The shiny smiles on the faces of presidential candidate Mitt Romney and his endorser, the Guy Who Likes To Say “You’re Fired!” on un-Reality TV in Las Vegas yesterday [Steve Marcus Photo, LVSun] is almost beside the point. At some point a few of the GOP’s spokespersons need to be wearing a few tread marks. Mr. Trump, with his racist birtherism and blatant biases, should be one of them. In this context, Mr. Trump’s ridiculousness is nearly beside the point. As suggested last evening –after the bland dismissal of Russ Limbaugh’s excoriation of Sandra Fluke and the pedant commentary on Trump’s adoption of birtherism — the point is When Does The Real Mitt Romney Stand Up?
The vaunted GOP capacity to create a narrative and have all the players take assigned roles is imperiled by the expressed need to get very disparate voices to speak to their segments of the voting public. In order to “win” does Mr. Romney need to cater to the Birthers? To acquiesce to the rabidly anti-gay bigots? To embrace Limbaugh’s misogyny? To swear obeisance to the radical rantings of a Ted Nugent? If he feels this need, then what does that say about his confidence in his own message?
Former Governor Romney wants to focus on “the economy.” However, that’s a difficult sell at the moment. Further, his contention that the economy “could have been better” without policies put in place by President Obama packs as little punch as the President’s comments that the economy “could have been a lot worse.” The Land of Could Have is a minefield.
Mine One: Worse still for the presidential hopeful, the economy is slowly emerging from a deep recession, and his prescription for economic growth is a Financialist’s wet dream replete with De-regulation and Lower Taxes for the top 1% of American income earners. It’s the Bush Administration’s policy on steroids and European Austerity on amphetamines. It’s also not clear that Mr. Romney actually believes his own narrative. Consider this example that’s been getting some play of late:
Halperin: …You have a plan, as you said, over a number of years, to reduce spending dramatically. Why not in the first year, if you’re elected — why not in 2013, go all the way and propose the kind of budget with spending restraints, that you’d like to see after four years in office? Why not do it more quickly?Romney: … 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.
Governor Romney’s comment makes it clear that he does comprehend the formula by which the GDP is derived.
Private consumption + gross investment + government spending + (exports minus imports) yields the GDP. However, because Governor Romney understands the GDP formula doesn’t mean that the President doesn’t. And, the President has the support of the leaders of the G-8:
“The leaders did concede somewhat to Ms. Merkel’s position on austerity, acknowledging that national budget deficits had to be addressed. But they added that spending cuts must “take into account countries’ evolving economic conditions and underpin confidence and economy recovery,” a recognition of how much the austerity packages have dampened consumer and political confidence in Europe.” [NYT]
In short, if government cutbacks undermine consumer confidence then the “C” part of the equation takes a cut as well. Thus, tossing out epithets like “community organizer” doesn’t necessarily offer any proof that the President doesn’t understand the essential elements of our economy and how we measure it. This gets us a step closer to Mine Two.
Mine Two: Is Governor Romney really serious about reducing deficits? Unfortunately, Governor Romney’s narrative is long on generalities and very short on specifics. He wants to cut taxes and reduce the deficit. Not. So. Fast. Here are the two proposals side by side:
Forbes magazine, not exactly a bastion of liberalism, reported the effect of the Romney plan: “TPC found that repealing the AMT and cutting rates by 20 percent would increase the deficit by more than $3 trillion over the next 10 years, even after the 2001/2003/2010 tax cuts are extended.” (emphasis added) This analysis renders the continuation of Governor Romney’s remarks all the more incomprehensible.
“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.” [Time]
What are we talking about here? The only specific is the elimination of the Affordable Care Act and the Patients Bill of Rights. What other programs are “like” Obamacare? If repealing “Obamacare” would add another trillion dollars to the deficit [HHS] or worse, “According to the CBO, repealing the Affordable Care Act would increase the federal deficit by $230 billion over the next 10 years, and by about $1 trillion more in the decade thereafter,” [AOL] then what deficit reduction is Governor Romney expecting?
What else is on the Romney Chopping Block?
“I know Medicaid, for instance – it can be better run by taking the Medicaid dollars, block granting it to the states, and then having the states know that in the future, those dollars will grow at inflation plus one percent. Of course, there will be an adjustment for changes in poverty level, and population, and so forth, but basically knowing that they have to live within those parameters. Those kinds of changes save about $100 billion a year. Just taking federal programs, sending them to the states, and growing them at inflation, or inflation plus one percent, you add these together, you get about $500 billion in savings.”
Let’s look for a moment at the practical implications of Governor Romney’s Medicaid proposal on Governor Romney’s state:
“While McDonough said it is possible for block grants to be structured in a way that adjusts for increased enrollment, he said the kind of block grants advanced by many Republicans has been more along the lines of “Here’s your dough. Good luck. Do the best you can. See you later.’’
US Representative Paul Ryan, a Wisconsin Republican and chairman of the House Budget Committee whose budget Romney has enthusiastically endorsed, has proposed a block grant tied to massive cuts in federal Medicaid expenditures.
The federal government, which now pays a fixed share of states’ Medicaid costs that automatically rise in response to a recession, would instead dole out a set dollar amount that would increase each year with inflation and US population growth.” [BostonGlobe]
Sending the funds to the states, and giving them “flexibility” sounds fine in the general sense, but it’s devastating in the real world. For the umpteenth time, federal spending can be an automatic stabilizer during economic downturns, and if the pressures for enrollment go up in a state, then if the federal government can ease the burden on states (and individuals) that frees up money for other consumer expenditures until we get into the rebound. The only constituency served by the Romney proposal to block grant Medicaid payments appears to be those who are ideologically disinclined to provide assistance to states to provide health care for those in poverty.
Worse still, the Romney proposal doesn’t even address some practical considerations which are widely acknowledged, for example:
“First, the block grants don’t grow at the rate of health care inflation (which far outpaces inflation in the broader economy). Second, the grants don’t adjust to account for an aging population that will become more and more expensive to treat. Currently, Medicaid costs are expected to grow at nearly 7 percent a year. The Ryan plan would cap the growth of the federal block grant at roughly 3 percent. Romney, in an astonishing assault on the poor, has said he’d put the cap as low as one percent.
Under the slightly-less-cruel Ryan plan, the federal contribution would be cut by one-third by 2021 – sticking states with $150 billion in unfunded healthcare obligations.
As CBO puts it, “federal payments for Medicaid under the proposal would be substantially smaller.” Even assuming that flexibility creates some cost savings, CBO writes, states would not have enough money to maintain Medicaid as it currently exists. They’re likely be forced to “decrease payments to Medicaid providers, reduce eligibility for Medicaid, provide less extensive coverage to beneficiaries, or pay more themselves.” [RS] (emphasis added)
Mine Three: Not to put too fine a point to it, but thus far the specifics offered by the Republican candidate (1) add — not subtract — to the federal deficit, and (2) do so at the expense of the elderly poor, the disabled, all while slapping a hefty $150 billion unfunded obligation on the states. Further efforts by interviewer Halperin to get Governor Romney to be more specific beyond cutting Amtrack, PBS, national parks, the endowment for the arts, and other small programs were ultimately unsuccessful. The Governor’s attitude seems to be “we’ll know when we get there,” — wherever that might be.
It’s hard to have confidence in a message when it (1) counteracts your stated intent, (2) may have unintended economic consequences especially at the state and local levels, and (3) is predicated on a negative, i.e. we can’t have nice things because we’d have to borrow money to get them. The last item is itself predicated on a bit of misinformation. No, the Chinese don’t “own us.” The U.S. has $15,692,368,000 in public debt [Treas] approximately 32 cents of each of these dollars is owned by federal trust funds like Social Security, and Americans own about 54% of our public indebtedness. Of all our public debt? China owns about 12%. [FC]
If this is beginning to sound like a muddle, it is. Governor Romney’s stepping on his own economic messaging. His deficit reduction proposals don’t reduce the deficit. His spending cut proposals predominantly cut into our social safety net. [RS] His tax proposals are almost as vague as his spending cut plans.
It is almost as if he believes that if his generalities are sufficiently sparkly they will blind voters into giving credence to his economic “expertise.” Should that not be enough, then perhaps he does need a coalition of the Birthers, the Transcripters, the Misogynists, the Raving Ranters?
References and Recommended Reading: “The complete Romney interview transcript,” Time, May 23, 2012. Forbes, “Romney Tax Plan Would Add $3T to the deficit over a decade,” Feb. 29, 2012. “How Romney Would Slask the Social Safety Net, ” Rolling Stone, Feb.1, 2012. “Romney Proposals would require massive cuts…” CBPP, May 21, 2012. U.S. Department of the Treasury, Data Center.