Is Mitt Romney the last true believer in austerity?

By Nicholas Wapshott
May 24, 2012

There is something oddly retro about Mitt Romney. He appears to have sprung from a nostalgic fifties “Hairspray” world where women sported beehives and cars had fins. Nor has his economic thinking kept up with the times. Although he backed Obama’s $787 billion-dollar Keynesian stimulus, as soon as the borrowers’ remorse that sparked the Tea Party took hold, he turned on a dime and embraced austerity and paying off the national debt.

As he declares on his website: “The only recipe for fiscal health and a thriving private economy is a government that spends within its means.” He signed the “cut, cap and balance” pledge that will tie his hands if he makes it to the White House. Not trusting himself, perhaps, to remain fiscally continent, he favors an amendment to the U.S. Constitution, obliging Congress to put balancing the budget before all other measures. He would cap federal spending at 20 percent of GDP, a feat that would entail about $500 billion in cuts. On day one of his presidency, he says he would send Congress a bill that would cut non-security discretionary spending by 5 percent.

His proposed economies include (his estimates in parentheses): repealing Obama’s healthcare plan ($95 billion); privatizing Amtrak ($1.6 billion); reducing federal payments to the National Endowment for the Arts, the Corporation for Public Broadcasting and the Legal Services Corporation ($600 million); eliminating family planning subsidies ($300 million); cutting foreign aid ($100 million); capping Medicaid (more than $100 billion); replacing only half those who leave the federal workforce ($4 billion); ending the Davis-Bacon Act ($11 billion) and paying federal employees lower wages ($47 billion); and that old elusive crowd-pleaser, reducing waste and fraud ($60 billion).

For good measure, he has further manacled himself by putting his name to the Americans for Tax Reform’s pledge that would prevent him raising taxes. If you thought George H.W. Bush’s “Read my lips. No new taxes” was rash, Romney has gone one further. Not only has he solemnly promised not to raise taxes in any circumstances but he will make the George W. tax cuts permanent, end capital gains taxes for those earning less than $200,000, and abolish estate taxes. By now, even Harry Houdini might be excused for feeling a little constricted.

The problem with the draconian austerity package Romney has in mind come January is that it is likely to tip the fragile American recovery into recession, as similar measures have done in Britain and, save Germany, in the euro zone. In the past, Romney has pointed to Europe with distaste, as if it were Soviet Russia. Obama’s public spending, he said, “takes us down a path to becoming more and more like Europe. And Europe doesn’t work in Europe.”

He is right to be wary of Europe’s example, but for the wrong reasons. The fiscally conservative policy of the euro zone, the product of a conservative alliance between German Chancellor Angela Merkel and former French President Nicolas Sarkozy, insists on governments paying down deficits quickly, even though, for countries like Spain, Italy, and Greece, this means perhaps a decade of penny-pinching, high unemployment, low growth and short rations.

The result, as predicted, has been a revolt against austerity at the ballot box and a rise in extreme politics. In recent elections, the Greeks and French have seen small radical parties trounce their moderate rivals, prompting political turmoil that is frightening away investors. So far, 11 European governments have fallen thanks to austerity, the biggest shock being Sarkozy’s ouster by the Socialist François Hollande.

What is more, austerity doesn’t work. It curbs growth, raises unemployment and concomitant state spending, and diminishes tax revenue. Britain, whose conservative coalition is paying down debt the fastest, has, as expected, returned to recession and is borrowing more now than two years ago. Traditionally prudent organizations like the OECD and the IMF are now preaching that austerity should be tempered by urgent measures to promote economic growth, a euphemism for increased public spending. Instead of austerity, European Union leaders have just agreed to promote growth and job creation.

Perhaps it’s time Romney did one of his famous flip-flops, wipe the Etch-a-Sketch slate clean of austerity and come up with a policy for boosting American growth. Now that could prove an election winner.


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a simple comment on this article would be President Obama for President of the United States

Posted by running | Report as abusive

another simple comment would be if you like “stimulus” so much, move to Greece. Years of spending more than they could afford is why they are where they are today. Really, if you like it so much, please go there.

Posted by USA4 | Report as abusive

I didn’t read your article because I couldn’t even get past the egregious title.

If Romney is a “true believer in austerity”, he certainly doesn’t “practice what he preaches”.

We don’t need a man like him for president to force the US economy to live as he refuses to live himself.

I certainly don’t expect the US to elect a hermit living in a cave as our next president, but to equate Romney with “austerity” is both ludicrous and offensive.

We need a president that can understand the American people are hurting economically, mainly because of the exportation/importation of jobs for cheaper labor costs for the wealthy, resulting in greater profits for them at our expense.

THAT is the kind of man Romney really is, and would increase that kind of “austerity” the US has been suffering from for the past 30 years or more.

IF we want to elect a man as president who will efficiently put an end to this country as we know it right now, then Romney’s your man.

Unfortunately, Obama is not much better.

I suggest we reelect Obama for four more years, and hope the country can manage another four years of his gross ineptitude as president.

Maybe in four more years the American people will have an opportunity to elect a better president than either choice we have now.

Going with Romney at this point is guaranteeing we won’t have four more years.

Posted by PseudoTurtle | Report as abusive

I do say I do tilt more to the Democrats position on the issues of economics much in the same way the author does.The policy that has been a failure has been this theory of trickle down economics the Republicans have been pushing since the 80′s. The result of those policies with no government accountability and the refusal to bring us back to the tax rates we had when we were a prosperous, growing and expanding country. The growing gap between rich and poor is evidence that the trickle down ideology put us on this trajectory. When Bush came into the White House with a Republican Congress and a surplus this country was on the path to be debt free nation. Two unfunded wars, Medicare Advantage and the Bush tax cuts make up something like 90% of the debt and yet Republicans have signed the Norquist pledge which supersedes their pledge to the United States. These are the same Republicans that idolize Reagan but fail to admit he raised taxes at least 11 times and bought us EMTALA which pretty much promised free health care but offers no way to pay for it. Even previous Republican stalwarts like Bartlett, Stockman, Buckley Jr. and notable writers like Thomas Mann and Norman Ornstein have written extensively on the current economics and don’t see going back to the Bush years as Romney wants to do as the best course for this country. Years of neglect are not going to change our economy overnight and despite some comments Obama’s policies haven’t failed. They are slowly and surely working despite a confrontational idealogical partisan opposition. Austerity alone is not the way and for those that pledge allegiance to Norquist over their pledge to the country is definitely not the answer. Those are the same forces that when they were in power claimed the deficit didn’t matter and spent more and spent more and cut taxes but primarily for the top 1%.

Posted by Saywhaaaaa | Report as abusive

I hope the government of the USA studies the case of UK’s “Railtrack” privatization and subsequent market failure/ safety fiasco, before going down this road themselves with Amtrak…

Posted by matthewslyman | Report as abusive