James Pethokoukis

Politics and policy from inside Washington

Mitt Romney, Going Rogue

Mar 12, 2010 02:39 UTC

The rap on Mitt Romney is that he is the protean presidential candidate. Always shifting, always morphing, ever eager to please in relentless pursuit of the Oval Office. If he was a contestant on American Idol, the judges would surely knock him for “not knowing what kind of artist he is.” One week a crooner, the next a rocker. One campaign a moderate,  the next a culture warrior.

Well, that’s the rap, anyway. Residue of the 2008 campaign. But in his new book, No Apology: The Case for American Greatness, it is the Omega Romney we see, the ultimate distillation. Like a wave function collapse in quantum mechanics where many possibilities become one reality — and that reality doesn’t seem so eager to please. Not at all.

So who is Mitt Romney, at least as revealed in print? Well, the slight 2012 favorite for the Republican presidential nomination is neither in style nor substance a natural Tea Party man. Golly, no. (On the book tour, he has already spoken out against the “temptations of populism.”)

Certainly a conservative. But government, for Romney, is not always and everywhere a problem. Sometimes it can be part of the the solution, as he frequently highlights in No Apology. The book is certainly no closing argument to those on the right who suspect the Bain Capital co-founder and former Massachusetts governor is a moderate, Wall Street elitist. Or, even worse in the eyes of many on the right, the American version of Tory leader David Cameron. Certainly Sarah Palin would never write “TARP,” Climate Change,” and “Investment Spending” on her palm. But those are major policy points in No Apology:

1) The widespread view among party activists is that the U.S. government should have let more banks fail in the fall of 2008. To them, the $700 billion bailout was just short of a socialist plot to nationalize the financial system. In the book, Romney does criticize Treasury Secretary Timothy Geithner’s management of the Troubled Asset Relief Program, claiming it has been turned into a slush fund for the White House agenda. But Romney supported the bailout in 2008, and isn’t flip-flopping now. He writes that TARP “prevented a systemic collapse of the nation’s financial system.”  (This is certainly the economic consensus, even among center-right economists.) His potential GOP rivals — keeping in mind Romney hasn’t officially declared he’ll be running — will have a different perspective. The governor of Minnesota, Tim Pawlenty, for one, says the financial crisis was overblown, while Sarah Palin, the former vice presidential candidate, says Republicans know bailouts “aren’t the answer.”

2) Romney doesn’t sign on to the belief of many conservatives that man-made climate change is the Hoax of the Century. He said this in the 2008 campaign, as well. But it would be easy to change positions in light of the explosive revelations of those climate scientist emails and shoddy United Nations research. But Romney is sticking. As he puts it in the book: “I believe that climate change is occurring — the reduction in the size of global ice caps is hard to ignore. I also believe that human activity is a contributing factor. … Scientists are nearly unanimous in laying the blame for rising temperatures on greenhouse gas emissions.”

Of course, this doesn’t mean Romney is a cap-and-trader. Like Danish economist Bjorn Lomborg, he believes in remediation and mitigation efforts that make economic sense, not trillion dollar programs to reduce carbon emissions. From that perspective, Romney suggests he would be willing to entertain the notion of a carbon tax whose revenues would be used to offset payroll taxes. This is a favorite idea of many economists, include Harvard’s Gregory Mankiw, a Romney adviser and chairman of President George W. Bush’s Council of Economic Advisers.

3) Romney spends almost a full chapter of the book in a lively and extremely important discussion of the role of productivity and innovation in the U.S economy. And while he eventually makes his case for a lower tax rates on company profits and capital gains, he first advocates more government funding for basic science research, particularly in engineering and the physical sciences.

This is not to say that nothing in the Romney agenda syncs with the Tea Party zeitgeist. Much does, particularly on the budget deficit.

1) He lays out a compelling case for treating federal government finances like a corporate balance sheet where long-term liabilities are recognized.

2) He recognizes the huge cost of public employee unions bleeding state treasuries (and hamstringing education reform).

3) He seems fond of a plan to cut the growth in Social Security benefits for higher-income people by linking benefits to inflation rather than wages.

4) As for Medicare, he believes — as does the Obama administration — that the program must move away from a fee-for-service model. Unlike the Obama administration, Romney also seems to favor eventually giving retirees “credits” to buy their own basic health insurance, with the wealthier paying more out of their own pockets. He then moves onto a spirited defense of RomneyCare in Massachusetts, calling it imperfect but a big improvement over the status quo — and nothing, nothing like ObamaCare. Nothing. Expect to hear that a lot.

And supporting seemingly every Romney policy proposal is an insightful McKinsey study or piece of cogent analysis by noted Harvard economist and competitiveness expert Michael Porter. Clearly Romney’s not a guy who would govern or lead America according to his gut. But that is not who Romney is. He was an investor, not a day trader, after all. Deep, quantitative analysis is what private equity guys and management consultants do.

Whether Republicans want a modernizing, non-ideological Mr. Fix-it who will go where the data take him is another issue. Right now, maybe not. He’s a bit too cool, a bit too technocratic for a party base in the thrall of populist Tea Party-ism. But in 2012, after possibly four years of sluggish, New Normal economic growth, they might.

COMMENT

Romney has made two fatal mistakes which make him unsuitable for the presidency..He enacted an Obama type healthcare system in Mass and he is a believer in the un-natural / man made Global Warming Hoax. This means he has no common sense…

Posted by bgstrong | Report as abusive

Financial reform imploding; Dems declare War on Goldman Sachs

Mar 11, 2010 17:58 UTC

So it looks like financial reform is going to be Dodd-Dodd rather than Dodd-Corker. The consumer finance regulator is like the new public option, a real deal killer. Also not helping is the wider, harsher version of the Volcker Rule that a group of Dems have proposed. I call it the Goldman Sachs Rule since it is targeted at the supposed conflicts of interest GS has. Throwing GS into the mix further politicizes the process and makes compromise tougher. A real poison pill. But that might be the idea all along. Push a weak, Democrat-only bill vulnerable to a host of anti-bank amendments on the floor of the Senate. Then force Republicans to vote against them with the midterm elections looming. With the economy weak and healthcare unpopular, financial populist may be the only card Dems have to play.

COMMENT

The detestable Democrat idiots are destroying our economy.

It takes “CAPITAL” you dummies in order to make our Economy work.

Capital and Labor are BOTH needed.

The idiots on the left destory CAPITAL so that there is nothing but a bunch of UNEMPLOYED idiots demanding paychecks from a printing press.

KEEP GOING GOLDMAN …. OUTSOURCE YOUR CAPITAL BEFORE IT GETS FLEECED IN ORDER TO SUSTAIN A DAY OR TWO OF OBAMA’S DEBT.

Posted by BlackBubba | Report as abusive

Problem with cap-and-trade is substance, not style

Mar 11, 2010 15:20 UTC

Washington is obsessed with optics and messaging. Indeed, U.S. proponents of limiting carbon emissions hope rebranding their “cap-and-trade” proposal as “pollution reduction” will boost the flagging proposal on Capitol Hill. But the real problem is the product, not the packaging. There are far more politically feasible and economically effective ways of dealing with climate change.

1) As it is, the Obama administration and Capitol Hill Democrats are late to the name-change game. Republicans have already effectively rebranded “cap-and-trade” as “cap-and-tax.” And as much as Washington insiders argue that America is woefully undertaxed, the American public heartily disagrees. Higher taxes are still political poison. Especially ones that hit the broad middle class. And especially during a time of historically high unemployment. Americans aren’t stupid. The whole point of a cap-and-trade plan is to eventually make carbon more expensivee. And that “cost” or “tax” or “pollution reduction” will eventually come out of their pockets.

2) Whatever you call it, an overarching, national cap on carbon emissions is going nowhere in the Senate after passing narrowily in the House. (The recent scientific clash over climate change data hasn’t helped its prospects in the upper chamber.) A possible Plan B is a gradual, sector-by-sector approach to cap-and-trade starting first with electric utilities and eventually expanding to various manufacturing sectors over the decade.

3) But that misses the point. The core political problem here is not how carbon is priced or what the method is called, but rather what is done with the revenue. The original Obama plan was to take some of the money from auctioning carbon permits and devote it to clean energy research. The rest would, temporarily, pay for middle-class tax cuts. But the suspicion has lingered that the money would eventually be funneled toward healthcare reform funding.

4) For the public to accept a rising carbon price, the money must be permanently returned to the public. Gaining momentum is a bipartisan plan where 100 percent of carbon permits are auctioned with 75 percent of the revenue returned as “dividends” and 25 percent invested in energy research. And in his new book, 2012 Republican presidential frontrunner Mitt Romney echoes an Al Gore idea of a carbon tax whose revenues are used to offset individual payroll taxes. Indeed, there are indications that key anti-tax crusaders would be willing to accept a carbon tax plan if the potential revenue was fully refunded in some fashion.

So forget the rebranding. Time to launch a new product.

COMMENT

Yes, use the most powerful economic medicine available — prices — to dislodge the “incumbent technologies”: fossil fuels. For example, as long electricity can be made from coal at a fraction of the cost of renewable alternatives, low-carbon energy alternatives can’t gain a foothold.

Cap-and-trade is a hidden, volatile and regressive carbon tax, which Wall St would set and collect.

A revenue-neutral carbon tax is explicit, predictable and with revenue recycling as you suggest, it’s progressive. See http://www.carbontax.org.

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