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In Defense of Mitt Romney’s Anti-Stimulus Bona Fides

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"In Defense of Mitt Romney’s Anti-Stimulus Bona Fides"

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Illustrating the difficulties that arise once the press gets it into their head that you’re a flip-flopper, Jim Tankersely and Katy O’Donnel have a National Journal piece up arguing that “at the dawn of Obama’s presidency, as the financial crisis rocked the global economy and the United States shed jobs like mad, Romney pushed for a stimulus plan that mimicked Obama’s in philosophy.”

As readers know, I’m a Mitt Romney fan and was a Mitt Romney 2002 voter in the Massachusetts gubernatorial election, so even though I’ve been saddened by the more conservative tack he took in recent years I still feel compelled to defend the guy when he’s unfairly maligned. And I don’t think this adds up at all. If you go back and read Romney’s extensive written remarks on stimulus (PDF) from January 2009, you’ll see that he had a fairly comprehensive critique of the kind of thinking that animated the American Recovery and Reinvestment Act.

Temporary tax cuts were an important part of ARRA. Romney dismissed this idea, saying that “a one-time check has very little positive impact.” The Obama administration ended up agreeing with Romney about this and employing behavioral economics to design an invisible tax cut that would do a better job of bolstering consumption. But Romney anticipated that move and said “even if consumption were to bump up, it would not lead businesses to expand and to add jobs.” Romney advocated instead permanent tax relief, focused on cuts for high-income investors. Romney sounded a cautionary note on infrastructure-focused stimulus, arguing that they “will be included, but because they invariably face delays for engineering, environmental reviews and contracting, they can take a long time to actually boost the economy.” He proposed instead a big hike in defense spending. He also criticized the idea of state and local fiscal aid:

I know that cities and states have various financial challenges of their own. Some have built rainy day funds for times like these. Others have not. As a governor who welcomed the help you provided to us in the last recession, I won’t prescribe zero help for the states. But I do believe that it is critical for cities and states to use this time to finally align spending with revenues.

Last he argued that any “stimulus package should include a commitment to reform entitlements” because “A stimulus bill, combined with a projected deficit of $1.2 trillion, could send us down the road to ruin if we do not muster the courage to reform entitlements and to rein in future government spending.”

In summary, Romney supported large permanent tax cuts, big increases in defense spending, a modest boost in infrastructure, and perhaps a small amount of state and local fiscal aid, all paired with big cuts to Social Security and Medicare. Obama proposed large temporary tax cuts, modest increases in defense spending, a big boost in infrastructure spending, a large dose of state and local fiscal aid, and no cuts to Social Security and Medicare. These are very different policies and they reflect different philosophies.

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