Mitt Romney is centering his run for the White House on an economic takedown of President Obama. To make the critique work, he’ll need to explain clearly what he would have done differently as president to pull the nation out of recession—which could prove tricky, because Romney supported several key components of Obama’s initial economic agenda, both philosophically and specifically.
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Announcing his bid for the Republican presidential nomination on Thursday, Romney said Obama has “failed America” and has pushed the nation “only inches away from ceasing to be a free-market economy.” He promised a New Hampshire crowd that he would “finally, finally balance the budget.”
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Romney has always advocated for freer markets, lower taxes, and less government regulation to boost the economy. But 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. Namely, he advocated the idea that the federal government should prop up the free-falling economy by plunging itself further into debt.
When Obama’s nearly $1 trillion economic stimulus bill passed in early 2009, Romney criticized several of its components as wasteful.
The Romney camp maintains the stimulus he supported was smaller and composed differently than Obama's, in order to better grow the economy. In particular, the campaign contends a heavier emphasis on tax cuts, particularly corporate tax cuts, would have spurred growth that would have generated additional tax revenues.
Early in 2009, Romney said Congress was “rightly focused on a stimulus to stop the economic decline and end the recession,” although he hedged his endorsement with a caveat that returning money to taxpayers would give the stimulus a “bigger bang for the buck” than federal spending.
Asked specifically on CNN in January 2009 whether he supported Obama's call for a $750 billion stimulus, Romney did not object to the size or composition of the plan. Instead, he expressed general support for stimulus, citing a loss of $400 billion in consumer spending from the economy. "Government can help make that up in a very difficult time," he said, adding later: "I’d move quickly. These are unusual times."
At several points, Romney argued for increased spending on infrastructure, defense, and energy projects during his January 15, 2009, testimony to a Republican economic stimulus working group. The Obama stimulus was stocked with infrastructure and energy spending, in particular. Romney also called for allowing businesses to deduct capital purchases for two years, a measure Obama signed into law.
“We are presented with economic peril unlike anything we have faced during our lifetimes,” he said in written testimony. “I do indeed believe that careful, skillfully crafted stimulus can improve the prospects for recovery.”
In his testimony, Romney also endorsed several stimulus measures that would very likely have piled onto the national debt that he and fellow GOP candidates now call irresponsible. The measures ncluded cutting corporate tax rates, extending Bush-era tax cuts, and permanently eliminating taxes for middle-income earners on dividends, interest, and capital gains.
Romney’s preferred tax cuts would certainly have added to the deficit; Obama’s Romney-endorsed extension of the Bush tax cuts and Alternative Minimum Tax patch alone is estimated to cost about $400 billion per year. His other proposals could have totaled hundreds of billions of dollars a year, easily.
The overlap presents a familiar challenge for the presumptive GOP front-runner. Romney has struggled to untangle himself from the similarities, down to a mandate for individual insurance coverage, between the Massachusetts health care plan he implemented as governor and Obama’s signature health care law, which Romney wants to repeal.
There’s no way to tell whether Romney’s suggestion that Congress adopt additional tax cuts as a form of stimulus would have racked up the $800 billion-plus price tag that Obama’s spending-based stimulus cost. But when it comes to the size of the federal deficit, tax cuts and spending items are interchangeable—Romney would have had to cut some spending massively to make the tax cuts deficit-neutral.
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Romney would go on to oppose several of Obama’s later economic efforts, most notably his decision to bail out Chrysler and General Motors. He grew to become one of the stimulus plan’s loudest critics, presumably because it was too amorphous for his liking: “Every stimulus should be crafted with care and exactitude.… Instead, Congress crafted and the president acceded to a stimulus that funded unnecessary pet projects, long-term programs, and delayed employment initiatives,” he writes in his book No Apology.
He has also, like many GOP leaders, zeroed in on growing federal deficits as a sign of presidential weakness in and of themselves. “For us to confidently grow our economy, we must grow our own pool of capital and make it available at a reasonable cost,” Romney wrote. “To do that, we must preserve the value of the dollar by defending against inflation [and] rein in government’s excessive deficits.”
In the campaign, Romney is pitching economic gravitas as perhaps his chief selling point, and on Thursday, he spared no words chiding Obama. The president, he said, was drawing economic inspiration from “the capitals of Europe.” The danger for Romney, as with his health plan, is that other candidates could argue the inspiration came from a closer capital: Boston.
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