It is time for the Romney ticket to get back to the real issue of this election, namely why they have a better plan to restore growth to the American economy. Nearly all of the economic issues are just derivatives of that basic discussion. Faster growth will create jobs for the unemployed. Faster growth will generate much higher revenue for the federal government that will reduce the federal deficit. Faster growth will funnel more money into the Medicare and Social Security trust funds thereby reducing the pressure on them. Faster growth will even improve the social issues; studies show that folks with jobs commit fewer crimes, have fewer substance abuse problems and make better parents. So the important question which ought to decide the election is which side has a better plan to restore economic growth back to the area of 5% from the current extremely low rate.
Although this was not meant to be a trick question, it feels like it is. That is because president Obama has no plan feasible plan to restore economic growth. Indeed, the main tenets of what Obama describes as a plan are nonsensical. First, Obama wants to raise taxes on the wealthy. There is not a single economist who would say with a straight face that such tax increases would help economic growth; the reverse is true. Raising taxes on the wealthy will slow the rate of growth. Indeed, both in 2009 and 2010, Obama told the country exactly this. Remember in December of 2010, Obama and the Democrats who had total control of Congress at that time extended the tax rates for everyone for two years. Obama explained that he would not raise taxes on the wealthy at that point because the economy was too weak and such a move would hurt it. Right now, the economy is substantially weaker than it was in 2010, so Obama's plan to raise taxes on the wealthy is basically nuts.
The second facet of the Obama "plan" is to improve education. That's a fine goal and one with which Romney agrees. But improvement of education will not do anything to grow the economy for many years. America needs help and America needs economic growth now, not in ten years.
Obama's last growth strategy is to bring back government construction. He wants about $60 billion of additional construction approved by Congress. Of course, Obama has not told us what the projects will be that will be built. It is instead another plan that will move forward "shovel ready" jobs. We all know how that idea worked in 2009. As Obama himself told the country, "shovel ready jobs weren't all that shovel ready." In other words, the Obama government could not find jobs on which to spend the funds. It is a travesty for Obama to now talk about doing the same thing again without even trying to plan what jobs are to be undertaken. On top of that is another major problem with this plank of the Obama program: $60 billion is a drop in the bucket. Spending that amount in the next year would raise the GDP by one quarter of one percent at most. The country needs much, much more growth than that.
Romney's plan is much better. It actually ought to work. First, Romney wants to unleash America's energy producers. Unneeded restrictions on drilling that were put in place by Obama and the Obamacrats will be removed. Natural gas production and usage will be encouraged. This will not only clean up the environment, but it will promote economic growth. The estimate is that over a million jobs will be created just in the oil and gas industry. Higher production will mean lower domestic prices for fuel, so America's factories will have an advatage over those in places where the energy prices are higher. That too will lead to more sales by American producers of all sorts of goods. Once again, that means more jobs and more growth. Ending an ever increasing chunk of oil imports will keep hundreds of billions of dollars each year in the USA. These funds which are currently going to Venezuela, Libya, Iran and other oil producing countries will stay here with the result that growth will increase. Estimates from a non-partisan study are that the growth rate in the economy will pick up by about 2% per year for the next five years at least just from this measure alone.
The second facet of Romney's plan is to promote increased trade through international trade agreements. Obama has spent four years in office and has negotiated not a single such agreement. This has been an enormous failure on his part which has cost the country hundreds of thousands if not millions of jobs.
The third facet of Romney's plan is to end currency manipulation and other games playing by the Chinese. During the Obama presidency, China has continued to grow its economy rapidly. That is fine, but one of the main drivers of that growth is that China manipulates its currency to keep its goods less expensive than those of other countries. Romney is not going to accept that anymore. China is a major world economy. It cannot use gimmicks and illegal strategms to favor its own producers. It has to understand that if it continues with such tactics, it will have to deal with the inevitable consequences.
Another facet of Romney's plan is to promote job training and education. That is the same long term idea for which Obama advocates, so there is a wash here. The problem, however, is that this concept does not lead to growth in the near future.
The last major portion of Romney's plan is to cut through the over-regulation of America's businesses, to get control of the finances of the federal government and to stop threatening to punish success. This section could be the subject of ten posts without my running out of new material. The point, however, is that Obamacare and all its costs on business will be repealed. Crazy regulations like the one that is forcing the closure of most coal fired power plants will be replaced. In short, the future for business will look relatively unhindered. That will give them the confidence to invest, and investment by business is one of the main drivers of economic growth.
Romney also wants to revamp the American tax code so that rates are lower and loophole for the special interests are closed. The change will be close to revenue neutral, but the effect on growth ought to be spectacular. Just imagine, instead of people looking for investments that will throw off big tax deductions, they will look for ones that will be likely to succeed and grow. Once again, it means a big jump in productive investments and that means more economic growth.
Since the recession ended in 2009, there has been a weak, almost non-existent recovery. That is not an accident. It is a result of the Obama policies that actively tamped down growth. America needs to get rid of those policies. America needs to get rid of Obama.
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