Overview of Mitt Romney's 2012 Economic Proposals:
Why Obama's Plan Didn't Work:
Romney summarized "...the President’s failure to address the looming deficits, national debt, unfunded entitlement liabilities, ballooning Freddie Mac and Fannie Mae liabilities, and incalculable government pension obligations causes employers and investors to ask whether the dollar will be worth very much in the future, and thus, they hold back." (Source: Boston Globe, "Grow Jobs and Shrink Government," Mitt Romney Op-Ed, August 18, 2010)
Reduce Government Size and Regulations:
Romney would introduce a Constitutional amendment that requires a balanced budget. He also calls for reducing Medicare except for current seniors -- similar to Paul Ryan's Road Map. Romney supports enabling the states to solve their unfunded pension obligations. Romney would tie unemployment benefits to worker retraining, which he would streamline "instead of the existing 47 separate programs run by nine federal agencies."(Source: Mitt Romney Campaign Website, My Plan to Turn Around the Economy)
Enhance and Enforce Free Trade:
Romney's First Day in Office:
- End Obamacare by returning that authority to the states to design their own health care solution.
- Order all agencies to eliminate Obamacare and all other regulations that inhibit job creation, and then cap annual increases of regulatory costs at zero.
- Issue oil drilling permits for pre-approved areas.
- Cite China as a currency manipulator and assess duties on Chinese imports if China does not float its currency.
- Reverse Obama's Executive Order encouraging using labor unions on government contracts.
- Reduce the corporate tax rate to 25%.
- Approve the Colombia, Panama, and South Korea Free Trade Agreements.
- Study how natural resources could be better utilized, and initiate all approved leases.
- Consolidate federal retraining programs and return their funding and management to the states.
- Cut non-security discretionary spending by 5% across the board.
Economic Impact of Lower Taxes:
Romney's corporate tax cuts won't trickle-down to workers. In the past two years, corporations have reported record-high earnings. However, instead of hiring workers, they've either hoarded the excess cash, or use it to pay higher dividends. The congressional Joint Committee on Taxation said Romney's cuts would increase the debt by $1 trillion over 10 years. (Source: Bloomberg, Romney's Tax Cuts Fall Short, November 11, 2011)
What Romney's Missing:
Like other Republican candidates, Romney bases his platform on the theory of supply-side economics. This states that tax cuts stimulate growth, thereby increasing the tax base and ultimately offsetting the loss in revenue. Supply-side economics seemed successful during the Reagan Administration, when tax cuts did boost the economy out of recession. However, the maximum income tax rate was 70%, not the low 30% top rate we have today. Reaganomics proposed a reduction in the growth of government spending. In fact, government spending was stimulative, increasing by 2.5% a year. As a result, Reagan doubled the national debt. Finally, Reagan did reduce government regulations on banking. The result? The Savings and Loan Crisis of 1989.
Both supply-side economics and Reaganomics are based on the Laffer Curve. However, Laffer himself cautions that tax cuts might not stimulate the economy at all if the tax rates are already below 50% and the economy is not growing. In fact, tax cuts and reduced government spending could throw a weak economy back into recession by cutting unemployment benefits and other cushions right when they are needed the most. (Article updated January 26, 2012)
Compare the 2012 Presidential Candidates on the Economy
- The Republic Presidential Debate
- Newt Gingrich
- Barack Obama
- Ron Paul
- Mitt Romney
- Former Candidate Michele Bachmann
- Former Candidate Herman Cain
- Former Candidate Rick Perry