Former Gov. Mitt Romney (R) is basing his presidential campaign on his supposed economic experience, playing up his time spent in the private sector (during which his company killed thousands of jobs) and playing down his time in public office (when his state was at the bottom of the barrel in terms of job creation). Today, on MSNBC’s Morning Joe, Romney explained that, in his opinion, the economy’s ills are due to businesses not having enough customers and then laid out his solution for fixing that problem:
ROMNEY: [Obama] thinks if you have cash on your balance sheet, you’re going to go hire people. No, you hire people if you have customers. The President doesn’t understand what makes the American economy go. I do. [...]
SCARBOROUGH: The question is, what do you do, as a conservative president who believes in limited government, if you do, to actually drive demand?
ROMNEY: Very simple. You make America the most attractive place in the world for entrepreneurs, for innovators, for investors. That’s what got us going in the first place.
SCARBOROUGH: How do you do that?
ROMNEY: Well, you say alright, we’re going to make sure our employer tax rates are competitive globally. We’re going to have regulations and regulators encourage the private sector, rather than crush it.
Romney is absolutely right that the country is suffering from a demand-side economic crisis and that businesses won’t hire until they have more customers. But his remedies — corporate tax cuts and fewer regulations — would do nothing to spur demand.
Corporations are already sitting on hoards of cash, and it’s unclear how receiving more cash via tax breaks translates into more customers. It also terribly unclear how fewer regulations — which at the consumer level give people confidence that the products they’re buying won’t harm them or make them sick — translates into more purchasing power.
President Obama’s jobs plan, meanwhile, is aimed at the demand side of the economy (like the 2009 Recovery Act), providing tax breaks for the middle-class and fueling infrastructure projects that will require supplies and machinery. That’s likely why the economists who participated in a new Bloomberg News survey said that Obama’s jobs plan would prevent a double-dip recession.