: "It's hogwash. It confirms yet again that Romney is not a limited government conservative."

"But with Romney now the Republican Party's presumptive nominee for president, anti-government-spending groups are largely holding their fire. Dan Mitchell, senior fellow at the libertarian Cato Institute, told HuffPost that while many at his organization would prefer a "slash and burn" approach to federal spending, they could still accept the "glide path" proposed by Romney -- even if it does rely on "Keynesian" reasoning.

"Big spending cuts would be great," Mitchell said. "So Romney's rhetoric is worrisome. But if he is willing to restrain the growth of spending, so that it grows slower than the private sector, that would be a modest step in the right direction."

"House Republicans -- as indicated by rhetoric like Boehner's -- seem less eager to compromise.

"UPDATE: A Boehner spokesman said Friday that the speaker also recognizes the value of trimming over the longterm, noting that his recent speech included this passage:

"Last fall, when I addressed the Economic Club of Washington, I said that making relatively small changes now can lead to huge dividends down the road in terms of debt reduction. As we approach the issue of the debt limit again, we need to continue to bear this in mind.

"As you know, we could eliminate all of the unfunded liabilities in Social Security, Medicare and Medicaid tomorrow, and the effect within the Congressional Budget Office 10-year window could be minimal.

"That’s because changes to these programs take time and are phased-in slowly.

"For example, when Congress last increased the retirement age for Social Security, the increase – a mere two years – was scheduled to fully take effect 40 years after the law was enacted.

"Another example: take the House Budget Resolution and its assumptions for Medicare reform. Those would not even begin until after 2022.

"Smart and modest changes today mean huge dividends down the line."

 

Looks like it's going to be lose-lose for Angela, with Obama or Romney in charge, she'll get no support from either.

"The Threat of German Amnesia
http://www.project-syndicate.org/commentary/the-threat-of-german-amnesia

By Joschka Fischer

(Joschka Fischer was German Foreign Minister and Vice Chancellor from 1998-2005, a term marked by his strong defense of Germany’s participation in NATO’s intervention in Kosovo in 1999, followed by [Full profile])

"BERLIN – Europe’s situation is serious – very serious. Who would have thought that British Prime Minister David Cameron would call on eurozone governments to muster the courage to create a fiscal union (with a common budget and tax policy and jointly guaranteed public debt)? And Cameron also argues that deeper political integration is the only way to stop the breakup of the euro.

"A conservative British prime minister! The European house is ablaze, and Downing Street is calling for a rational and resolute response by the fire brigade.

"Unfortunately, the fire brigade is being led by Germany, and its chief is Chancellor Angela Merkel. As a result, Europe continues to try to quench the fire with gasoline – German-enforced austerity – with the consequence that, in a mere three years, the eurozone’s financial crisis has become a European existential crisis.

"Let’s not delude ourselves: if the euro falls apart, so will the European Union (the world’s largest economy), triggering a global economic crisis on a scale that most people alive today have never experienced. Europe is on the edge of an abyss, and will surely tumble into it unless Germany – and France – alters course.

"The recent elections in France and Greece, together with local elections in Italy and continuing unrest in Spain and Ireland, have shown that the public has lost faith in the strict austerity forced upon them by Germany. Merkel’s kill-to-cure remedy has run up against reality – and democracy.

"We are once again learning the hard way that this kind of austerity, when applied in the teeth of a major financial crisis, leads only to depression. This insight should have been common knowledge; it was, after all, a major lesson of the austerity policies of President Herbert Hoover in the United States and Chancellor Heinrich Brüning in Weimar Germany in the early 1930’s. Unfortunately, Germany, of all countries, seems to have forgotten it.

"As a consequence, chaos looms in Greece, as does the prospect of subsequent bank runs in Spain, Italy, and France – and thus a financial avalanche that would bury Europe. And then? Should we write off what more than two generations of Europeans have created – a massive investment in institution-building that has led to the longest period of peace and prosperity in the history of the continent?

"One thing is certain: a breakup of the euro and the EU would entail Europe’s exit from the world stage. Germany’s current policy is all the more absurd in view of the bitter political and economic consequences that it would face.

"It is up to Germany and France, Merkel and President François Hollande, to decide the future of our continent. Europe’s salvation now depends on a fundamental change in Germany’s economic-policy stance, and in France’s position on political integration and structural reforms.

"France will have to say yes to a political union: a common government with common parliamentary control for the eurozone. The eurozone’s national governments already are acting in unison as a de facto government to address the crisis. What is becoming increasingly true in practice should be carried forward and formalized.

"Germany, for its part, will have to opt for a fiscal union. Ultimately, that means guaranteeing the eurozone’s survival with Germany’s economic might and assets: unlimited acquisition of the crisis countries’ government bonds by the European Central Bank, Europeanization of national debts via Eurobonds, and growth programs to avoid a eurozone depression and boost recovery.

"One can easily imagine the ranting in Germany about this kind of program: still more debt! Loss of control over our assets! Inflation! It just doesn’t work!

"But it does work: Germany’s export-led growth is based on just such programs in the emerging countries and the US. If China and America had not pumped partly debt-financed money into their economies beginning in 2009, the German economy would have taken a serious hit. Germans must now ask themselves whether they, who have profited the most from European integration, are willing to pay the price for it or would prefer to let it fail.

"Beyond political and fiscal unification and short-term growth policies, Europeans urgently need structural reforms aimed at restoring Europe’s competitiveness. Each of these pillars is needed if Europe is to overcome its existential crisis.

"Do we Germans understand our pan-European responsibility? It certainly does not look that way. Indeed, rarely has Germany been as isolated as it is now. Hardly anyone understands our dogmatic austerity policy, which goes against all experience, and we are considered largely off-course, if not heading into oncoming traffic. It is still not too late to change direction, but now we have only days and weeks, perhaps months, rather than years.

"Germany destroyed itself – and the European order – twice in the twentieth century, and then convinced the West that it had drawn the right conclusions. Only in this manner – reflected most vividly in its embrace of the European project – did Germany win consent for its reunification. It would be both tragic and ironic if a restored Germany, by peaceful means and with the best of intentions, brought about the ruin of the European order a third time."

 

Interesting,makes Romney not seem so bad.Need to see the specifics of Romneys plan.Romney has recently said spending cuts now will hurt the economy,but will he give in to the tea party crowd

 

Shit. Obama 2012!!

 

Romney is running a good campaign unlike numbnuts McCain.

 

"The Keynesian case for Romney
Posted by Ezra Klein at 02:45 PM ET, 06/04/2012

"Even if you disagree with every one of Mitt Romney’s policies, there’s a chance he’s still the best candidate to lift the economy in 2013.

"That’s not because he has business experience. For all his bluster about the lessons taught by the private sector, his agenda is indistinguishable from that of career politician Paul Ryan. Nor is it because he’s demonstrated some special knowledge of what it takes to create jobs. Job growth in Massachusetts was notably slow under Romney’s tenure. It’s because if Romney is elected, Republicans won’t choose to crash the economy in 2013.

"The Congressional Budget Office estimates that if Congress gridlocks this year — if it simply gets nothing done — the economy will take a $607 billion hit in 2013 as the Bush tax cuts expire, the payroll tax cut expires and assorted spending cuts kick in. Falling off that “fiscal cliff,” they predict, will throw us back into recession.

"But it’s worse even than that: Speaker John Boehner has said he wants another debt-ceiling showdown. We’re not expected to hit the debt ceiling until February or March, and so the only scenario in which the debt ceiling matters is one in which Congress has already pushed us over the fiscal cliff. So as bad as the last debt-ceiling crisis was — and Gallup’s polling showed it did more damage to consumer confidence than the fall of Lehman Bros — this one would be worse.

"Miles Nadal, CEO of the marketing and communications firm MDC Partners, says that at a recent event with executives of more than 100 companies, the business leaders, panicked about this possibility, agreed on the best outcome for the economy: “a Republican landslide.” Why? “Because anything that breaks the logjam is positive,” he says. “The quality of the leader is less relevant than the ability to break gridlock.”

"There’s no reason to believe Romney could “break” gridlock. But there’s reason to believe he wouldn’t face it in the first place. Republicans control the House. They’re three seats from controlling the Senate — and, because this Senate election follows 2006, which was a wave election for Democrats, Republicans are defending 10 seats while Democrats are defending 23. It’s difficult to imagine a scenario in which Romney wins the White House and Republicans don’t control the House and Senate. On the other side, while it’s not impossible to imagine President Obama winning the White House and Democrats taking back the House, it’s unlikely.

"Romney and the Republicans are not likely to reach 60 seats in the Senate, but they won’t need them. The major issues on the table are budgetary. That means they can be considered using the budget reconciliation process, which can’t be filibustered. So if Republicans can maintain party unity — and they usually can — they’ll be able to govern effectively. And there’s no way that they’ll permit the Bush tax cuts to expire or the debt ceiling to lapse. Investors, knowing that, would likely stop worrying about the debt ceiling the moment a Romney win became clear.

"Now, Republicans could still push the economy into recession if they pass an immediate austerity budget that slashed spending in 2013. And, given Republican rhetoric about how slashing the size of government will lead to more growth because the confidence fairy will come out and persuade businesses to spend more, you might think that’s exactly what they’ll do.

"But Romney, though he often buys into that sort of nonsense while criticizing Obama, knows better. Time magazine asked him about cutting spending in 2013. “If you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5 percent,” Romney said. “That is by definition throwing us into recession or depression. So I’m not going to do that, of course.” You couldn’t have gotten a clearer definition of Keynesian budgeting from Obama.

"There’s a good chance that a Romney administration would extend both Bush and Obama’s tax cuts and delay the scheduled spending cuts. Congress would raise the debt ceiling after Romney promised congressional Republicans that he’d sign some variant of Paul Ryan’s budget as soon as it’s sent to him. Somewhere along the way, Romney would pass both more short-term tax cuts and a long-term transportation bill — something Republicans have been blocking under Obama — that doubles as an infrastructure package and includes, to secure Republican support, the Keystone XL oil pipeline.

"Nor is it clear that this will come at the cost of harsh deficit reduction in coming years. There will almost certainly be deep spending cuts if Romney is president, but both the Romney and Ryan proposals include trillions of dollars in unpaid-for tax cuts and defense spending. If Republicans clear that hurdle by simply assuming that deep tax cuts will lead, through supply-side magic, to larger revenues, their deficit-reduction plans might well end up increasing the deficit over the next few years. “Remember,” wrote Business Insider’s Joe Weisenthal, “Republicans were pro-deficit, and pro-entitlement expansion under Bush and Reagan. Deficit cutting only became part of the party’s ideology under Obama.”

"Compared to anything Obama is likely to get from a Republican House, that is, at least in the short term, a much more expansionary, Keynesian approach. But it’s also an awful precedent. In a sense, Republicans are holding a gun to the economy’s head and saying, “vote for us or the recovery gets it.”

"That might well prove an effective political strategy: The more they say that they’re willing to let the debt ceiling expire and the economy run over the fiscal cliff, the more businesses will pull back and households will stop spending in order to make sure they have enough cash on hand to ride out another crisis. That will further depress the economy this year, making it more likely that Romney wins, and that Republicans embrace the smooth Keynesian glide path that they’re denying Obama.

"If Obama wins, it’s of course possible that the two sides will come to a swift agreement. That’s the president’s prediction. “I believe that if we’re successful in this election, when we’re successful in this election, that the fever may break, because there’s a tradition in the Republican Party of more common sense than that,” Obama has said. “My hope, my expectation, is that after the election, now that it turns out that the goal of beating Obama doesn’t make much sense because I’m not running again, that we can start getting some cooperation again.”

"But privately, many top Democrats admit that congressional Republicans, angry after a narrow loss and appealing to a base that is likely to blame the defeat on Romney’s moderate past, might prove just as obstructionist after the election than before it. If that happens, they say, the president can’t keep giving into Republican threats. Much as the government shutdowns in the 1990s discredited Newt Gingrich’s hardball tactics, Obama will have to let voters see the consequences of the Tea Party’s approach. But while that might be sage political advice, the economic consequences could be devastating.

"This is the logical conclusion of a system biased toward gridlock: The out-party benefits when the public feels that Washington is failing and it often has the power to make Washington fail. Which, arguably, leads to another unusual reality about this election: Even if you agree with Romney’s policies, it may be that voting for Obama, and delivering a landslide against the GOP’s economic brinksmanship, is the only way to end the dangerous appeal of strategic gridlock going forward."

http://www.j-bradford-delong.net/movable_type/