At a reporters breakfast meeting with Rep. Paul Ryan today, Ryan spoke mostly about the budget. (He says the GOP version will deal with entitlements.)
He veered into some 2012 territory, too. Ryan repeated that he will not run for president next year, but added that he didn’t think it served the party well to merely nominate the “next person in line.” Most analysts would say that person was Mitt Romney. That does not mean Ryan opposes Romney. Ryan might think Romney would be a fine candidate — but should not get the gig just because he arguably was the 2008 runner up.
But then again Ryan made a few cracks about Romney’s signature public policy achievement, healthcare reform in Massachusetts. He said it was not “dissimilar” from Obamacare and was heading into a financial “death spiral.” Ouch.
If Romney were to win the nomination and pick Ryan, you could end up with a weird situation where Obama and Romney would support the Massachusetts plan, with Ryan opposing. Politics is a strange business, but I don’t see how that one would work. Then again, finding conservatives who like Romneycare isn’t easy. So where would Team Mitt find its veep?
Photo: U.S. House Budget Committee Chairman Paul Ryan (R-WI). REUTERS/Jason Reed
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 onAmerican 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 inNo 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 inNo 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.
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.
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.
Mitt Romney attacks cap-and-trade via video over at his PAC website, Free and Strong America. He basically portrays it as an energy tax on Americans (which it is) that will hurt American competitiveness vs. India and China (which is it will.)
But, more interestingly, he makes is clear that does believe in climate change (which the conservative talk radio crowd generally does not). And you can be sure his campaign for president will have a more expansive energy policy than just “drill, baby, drill.” During his last run, Romney told me he was certainly willing spend many billions on government investment in alternative energy and other new energy technologies. That’s right, government spending — though I am sure venture capital would play a huge role as well.
OK, here is what the front runner (at least according to the online betting markets) for the 2012 GOP nomination said at the Value Voters summit over the weekend:
When government is trying to take over health care, buying car companies, bailing out banks, and giving half the White House staff the title of czar – we have every good reason to be alarmed and to speak our mind!
Now that does sounds like a repudiation of TARP. And here is what Mitt Romney told me in March:
The TARP program, while not transparent and not having been used as wisely it should have been, was nevertheless necessary to keep banks from collapsing in a cascade of failures. You cannot have a free economy and free market if there is not a financial system. … The TARP program was designed to keep the financial system going, to keep money circulating in the economy, without which the entire economy stops and you would really have an economic collapse.
Now that does sound like an endorsement of TARP. If Romney liked it then and doesn’t like it now for policy reasons, I think that is OK. But if that is the case, he should explain is reasoning and change of mind.
Of course, the cynical explanation is that Romney now realizes that among many conservative GOPers, endorsement of TARP is almost a disqualifier for the 2012 nomination. So he is trying to muddy his support a bit. Probably the best way to approach it is to say that while TARP was better than doing nothing, there were better alternatives — asset auctions, debt swaps — that should have been planned for after Bear Stearns and executed. In any event, his criticism of TARP is fairly mild here — though it certainly does raise the issue of serial flip-floppery.