Politics & Policy

Avoiding the ‘Doom Loop’

Romney plans to steer us away from the Greek example.

Republican presidential candidate Mitt Romney talked to NRO’s Jim Geraghty Wednesday afternoon about tackling the debt, Greece, Bain Capital and bankrupt companies, and the strangely inserted facts about Obama in the presidential biographies on the White House website.

Mitt Romney on getting Americans to focus on the difficult, sometimes abstract issues of the deficit and accumulating national debt:

“I think it helps to translate the federal-debt and unfunded-liability numbers into personal numbers. The total amount of accumulated debt and unfunded liabilities is approximately $520,000 per American household. What that means is that each household will be paying the interest on the debt and paying the principal on the unfunded liabilities over the coming decade or two. It means that our kids will get saddled with that $520,000 — which of course will become a good deal larger over the next four or five years if the president is reelected.

“That number says that as interest rates go up, as they undoubtedly will down the road, people will get burdened with a tax figure that makes it harder for them to start their lives out, get homes, and build a future for themselves. It really kills the American Dream to be burdened with that kind of a figure from the beginning of your life. And so I think that’s the most effective way I can talk about the personal impact, long term, of this debt and unfunded-liability burden.

“There is also a recognition in this country that what Greece and Italy and Spain are facing could conceivably be brought home to us. The recognition that you reach a point where the world decides that your obligations are perhaps not going to be met, or that they will be inflated away — in which case people will ask for higher interest rates, and you’ll find yourself in a doom loop.”

On restoring America’s AAA credit rating, and how long that would take:

“I believe that if we show we have tackled our long-term unfunded liabilities, which are primarily Social Security and Medicare, and if we have killed certain federal programs, and if we’re on track to have a balanced budget in about eight years or so, at that point rating agencies will recognize that our credit rating is solid.

“ . . . Right now, the challenge from having been downgraded is not as apparent [as it might be] to the American people because the world is frightened of the euro, and so people are bringing their cash to the United States. That is holding down interest rates here. In addition, the Federal Reserve is purchasing our treasuries and holding down interest rates here. But at some point these features will come to an end, and if we are not on track to having a superior credit rating, we will start paying the costs of higher interest.”

During the campaign of 2008, Obama said that running up $4 trillion in debt was “unpatriotic.” On whether he would use the same term to describe Obamas running up $5 trillion:


“I’ll call it inexcusable and disappointing that a president who was so critical of his predecessor for roughly $400 billion to $500 billion annual deficits is now running trillion-dollar deficits and has not apologized for them. When a president says that he pledges to cut this deficit in half by the end of his first term, and he’s doubled it instead — that shows he is on the wrong track. I try to avoid highly incendiary language, but this is something that puts our country very much at risk.”

On the fact that one of his successors at Bain Capital, Jonathan Lavine, is a top Obama bundler:

“I have no problem with people who have differing political sentiments participating in the political process. I can say I know that the Obama campaign misfired with this attack. The GS Steel Enterprises events that are in question occurred after I left the firm, so that obviously is not a very effective attack. Although the whole idea that we’re going to attack people in private equity — who make over 100 investments to get results in any one investment — is a very strange course for the president to take. I realize, however, that the president wants to do anything he can to deflect attention from his record, and he will persist in personal attacks.”

On how a firm like Bain can make money while the companies it manages, such as GST or Dade Bering, can fail:

“With very few exceptions, the times you are successful in an investment are when the enterprise itself becomes larger and more successful. That is how our firm and other firms were able to achieve such success. There are a few exceptions where an enterprise is doing well, and realizing dividends from its success, but then it encounters a reversal in circumstances, and it no longer does well. . . . That tends to be rare. The people in my firm, in every investment we made, we wanted to make the business more successful. The cartoon caricature of investors coming in, taking all the money out of a business and leaving it bankrupt is, of course, absurd. The only way you make money in the industry that I’m familiar with is by making the business more successful, more profitable, not by making it less so.”

On whether Greece should leave the euro, and whether the euro was a mistake from the beginning:

“I think the euro is under the stress that many had predicted. Cobbling together in one currency nations with such different fiscal policies and such different levels of productivity was bound to cause strains that, if not addressed, could imperil the other nations and the currency itself. The fact that Greece has found it difficult to live up to the commitments it made coming into the euro — that has made those stresses even greater. And now you have an extremely threatening setting that has the entire world holding its breath. We’re all concerned about what might happen to Greece and the people there if aggressive action is not taken to restore its fiscal balance and allow it to grow again and start participating fully in the world economy. I can’t predict precisely what will happen. That will depend upon the people of that nation, the leaders of that nation, and the leaders of countries like France and Germany. They may decide that it’s in their interest to try to cover for the shortfalls of another nation, but that is yet to be seen.”

On reports that President Obama is fighting against congressional Democrats for supporting legislation that would take a harder line with Russia on human rights:

“I’m not familiar with the bill itself, so I won’t comment on it, but I have been concerned that the president and his administration have apparently retreated from America’s historic commitment to fostering human rights. The vice president’s comments in China, that ‘we understand’ their one-child policy, were alarming comments. As far as our relationship with Russia, I believe the president has tried hard to, quote, ‘reset’ relations with Russia by bowing to their demands for such things as the removal of our missile-defense sites in Poland. I think he’s received very little in return. He’s bowed to their insistence for the terms of the New START treaty. He gave Russia a one-sided victory. With regard to other aspects of the U.S. relationship with Russia, I would not find it surprising that he has once again bowed to the insistence of Russia that we give and they get.”

On whether he will be campaigning in Wisconsin with Governor Scott Walker or otherwise involved in the recall election in the next three weeks:

“I don’t know the schedule details in the next couple of weeks, but I was just recently in Wisconsin, campaigning there, and I’m fully supportive of Governor Walker’s efforts there. I spoke at a Republican governors’ conference, and Walker was in attendance. I stand with him, shoulder to shoulder, in his recognition that public-sector unions must not negotiate for benefits that would ultimately imperil the fiscal solvency of states or localities. Other states have dealt with the same issue, whether it was in Indiana or New Jersey or, to a lesser extent, my home state of Massachusetts. We simply cannot allow politicians to win favor from large public-sector unions by promising them benefits that threaten the fiscal solvency of the state or locality.”

On California governor Jerry Browns call for a referendum in November on his proposal for an $8.5 billion tax hike:

“I think you are seeing the result of a series of actions in California, actions that have led to public-sector unions’ having benefits and wages out of line with those in the private sector. There’s an unwillingness to deal with fiscal problems before they reach near-crisis level. And the high rate of taxes in California is causing businesses to leave California.

“I hope that doesn’t accelerate, but as the governor continues to raise taxes on the most successful, the most successful will leave. Others will decide to not open their doors because the risk will be too great that even if they’re successful, the government will end up taking what they earn. The governor is taking them in the wrong direction. I wish Californians had elected Meg Whitman. She would have been more successful and explained to Californians the need to cut back on spending and eliminate unnecessary programs. There are other states that have very different records. I think it’s interesting that the state with the highest or among the highest tax rates in the nation also has the worst or near the worst deficit.

“You can’t tax your way out of debt or a deficit. You simply have to rein in the size of the government, because the government will simply ask for more and more and more, until the taxpayers finally say ‘enough.’”

On the news that White House staffers have inserted facts about Obama into the biographies of former presidents on the White House website:

“I hadn’t seen the story, but I do know that when the president ran, he said that this election would be the turning point, that the oceans would recede, that the world would shift because of him being in office. There seem to be people around him, as well as himself, who have a very grand view of what he will accomplish . . . and we’re still waiting to see that. I think the American people have been disappointed. The promises were grandiose and extraordinary, and the deliverables have been disappointing at best. I think it is one thing to try to rewrite your own history — it’s something different altogether to rewrite that of all your predecessors. . . . I can commit: I will not be trying to rewrite the biographies of former presidents.”

— Jim Geraghty writes the Campaign Spot on NRO.


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