08 June 2012

Romney’s Selective Keynesianism

In May, Time published Mark Helperin’s interview with Mitt Romney, which included this exchange:

Time: Why not in the first year, if you’re elected — why not in 2013, go all the way and propose the kind of budget with spending restraints, that you’d like to see after four years in office? Why not do it more quickly?

Romney: Well because, if you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5%. That is by definition throwing us into recession or depression. So I’m not going to do that, of course.
That’s standard economic thinking: cutting government spending during economic bad times not only hurts the most vulnerable but can causes a vulnerable national economy to stall. John Maynard Keynes realized that years ago, advising governments to spend more to grow out of recession, even if that requires more borrowing in the short term. Romney evidently accepts that reality.

Except when the President is Barack Obama. At the same time Romney was excusing himself from making deep cuts in his first term, he was criticizing President Obama for not doing so:
What’s happened here isn’t complicated. Washington has been spending too much money and our new President made things much worse. His policies have taken us backwards. . . . The consequence is that we are enduring the most tepid recovery in modern history.
This was the same speech in which Romney lied in saying Obama “added almost as much debt as all the prior presidents combined,” as detailed back here.

In fact, as Rex Nutting wrote in the Wall Street Journal’s Marketwatch blog, President Obama’s budgets have increased spending less than his predecessors’. Which to any Keynesian explains why the economic recovery has been “tepid.”

Even Romney recognizes that drastic spending cuts would hurt a fragile economy, “by definition throwing us into recession or depression”—as long as he’s in charge. But according to him and people suffering from OIP Derangement Syndrome, the laws of economics work differently under President Obama.

COMING UP: Romney keeps trying to move the economic goal posts.

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