All three presidential debates are now behind us. Mitt Romney’s convincing win in the first clash was a game changer, turning a possible Obama landslide into an even race. The debates provided the big boost Romney needed, but for advocates of limited government, the three debates suggested a troublesome four years ahead, no matter who wins. Just a few of the red flags:
The China Syndrome. Although Mitt Romney did make some nods to the importance of trade for the U.S. economy, he spent a large amount of debate time trying to start a trade war with China. Of course, China probably is a currency manipulator (though our hands are hardly clean in this regard — just ask Ben Bernanke). But there is no reason to believe that a more valuable yuan would erase our trade deficit with China. In fact, from 2001 to 2008, the yuan did increase in value by 21 percent relative to the dollar, yet our trade deficit with China actually increased by a third over the same period. And imposing penalties on China for currency manipulation would almost certainly invite China to retaliate on other fronts. Romney’s actions will more likely than not end up costing American jobs in the long run. Moreover, the idea that low-cost imports are bad is an outdated mercantilist principle; in reality, they reduce costs for U.S. consumers and manufacturers.
In the debates, President Obama repeatedly boasted of having saved Americans from the threat of inexpensive Chinese tires. His decision to impose tariff penalties on Chinese tires may or may not have saved 1,000 jobs in the tire-manufacturing industry, as the president claims, but it also cost American consumers more than $1.1 billion in higher tire prices — Americans ended up paying more than $1 million for each tire-factory worker’s job saved. Further, because Americans had to pay more for tires, they had less to spend on other goods and services, meaning fewer jobs in other industries. Studies suggest that on net, the president’s tire protectionism actually resulted in a loss of more than 2,500 jobs. And if that wasn’t bad enough, the Chinese retaliated by imposing penalties on U.S. chicken products, costing that industry at least $1 billion in sales. It was almost hard to believe that two reasonably intelligent candidates for president could act so utterly ignorant of basic trade economics.
Cut the Deficit . . . Someday. During the final debate on Monday night, Mitt Romney correctly noted that perhaps the biggest threat to our national security is the crushing burden of government debt. He then proposed to remedy this by spending more on national defense. Defense is at least a proper constitutional imperative, though Romney’s penchant for simply counting the number of ships or airplanes is not an especially convincing case for increasing spending, as Obama pointed out. But further, during the debates Romney also seemed to rule out cuts to Medicare, student loans, government-directed research and development, Pell Grants, and K–12 education spending. In the final debate, he promised to reduce domestic discretionary spending by 5 percent. Since that category amounts to less than 17 percent of total federal spending, such a cut would reduce the deficit by $30 billion per year. It is currently $1.1 trillion. Enough said.
But Romney looks like a skinflint next to President Obama, who could hardly find any government activity that didn’t deserve more spending — sorry — “investment.” The president made passing mention of “tough spending cuts” to come, but couldn’t actually name any. He did, of course, endlessly repeat his call for the rich to pay “a little more” in taxes. He didn’t mention that his proposed $1.8 trillion tax increases over the next ten years don’t even pay for the increased spending he has called for, let alone begin to cut the deficit. The president’s proposed budgets do reduce the deficit to $575 billion by 2018, but only because of economic growth, not spending reductions. In 2019, they promptly begin to skyrocket again with no end in sight.
The choice, then, is between drowning in an ocean of red ink, or just in a big lake of it.