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

Mitt Romney’s TARP problem

Mar 4, 2010 20:49 UTC

The 2008 financial crisis killed John McCain’s chances of becoming president. But will it kill Mitt Romney’s, too?

The former Massachusetts governor and private equity investor supported the $700 billion bank bailout then and he still supports it today, albeit with a host of reservations and qualifications. The problem, of course, is that the Troubled Asset Relief Program is wildly unpopular among Republicans. And Romney, one can safely assume, would like to be their presidential nominee in 2012.

Yet one can hardly think of a more toxic issue for a GOP candidate in the Age of the Tea Party than support for TARP. Especially a candidate with a Wall Street background. Especially a candidate who many party activists suspect has the heart and soul of a raging moderate. To many conservatives, TARP is nothing more than extreme crony capitalism, Big Government rescuing Big Money. Here is how Michelle Malkin puts it: “Members of Congress who let themselves be bullied into [voting for the bailout] should be experiencing the biggest case of buyer’s remorse in U.S. history.”

Maybe Romney is having that experience. But there are few signs of it. This is what he told FOX News this week: “I hate the way TARP was administered, but I can tell you that we were on a precipice unlike anything we have known before in modern history with the potential of a complete collapse of our currency system and our financial system. Had we not taken action, you could have seen a real devastation.”

Yet Romney clearly knows his TARP support is a problem. He spends time in his new book, “No Apology: The Case for American Greatness,” explaining his position and making his case. Let’s take his key points one by one.

1) “Secretary [Hank] Paulson’s TARP prevented a systemic collapse of the national financial system.”

That is certainly the economic consensus, even among right-of-center economists and financial experts. This bit of analysis from Nicole Gelinas of the free-market Manhattan Institute is typical: “We were never going to escape this debacle without pumping massive amounts of taxpayer money into the financial system.”

There are objectors, of course. Stanford University economist John Taylor, for instance, argues that the TARP proposal itself incited a panic on Wall Street. But even many of these folks were in favor of government debt guarantees for banks and money market funds, as well as Federal Reserve liquidity measures. Having government do nothing was not a realistic option. And while many free-market economists have devised TARP alternatives since the fall of 2008, such proposals were hard to find at the moment of crisis or difficult to quickly implement.

2) “It was intended to prevent a run on virtually every bank and financial institution in the country.”

Or, in other words, TARP was about recapitalizing banks. But Americans thought it was more about unfreezing credit markets and keeping Wall Street lending to Main Street. So when Paulson called off the plan to buy troubled assets — the ones supposedly clogging up the system — and just injected capital, it looked like a bait-and-switch plan. Yet if the banks weren’t stabilized, lending would surely have come to a halt.

3) “But TARP as administered by Secretary Timothy Geithner was as poorly explained, poorly understood, poorly structured and poorly implemented as any legislation in recent history.”

This is confusing. Although it was under Geithner that TARP money was used for foreclosure mitigation, it was under Paulson that TARP shifted from an asset buying program to a capital injection program. And it was also under Paulson that TARP was used to bailout automakers and AIG. Has TARP become a slush fund? Sure, but both Republican Paulson and Democrat Geithner are to blame for that.

Bottom line: Doing nothing back in the fall of 2008 might have worked. It certainly would have negated years of moral hazard created by Washington’s Too Big To Fail approach toward the financial sector. But it would have been an amazingly high-risk proposition. That, especially with the banks now quickly repaying those billions in government bailouts. Even some early TARP critics have calmed down. The University of Chicago’s Luigi Zingales now admits TARP funds were “deployed with conditions not too far removed from market ones.”

Still, many conservatives will probably never see it that way. For them, TARP is a permanent, shining scarlet T on Romney. (They also don’t much like his health reforms in Massachusetts, nor his belief in man-made climate change.) But maybe as time passes and TARP doesn’t look quite as much like a money pit, maybe that letter won’t shine so brightly.

COMMENT

Mitt Romney is just a GWB with a nicer hairdo. If this is all the Rs have for 2012, then we’re in trouble. He’s not gonna let his boys on the Street fail.

Posted by Michael | Report as abusive

Romney’s “No Apology”

Mar 2, 2010 21:25 UTC

Just started reading Mitt Romney’s book “No Apology.” Actually quite a lot of meat in the economics chapters. The former Massachusetts governor and possible Republican presidential contender wants to cut investment and corporate taxes. Doesn’t like the Fair Tax or value-added taxes. Seems willing to consider a carbon tax/payroll tax swap. Wants to spend a lot more on basic research. No apologies for supporting TARP or RomneyCare.


Dobbs, 2012 and the ghost of Perot

Nov 27, 2009 15:45 UTC

If former CNN anchorman Lou Dobbs decides to make an independent bid for president in 2012, he will probably find the political climate as hospitable for an insurgent run — if not more so — as it was in 1992, when Ross Perot captured a fifth of the popular vote. (It was the best showing by a third-party candidate since Bull Moose Teddy Roosevelt finished second with 27.4 percent of the vote in 1912.)

The dreary economic New Normal that is the aftermath of the Great Recession has created a huge political opening for Dobbs or Michael Bloomberg or Sarah Palin, or some other American with high visibility or deep pockets or both.

It was a slow-recovering economy and concern about big deficits that drove the Perot phenomenon. There’s a high probability both factors will be at play three years from now. The Center on Budget and Policy Priorities forecasts annual budget deficits to average $1.2 trillion over the next three years. And the Federal Reserve is forecasting a so-so economic expansion that will leave unemployment over 7 percent in 2012. Overall, the nation’s economic mood might be a lot worse than it was in 1992.

Then you have a populist, anti-Wall Street sentiment that neither Democrats nor Republicans have been able to capture successfully. The result is that party loyalties are frayed, with the tea party movement one manifestation. According to the Pew Research Center, 36 percent of Americans identify themselves as independents, the highest number since 1992. And they seem to be up for grabs. Barack Obama won 52 percent of the independent vote in 2008. But a recent poll by Rasmussen Reports shows Obama with a 61 percent disapproval rating among the group.

None of this means an independent would actually win. Rasmussen has Dobbs at 14 percent in a race with President Obama (42 percent) and Mitt Romney (34 percent.) With the more populist Palin replacing Romney, Dobbs gets 12 percent versus 44 percent for Obama and 37 percent for Palin.  Yet without Dobbs in the race, Romney is tied with Obama and Palin trails by just three. So an independent could, at the very least, radically alter the political landscape.

And not just for the GOP. Unhappiness about an escalation in the Afghanistan war and muddled healthcare reform could create a more liberal independent challenger. Take Howard Dean, for instance. The former Vermont governor and chairman of the Democratic National Committee has been ripping ObamaCare lately and says he would vote with Sen. Bernie Sanders of Vermont, an independent socialist, against it if he were a senator. And Dean sure knows how to use the Internet to raise money, as he showed in his 2004 run for the Democratic nomination.

But here is the bottom line: If the New Normal turns out to be worse than expected, with the GOP blamed for the original collapse and Democrats for a bungled remedy, an independent might accomplish much more than just being a spoiler.

COMMENT

Jim Gilchrist,who is a leader of more than a million Minuteman, Viet Nam vet with Purple Heart and other medals, charisma, well spoken, well known, been on turncoat Lou Dobbs Show, idiot Larry King Live Show and Fox News etc. retired accountant and nice guy. The fact that he is not a corrupt politician is gold. He will have the Minutemen,people who think like the Minutemen like us and the Vets behind him. He is a lot better than obama and the ones on the right by far for president.Lou Dobbs is a con artist with a hidden agenda for Money and Fame. Anyone who is really against amnesty and illegal has it in them like an arm or a leg. So he was never against amnesty and illegal from the beginning. Just the only way he could get Money and Fame. Schemer with illusions of Grandeur. Opportunist. Who is going to vote for him now other than his own family? That turncoat is a joke. The stunt he pulled would be like Rush coming out and saying he was really a Democrat. Dobbs stabbed his listeners in the back with really being for amnesty all these years for the money. But telling his audience he was against amnesty, illegal like them. Should be some kind of law against it.Palin is another one who is a schemer with illusions of grandeur. Opportunist. United the Republican base with religion and morals. She is copying bush’s strategy of using the fundies to be elected. After the fundies left the oval office bush and the Republicans made fun of them. How can these fundies be duped twice? But then the liberal left fundiea and left are duped by obama. Separation of Church and State. What is she going to do rule the country with the Bible instead of the Constitution? Well seeing as how she didn’t know what NAFTA was she doesn’t know the Constitution either. She left being governor of Alaska with how many? 50 ethic violations? She was against the poor polar bears etc when she was governor. Hypocrite hunts for the thrill of the kill. She is a big joke too.4th generation Democrat no longer and never again. There is no such thing as a Democrat today. My father’s Democratic Party when men were men and took care of their own, would never have been for illegal, foreign workers, amnesty, CAFTA, NAFTA, outsourcing, North American Unoin, NWO etc. like these so called Democrats today. The Democrats of today are just the opposite of my father’S Democratic Party, who were all for the Americans and US Made.

Posted by Darraugh | Report as abusive

2012 Watch: Pawlenty the tax cutter

Aug 31, 2009 17:15 UTC

How much Tim Pawlenty pay Walter Mondale to say this:

He brings an almost Jack Kemp-like fervor to cutting marginal tax rates; an important predicate for any presidential run may be how Pawlenty handles a recommendation from a task force he appointed that the state replace some corporate and individual taxes with consumption levies. His emphasis on taxes rankles many Minnesota Democrats. “There is a long line of progressive Republican governors in Minnesota who are big supporters of education,” says Walter Mondale, the former vice president and U.S. senator. “He is much more interested in tax-cutting and has broken with that tradition.”

John Wayne Syndrome: Americans like tall, square-jawed presidents during tough economic times

Aug 18, 2009 15:58 UTC

Will Americans go big in 2012? President Obama is a smidgen under 6’2″, Mitt Romney is 6’2″, Sarah Palin is 5’5″ … Tell us more, New Scientist:

When the going gets tough, the presidents get taller. So says social psychologist Terry Pettijohn of Coastal Carolina University in Conway, South Carolina.

He looked at the heights, ages and facial attributes of the 11 elected US presidents over the past 75 years, and compared them with economic and social indicators such as unemployment and birth rates. “What we’re seeing is that taller candidates are preferred when times are more difficult,” says Pettijohn.

Hard times also make for presidents with larger chins and smaller eyes, says Pettijohn. He thinks that voters associate these features with strength and maturity – qualities that could be perceived toprovide security in troubled times. The results were presented last week at a meeting of the American Psychological Association in Toronto, Canada.
COMMENT

I usually don’t read comments, much less respond to jejune remarks, but the pure ignorance of the citizenship arguments are getting obnoxiously embarrassing: Whether Obama or McCain were born in Kenya, China, or the middle of the Sahara, the fact that one of their parents was a US citizen at the time of birth automatically makes them a natural-born US citizen!

Posted by americanbychoice | Report as abusive

2012 Watch: Mark Sanford visits DC

Jun 4, 2009 13:56 UTC

I had the pleasure this morning of attending a small breakfast gathering with South Carolina Gov. Mark Sanford, a potential contender for the 2012 Republican presidential nomination. Sanford talked a lot about his legal fight to reject stimulus money from the federal government. Well, not so much about the legal details, but more the philosophy behind his stand. He says he is extremely concerned that the government’s debt problems are approaching a “tipping point” that will lead to higher inflation and a weaker dollar — all characteristics of “banana republic economies.”  Sanford also said that Obama’s stiff-arming of GM creditors is an assault against private property rights and the rule of law, creating uncertainty in America’s business community about ” what the rules are” and potentially freezing business invesment here. ( He added that a meeting with folks on Wall Street confirmed his suspicions on this matter.)

I asked the governor about Democrats using concerns about the budget deficit as an excuse to raise taxes. He said he didn’t see much appetite out in America for higher taxes, given the success of the “tea party” movement and the rejection of tax-hikes measures in California.

A few observations:

1) He called himself a “low-key” kind of guy. I think that is a pretty  accurate self assessment, though it was pretty  early in the morning and he got into town late last night.

2) If Mitt Romney is a CEO, then Sanford came across as a CFO. It kind of reminded me of company conference call where the CEO gives that analsysts the sales job and then calls in the CFO to run through the numbers. I am not sure what kind of salesman Sanford would be as a presidential candidate, but he does comes acrosss as whip smart, even wonky guy.  Also a very “suburban” vibe.

3) Just a hunch, but I think he would market himself as a guy who could restructure government and make it leaner and more efficient, sort of governor for the nation. It wouldn’t be a “cult of personality” sort of campaign.

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