Romney touches third rail – and lives

November 9, 2011

Increasingly, Mitt Romney seems the Republican candidate who has given serious thought to governing – to what specific policy actions he would take if he became president. The other Republican candidates seem mainly concerned with self-promotion and applause lines, while Newt Gingrich’s “Day 1 Project” seems more like a dress rehearsal than a real concept for governing.

If Romney is the serious challenger to President Barack Obama, then his fiscal policy speech a few days ago bears inspection. It was notably better than most campaign speeches, and contained both gold and dross. Here are some highlights:

Gold: “We cannot with moral conscience borrow trillions of dollars that can only be repaid by our children.” Reckless borrowing, with the invoice passed to our children – nobody in power in Washington right now will be asked to repay the national debt – is not just numbers, it is a moral issue. Romney recognizes this.

Dross: Obama is to blame for “massive defense cuts.” Democrats always accuse Republicans of wanting to despoil the environment; Republicans always accuse Democrats of wanting a weak defense. Neither claim is true. Converted to today’s dollars, the 2000 defense budget was $390 billion. Check Table 32-1 for the key Pentagon numbers under Obama. The 2010 defense budget, the first Obama fully controlled, was $690 billion, and this year’s defense budget is $708 billion. “Massive defense cuts” is not true. Although the White House does project a decline in defense spending to $620 billion in 2013, almost all the projected reduction stems from the expected ends of the wars in Iraq and Afghanistan. Doesn’t everyone want those wars to end?

Gold: “I will make government simpler, smaller, and smarter.” In Romney’s case this is not just rhetoric, since he helped make Massachusetts government simpler, smaller and smarter. Compared to most other states, Massachusetts has a strong economy, good health care coverage for average people and a relatively small debt. If Romney could do for the nation what he did for Massachusetts, we’d all be happy.

Dross: Seniors should be angry at the White House because “it was President Obama who cut $500 billion from Medicare.” The essence of doubletalk is to say that federal spending must be reduced, and then denounce spending cuts. Equally important, Obama has not reduced Medicare spending, and Romney must know this.

The “$500 billion Medicare cuts” figure being batted around by Republican candidates is an estimate for 10 years of projected future reductions from unspecified future savings to be identified by the new Independent Payment Advisory Board, whose advice does not even start until 2014. Obama’s own actuaries have warned there is an “extremely low likelihood” many projected Medicare cuts will occur.

Twenty-four karat gold: Romney placed his hand on the third rail of American politics, by proposing Social Security cutbacks. He said, “I believe we can save Social Security with a few commonsense reforms. First, there will be no change for retirees or those near retirement. No change. Second, for the next generation of retirees, we should slowly raise the retirement age. And finally, for the next generation of retirees, we should slow the growth in benefits for those with higher incomes.”

The test of leadership is saying what your audience does not want to hear. John Kennedy proved he was a leader by telling the East Coast liberal establishment that the old Soviet Union was a dire threat, something it did not want to hear. Lyndon Johnson proved he was a leader by telling Southern states the Civil Rights Act must pass. Ronald Reagan proved he was a leader by telling conservatives the time had come for arms control.

Is Romney the one to tell America what it does not want to hear about Social Security? There simply is no escape route from the red-ink mess that does not include raising the Social Security retirement age (lifespans are significantly increased from when the system was created), slowing the growth in benefits and reducing benefits to the well-off.

The Social Security trustees report that the system can currently pay only about three-quarters of scheduled benefits. In 2010, the report notes, that system wasn’t even self-sustaining, having to draw on the federal debt. If benefits aren’t trimmed, either taxes must rise or the federal deficit must accelerate anew. Neither would be good for the country, and that’s assuming China would keep loaning us additional money, which may not be an accurate assumption.

Beyond that, Social Security is not and has never been an investment program: it is an income transfer program, taking from working-age people and giving to retirees. Many seniors need their Social Security checks, but those who don’t should no longer receive them. That average working-age people are being taxed to fund income transfers to well-off seniors is bad policy, and not moral. National leaders including President Obama strenuously avoid speaking the truth about Social Security, because that truth is so unpopular.

Should Romney reach the White House, a measure of his presidency will be whether he keeps the promises made in this speech.

Photo: Republican presidential candidate and former Massachusetts Governor Mitt Romney listens as former New Hampshire Governor John Sununu speaks at a campaign stop in Exeter, New Hampshire November 3, 2011. REUTERS/Brian Snyder



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Once this train wreck of a primary is over it would be nice to see the election based on issues rather than highlighting the middle name (Hussein) of Obama or religion (Morman) of Romney. Economy-Security-Education-Healthcare should make up 100 per cent of the debate.

Posted by gobucks | Report as abusive

The US invested large sums of money into basic research during the 40’s thru 60’s … concepts with no guarantee of return or profit. The windfall of findings from those years were the engine of the US economy. When partisan conservatives started cutting funds for basic research programs starting in the 1980’s e.g. the Superconducting Super Collider, they effectively started a decline in US scientific leadership … a future that is only now starting to manifest. The net outcome will be the declining strength of US industry.

Posted by SanPa | Report as abusive

$500 billion in cuts to Medicare is just batted around by Republicans? Democrats touted those cuts as “savings” to pay for “Obamacare”. Many Republicans said those cuts would never happen at the time, but they were rebuffed by Democrats. So now quoting the Democrats own claims is somehow a cheap political ploy? We know that there is an estimated $100 billion in waste in Medicare every year. Though identifying and eliminating it doesn’t happen by snapping your fingers. You also don’t get a “savings” from simply reducing what Medicare compensates doctors for treatment. There are already doctors who won’t see people on Medicare do to low compensation. Though Democrats on the “Super Congress” deficit reduction team seem unaware of the fact that you cannot “save” money by that kind of decree.

Posted by AustinG | Report as abusive

> “Superconducting Super Collider…”
– The thickest slice of Republican pork the USA has ever known! The cancellation of that one government project alone caused a minor recession in the Dallas – Fort-Worth area of Texas. The USA will do far better economically out of their involvement in the international LHC project at CERN, than they would have out of “going it alone” with a project that would have been 3x as expensive and might have been out-of-date not long after it was completed…
Basic research is crucially important but the money needs to be spent in a smart and non-politically-preferential way.

Posted by matthewslyman | Report as abusive

For any “real economist’s out there” a question.
What would be the effect on our debt burden if we froze all tax refunds at the state and federal level for all including corporations and these monies were used to first eliminate all of our nations debt,and secondly to fund the rebuilding of our nations infrastructure something in need of dire upgrading….how long would it take?
This is a shared sacrifice the greatest since WW2 that must be addressed by all Americans…it’s time we sucked it up and got down to a harsh reality of dealing with our problems and these 2 issues are a great start…others can follow.

Posted by terry641 | Report as abusive

@matthewslyman — So you favor that top high energy physicists be based across the Atlantic over an amount of money equivalent to 1-yr. of subsidized “Clean Coal” use? And that researchers will spawn the highest concentration of new businesses back in the USA because of a so=called prudent spending model? Why is it that the highest concentration of new high-value businesses get their start near major universities, and not in the cornfields of low tax states?

And you believe arguments of project obsolescence, such that upgrades are not part of any long term investment? Consider Hubble. The recently decommissioned Fermi accelerator. The recently decommissioned space shuttle? Successful large science projects are tough to manage with an accountant’s pencil, and should not be driven by the same.

Posted by SanPa | Report as abusive