Romney and his party are the problem, not the solution

Romney and his party are the problem, not the solution

The last two weeks have not been kind to Romney. His gaffe on Libya has been denounced by both Democrats and Republicans. His statement that he does not expect, nor care for the votes of the 47% (the actual figure is 46%) of the electorate who do not pay federal income tax has made him look uncaring and cost him votes amongst independents. Two recent reports have blown a huge hole in his claim that he will create 12 million jobs. Yes, America needs solutions to the government’s debt, jobs and entitlement programmes (payments to war veterans, student loans, retirees, welfare and food stamps) but Romney and the Republican Party are the problem, not the solution.

The gaffes show the true Romney

Romney’s recent gaffes have been a serious embarrassment to him and they say a lot about this candidate. His comments that Obama’s appeasement and deference to countries encouraged the murderers of the American Ambassador and three other officials in Libya were not only wrong but point to a disturbing approach if Romney wins the election. The statement by the US Embassy in Egypt condemning the film, which insulted Islam that started the massacre, was made before the Libyan attack. The embassy’s press release was made on its own initiative not from a dictat from Washington. It condemned the film because of fears that the public would blame the US government for the insult, to forestall the murders that happened. Romney attacked the US embassy’s approach, attributing it to Obama before getting all the facts. This shows he does not have the cool level headed approach needed in foreign policy. It also shows that his macho approach, goaded by his party, will unravel all the diplomatic efforts of Obama and Clinton that has seen the US regaining support and admiration from allies and foes. If elected, Romney’s approach will make it very difficult for these Arab countries to distance themselves from extremists and terrorists. It should be noted that the Egyptian President, who is from the Muslim Brotherhood party, has denounced these murderers. Pro government supporters in Benghazi, where it happened, have come out against extremists. Under Romney, these governments would not come out against extremists because they would all have been labeled as part of the problem and would see no need to do so.

Romney’s statement that he believes the 47% of people who do not pay federal tax and regard themselves as “victims”, are a lost cause is a very damming indictment of a Presidential candidate. It shows that he has no interest in the poor and struggling elements within the middle class. To say this was misleading is gross understatement. Firstly, many of these low income people pay payroll, sales and property taxes, which have been estimated at up to 25% of their incomes, far higher than the 13/14% income tax Romney has reported. Retirees would have paid taxes throughout their working lives and would therefore be entitled to some form of pension/social security payments for which they have contributed during their working lives. Finally, if he accepts the principle of progressive taxation then by paying 13/14% tax on his income, assuming all tax payers were to pay the same proportion of tax on their incomes, only 1% of US taxpayers would be paying tax which would make the US government bankrupt. Romney’s statement should not be a surprise since his tax and healthcare policies are designed to favour the rich. A President that has no interest in half of the electorate will not be seen as legitimate by a wide swathe of the people he governs.

Democrats are better job creators

Two recent reports have blown a huge hole in Romney’s platform. The figures from the US Bureau of Labor Statistics show that since 1957, Democratic administrations have been much – two and a half times – better at job creation in the private sector. Clinton’s job creation in the private sector was several times higher than that under George W Bush. And, Obama was much better at creating private sector jobs than G W Bush, who scored negative in his first term. Under Bush the increase in federal government jobs was higher than under Obama and Clinton, refuting the claim that the Republicans are a party of “small government”. This “small government” myth has been refuted by another recent report. A paper by Dr Nicholas Eberstadt in the American Enterprise Institute revealed that since 1960, spending on entitlement programmes, that is the 47% Romney referred to, rose much higher under Republican administrations than under Democrats. The middle class have benefited more from these entitlements than the poor.

These US Bureau Labor statistics figures show that the Republicans, contrary to their claim, do not have a good track record of job creation. This is particularly relevant to the Romney campaign which has made the Bush policies of tax reduction a central plank in his effort to revive the American economy – taxes were higher under Clinton yet job growth was much higher. It should also be noted that Romney has a very poor record at job creation because as Governor his state came 47th in job creation in the country. They also destroy the myth that the Democrats are the party of big government, looking at the most recent trends – Bush created more federal jobs than both Clinton and Obama. The “entitlement culture” is very much a Republican creation. Finally, they show that the Republican’s policy of demonizing the poor is a myth. Obama has been called the “food stamp President” while it is the Republicans who have tried to bribe the electorate but in so doing rewarding the middle class much more than the poor. The policies advocated by the Romney/Ryan team will see the poor receiving much lower portion of the national cake from their already low level.

Republicans do not offer short and long term solutions

The US needs to address short and long term issues. It needs to improve the anemic economic growth rate and job creation and reduce budget deficits but the Republicans are not the solution, rather for a number of reasons they are the problem. In the short term, Economists like Paul Krugman have noted that Obama’s stimulus package should have been larger and call for a second phase. Krugman notes that even with the US losing its AAA credit rating, borrowing rates for the government are at record low. A much faster growing economy will, he asserts, see an increase in government revenue, making it easier to reduce the budget deficit. Prof Jeffrey Sachs, another eminent Economist makes a forceful case for investment in human and physical capital to improve the country’s competitive position in the world. These investments in education and the infrastructure will have a very positive effect on America in the face of huge investments by its competitors such as China. The Republicans are against this policy as a matter of ideology and plain ignorance. For them, reducing the budget deficit is their raison d’etre. They do not believe that government needs to take such an activist role in the economy and will therefore not take the measures that Professor Sachs believes are necessary to improve America’s competitiveness and job creation prospects in the medium to long term.

The Republican Party’s reluctance to take measures that will stimulate the economy in the short term and retool America to improve its long term competitive position shows that they do not have the solution to the nation’s problems. Firstly, it was exactly these measures that President Franklin Rooseveldt took that not only got America out of the depression but ensured decades of a competitive America. The Republican’s view is that the market, namely, private investors, will make such investments is a fallacy, since private companies will never play that role. Republicans are worried about the effect on the dollar and inflation. They have castigated the recent policy of the Federal Reserves, the country’s central bank, to implement another round of quantitative measures. They do not seem to understand that the bank’s policy is within its mandate. These concerns are totally misplaced. Firstly, inflation has been very subdued. China, one of the US’s major trading partners has been manipulating it currency, thereby making that country’s exports competitive, even to the point where inflationary pressures in China, as a result of that policy are increasing. Japan, another major trading partner, has just announced a huge stimulus package which will prevent the value that country’s currency rising significantly against the dollar. Europe is mired in recession, ironically for taking policies that the Republicans want to adopt, which will prevent the Euro rising significantly against the dollar. Finally it must be noted that America does not need a strong dollar as this will prevent it exporting its way out of the economic problems it finds itself in.

In the long term America needs to solve the budget deficit issue but in this the Republicans offer no solution. Dr Eberstadt’s paper shows that in the 50 years since 1960, the cost of entitlements has grown by 700% and would continue to grow exponentially as a result of the changing demographics. One area that must be addressed is the cost of healthcare where the country spends more than double the level in most other mature economies but without getting value for money. A review of key health indicators shows that the Europeans and Japanese are doing much better for much less money. The solution is not the voucher scheme as suggested by the Republicans but rather measures should be taken to bring down the cost of healthcare. The Republicans are opposed because it could hit the profits of insurers and healthcare providers, some of their key constituents. Obama’s healthcare reform makes an attempt at this but it is rather a weak one, extending the life of the system for only a few years, for which he has been attacked by the Republicans. Middle class families have to be weaned off entitlement and those that can afford it should pay more for such programmes, possible through means testing. Finally, Americans need to pay more tax if they want to solve the budget problem, including the 47% that Romney referred to. But this is anathema to the Republicans.

Note by Author December 2014: Since I wrote this paper the US economy has made significant gains to the extent that Forbes magazine has stated that Obama could be one of the truly outstanding Presidents on the economy. The gains in private sector jobs created are substantially higher than those cited above. Reagan was mentioned as a contender but it must be noted that he trebled the deficit and America’s debt and would therefore not have passed the litmus test of Tea Party conservatives. The deficit and debt ballooned under Reagan as a matter of choice. He wanted to and succeeded in bankrupting the Soviet Union. He gave away billions in tax cuts for the rich following the flawed supply side economics theory. This policy has resulted in huge disparities between the rich and middle-class and poor Americans over the last thirty years. A Democrat, Bill Clinton, one of the great Presidents cited in the Forbes report balanced the budget and at the same time increased the marginal tax rate on the rich. The increase in the deficit under Obama was forced on him in his successful bid to fix the problems of the great recession which had been largely caused by the flawed policies of his Republican predecessor, George Bush, notably, his housing policies, an unnecessary (Iraq) war and tax cuts for the rich. Policies that resulted in a move away from the balanced budget he had inherited from his Democratic predecessor, Bill Clinton. Obama has been rewarded by the American electorate with Republican majorities in both houses of Congress. Most Republicans opposed Obama’s policies that steered the country from the great recession and would have preferred him taking the path adopted by the EU that is still experienced very slow economic growth and high unemployment in stark contrast to the booming American economy.

Author

J Boima Rogers has written for publications and websites in the UK, Africa and the USA. He is Principal Consultant at Media and Event Management Oxford (MEMO), which provides policy, media, marketing and event management services.