Admittedly, Romney White Paper is Spot-on about Obama

R. Glenn Hubbard, N. Gregory Mankiw, John B. Taylor, and Kevin A. Hasset released a white paper on the failings of President Obama’s economic policies. The professors also pointed out what they expect will be effective policies as proposed by the former Massachusetts governor.

In short, they criticized Mr. Obama’s policies as being wasteful and short term, citing programs such as Cash-for-Clunkers and home mortgage modifications. I agree with professors on that point. These programs have done nothing for long term economic growth, appearing, in my opinion, to appease short term needs of a few select groups like the auto industry unions for example.

I couldn’t agree with the professors on the hype they put on Mr. Romney’s policy proposals. In short they are:

1. Stop runaway federal spending and debt;
2. Reform the nation’s tax code to increase growth and job creation;
3. Reform entitlement programs to ensure their viability; and
4. Make growth and cost-benefit analysis important features of regulation

The professors believe that reducing regulatory uncertainty could come about by capping the level of federal government spending at 20%. I disagree. Reducing regulatory uncertainty is a lot more fundamental than that.

We should instead ask ourselves a number of questions. Why do we want to regulate the behavior of these players in the first place? Are we sure the market is not sufficiently keeping their behavior in check? Is there a reason why we should expect or want a market to be made in the first place? Is government a necessary player in the market we are addressing? Address these questions and we more directly address the issue of runaway federal spending and the debt we enter in order to finance it.

On taxes, Mr. Romney wants a 20% across the board cut on marginal tax rates, a reduction of taxes on capital gains and dividend income, and a flatter tax base. Mr. Romney could make his proposal a lot simpler. Introduce a flat tax and get rid of all consumer and business tax loopholes.

On regulation, Mr. Romney is spot on. If a regulation does not promote economic growth, scrap it. If a regulation does not pass a cost/benefit analysis, don’t pursue it. Good government, in my opinion, means implementing effective programs. Best government means implementing the barest number of government programs possible.

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
This entry was posted in Mitt Romney, Obama, Political Economy, stimulus and tagged , , . Bookmark the permalink.

One Response to Admittedly, Romney White Paper is Spot-on about Obama

  1. Ken Ciszewski says:

    I will probably have a lot to say about this post, so I may do so in installments. To start out:

    “1. Stop runaway federal spending and debt;”

    Right. Don’t go to war unless taxes are raised (in a serious progressive manner) to pay for the way. WE did this in WW II. If there isn’t the will to raise the necessary taxes with shared sacrifice from all, then maybe there is not a strong enough case to go to war! Also, find ways to destroy our enemies quickly and cheaply with the minimum loss of American lives. We have the non-nuclear firepower to destroy any city on this planet within three days. Further, if an enemy isn’t worthy annihilating, he’s not worth fighting. We should have learned all of this from WW II and how we got Japan to surrender. This means we should have destroyed first Saddam Hussein’s palace, and then, after telling the Iraqi’s to surrender him or else, we should have destroyed Baghdad by firebombing. We should have done the same thing to the Taliban relative to Osama Bin Laden in Afghanistan. After that, no terrorist would have ever bothered us again. Remember when we bombed Qadafi’s compound some years ago?

    “2. Reform the nation’s tax code to increase growth and job creation;”

    We’ve had the Bush tax cuts for several years. The GOP and business are crying in their beer that if these tax cuts go away, the world will end. Question: if tax cuts of this magnitude are supposed to create jobs, where are the jobs? Why during W’s term was job creation essentially nothing? Jobs should be falling out of the sky by the millions under “the tax cuts create jobs” logic.

    If tax cuts and giving business special tax incentives don’t actually create jobs, what’s the point? Let’s get rid of “business welfare” and let all of these self-made entrepreneurs make on their own, like they keep bragging they have done. Most of them wouldn’t last 10 days.

    “3. Reform entitlement programs to ensure their viability; and”

    Certainly this sounds like a good idea, as long as it doesn’t mean “abolish them”. As to health care, it’s time we found a way to come up with real cost control. Just because doctors and hospitals heal people doesn’t mean they are entitled to walk away with all the money. As for HMOs and health insurance companies, they add no value to health care and should be abolished. They were once an excuse to save business benefits money by controlling health care costs, while telling patients to see their doctor as much as they liked. That was so transparently ridiculous I don’t see how they could have said that with a straight face. We could get 20-30% more real health care if we went to single payer. We could also control costs. No one on either side of the aisle has the guts to do this. After all, if someone can’t make a profit at it, it’s not worth doing (paraphrase of the Ferengi Rules of Acquisition).

    As for Social Security, modest tax increases would help the long-term short fall. Just take the income cap off, problem very much helped.

    “4. Make growth and cost-benefit analysis important features of regulation”

    Sometimes the bureaucratic mindset does go over board when it comes to making regulations. However, given business’ record of not caring much about the health and safety of employees, or for that matter, the health and safety of even their customers, there are times when we need prevent them from doing harm. Then there’s the economic exploitation that business often tries to get away with. Many people fought long and hard for things like decent working conditions and wages, food safety, pollution control so we can actually breathe without getting emphysema, to name a few.
    Alton’s dictum is “If there is no market failure, there should be noregulation.” We need to understand what the definition of “failure” is. From my point of view, if the actions of markets (or businesses) do harm, then they have failed in that sense. Social costs need to be accounted for in the overall scheme of things. The polluted dump sites that go back 50-60 years that we spent so much money cleaning up becaise they were downright poisonous are social costs that were not paid by the busineses that dumped the chemicals. We paid them much later for the protection of our citizens. That sounds like exploitation for profit to me.
    In a similar fashion, laws against monopolies were passed in the early part of the last century in response business actions that would have restricted competition. If business can set prices without competition to temper that action, then consumers can be exploited and would be hard pressed to fight back. Witness Enron’s outright manipulation of electric power prices in California just a few years ago that cost consumers incredible amounts of money.
    I agree that we should look at cost benefit analysis, and decide as part of that how much risk we can stomach when regulating. There is no such thing as zero risk. Sometimes we appear to err on the side of “zero risk” because we value such things a human life. Who wants to be the one to tell someone, “we didn’t want to regulate that, so now you have asbestos in your lungs, and the prognosis is fatal.” Not everything is like that, so we need to distinguish the fatal from the moderately riskly. However, there are things like that that need serious regulation.
    I know of at least one international corporation that has a “Zero Harm” evironmental health and safety vision, mission, and policy. It haven’t fully reached that goal, obviously, but it works really hard at it. So far, they are still in business and doing fairly well, as far as I can tell.

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