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Romneynomics by the Numbers

by Ramesh Ponnuru
They appear to come from 2006

Mitt Romney released a 59-point economic plan in September. Very little attention has been paid to its details, which is perhaps surprising given that he is widely considered to be the leading candidate for the Republican presidential nomination in what looks like a competitive year. On the other hand, perhaps it is not surprising, since reporters (and voters) have a limited appetite for reading through 59-point plans — especially when most of the 59 are familiar, unexciting Republican proposals. It is worth taking a look, though, since it is quite possible that in a little more than a year we will have a new president who has committed himself to this plan. Here is a guide to Romney’s numbers.

4: That’s the average growth rate Romney believes his plan will help the economy generate in the 2013–17 presidential term. This target is significantly less ambitious than the 5 percent over ten years that Tim Pawlenty declared to be his goal when he was in the race. It is therefore more achievable. From 1995 to 2000, economic growth, adjusted for inflation, averaged 4 percent per year. But we had demographic, geopolitical, and technological trends going for us then that we no longer enjoy. We have achieved 4 percent growth in none of the years since that period.

11.5 million: Romney believes that if his plan is implemented, the economy will generate 11.5 million jobs during the next presidential term. That’s about as many as it generated during each of Bill Clinton’s terms.

3: Romney deserves some credit for specificity: Only three of his 59 points are so vague that they amount to a plan to have a plan. Romney pledges to “pursue a conservative overhaul of the tax system over the long term that includes lower, flatter rates on a broader base.” He says he will “undertake fundamental restructuring of government programs and services.” And he commits to repealing the Dodd-Frank financial-regulation law and replacing it with a “streamlined, modern regulatory framework.” The Romney campaign released a 160-page booklet to explain the economic plan, but it doesn’t flesh out these promises.

5: Presidential candidates never run as pure free traders, and presidents never govern that way. It is nonetheless striking that five of Romney’s economic policies involve increased restrictions on trade, especially with China. Perhaps the most important of these policies would designate China a currency manipulator and impose tariffs on its exports. Republican and Democratic presidents have for many years now been a restraining influence on the protectionist tendencies of Congress. That might change under President Romney.

5: For each of Romney’s trade-restrictive points there is a trade-liberalizing one to match. Romney would, for example, ask Congress to reinstate the president’s power to negotiate trade agreements — a power that lapsed under Pres. George W. Bush. Whether the net effect of Romney’s policies would be freer trade would depend on the Chinese response. The prospect of new trade agreements would not make up for a trade war with China.

2: Besides Romney’s trade policies, only two of his initiatives would draw opposition from significant portions of the Right. These also involve border control. But where many conservatives will find his trade policies too restrictive, they will find his immigration policies too loose. Romney has two initiatives to increase high-skilled immigration, and he does not believe this increase should wait on a comprehensive solution to the flaws of our immigration system. Business-oriented conservatives largely agree with Romney on this point, but he would have to fight some Republicans to get his way.

7: Most of the rest of Romney’s points reflect Republican orthodoxy: They are things that any Republican president would do. For example, Romney pledges to make pro-business appointments to the National Labor Relations Board. Fully seven of Romney’s points would reduce the power and influence of private-sector unions, which have been shrinking in membership for decades. Romney says he would “use the bully pulpit of the presidency to encourage more states” to adopt right-to-work laws.

7 is also the number of points devoted apiece to tax and spending cuts. Romney would keep the Bush tax rates on income, capital gains, and dividends, and press forward the corporate-tax-cut proposal that John McCain made in 2008. He would end the estate tax, end the taxation of the overseas profits U.S. companies bring home, and end taxes on capital investment for people making less than $200,000 a year. (This last point — a tiny tax cut in the context of Romney’s overall tax program, let alone in that of the overall budget — has already gotten the Wall Street Journal to complain that Romney has surrendered to “class warfare.”)

The spending cuts are mostly small or lacking in detail. Romney would cap federal spending at 20 percent of the economy, but does not say what he would cut to abide by that cap. He would try to get Congress to pass a constitutional amendment requiring that budgets be balanced and that supermajorities approve any tax increases. Like almost all proponents of such amendments, he says nothing about how it would be enforced.

Medicaid, the health-care program for the poor, is the only entitlement for which Romney will commit to a plan. He would send Medicaid funds to the states, an approach he says “could save” the federal government $200 billion a year. In the booklet, he also says he will propose Social Security and Medicare reforms — maybe in the next booklet.

13: That’s how many of Romney’s 59 points concern energy or the environment; in 9 of those cases he is fighting new regulations or rolling back old ones. An additional 3 points are devoted to regulatory reform in general. Romney would push for a new law to deny the EPA the authority to regulate carbon emissions, and speed up the process of approving nuclear reactors.

1: Romney includes one health-care plank in his platform, and it is the most succinctly worded of his 59 points: “Repeal Obamacare.” Romney’s booklet makes one reference to his desire to “replace” Obamacare, but he does not say what the replacement would look like. This is a little odd, because elsewhere on his website he does endorse specific reforms: letting people who buy their own health insurance get the same tax benefit as people who rely on their employers, allowing people to buy insurance across state lines, capping malpractice awards. Perhaps he does not see these reforms as having important economic effects.

2: On two occasions Romney’s booklet hints that items on his agenda might raise wages. He speaks negatively about an Obama-administration ban on underwater drilling that killed jobs and therefore cost workers wages, the implication being that his own less regulatory approach would lead to more money in people’s pockets. And he notes that the corporate-income tax reduces wages, which implies that his cut in that tax would increase them. And that’s it. Romney could make the case that the health-care reforms he favors — but does not discuss in his 59-point plan — would raise wages, too. Take-home pay was stagnant for workers in the middle of the income spectrum even during the economy’s best years over the last decade. But this question does not seem to preoccupy Romney, or his economic advisers.

0: That’s the number of Romney’s points that address monetary policy, Fannie Mae and Freddie Mac, the housing market, or the problem of financial companies that are too big to fail. In a recent debate, Romney said that he did not want to look back at what went wrong in 2008, and apparently he wasn’t kidding. Neither his 59 points nor his accompanying booklet has anything to say — anything at all — about preventing a recurrence of the trends that led to the crisis. And while many of Romney’s policies have the potential to raise the economy’s long-term growth rate, none of them seems to have been designed to cope specifically with the aftermath of the financial crisis and the severe recession that accompanied it.

In almost no way is this plan tailored for the economic circumstances of 2011 or 2012 rather than those of 2006. (The “almost” is there because there would not have been any pledge to repeal Obamacare in 2006.) Had they been in place then, the economic contraction of the last few years would have proceeded more or less as it did.

The implicit premise of Romney’s plan is that the chief obstacles to economic growth in the U.S., or at least the chief obstacles amenable to a policy solution, are private-sector unions, environmental regulation, excessive taxation and spending, and Chinese unfairness. A dysfunctional health-care system, a weak housing market, poor monetary policy, mediocre schools, bad debts: These things are afterthoughts at best. If Romney becomes president, let’s hope these assumptions are right — or that he doesn’t really believe them.

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