Friday, October 21, 2011

Romney's economic plan - FAIL

It's time for me to accept that Romney may well be Republican nominee, despite the appearance that half the Repub base can't stand him. Since I live in Massachusetts, I've experienced Romney as a governor but I can barely remember it. That indicates that he wasn't a great governor or an awful one. That's the sum of my firsthand experience. For any other questions, I have to research just like anyone else. This comment from an Atlantic blog seconded my impression of him and prompted my flurry of Romney research:
"He's seeped himself in the republican orthodoxy with a wink wink and nod and a smile at the camera.  I think he can largely free himself from that come the general election." --Atlantic post
My impression of Romney as a campaigner: polished delivery, strong on the details, personable, moderate. I don't remember many policy proposals, but the entire field has been rather lean on policy (except 9-9-9), so that's par for the course. I had to look at the goods, so I skimmed Romney's 87-page economic plan.

The good news is that the plan is not a typical Republican conservative supply-side fairy tale. Of course there's Obama-bashing on every other page, but there's some promising stuff too. What I liked:
  • Lower tax rate on cap gains, dividends, interest, but importantly, only for tax payers under $200,000.
  • Cut corporate rate to 25% and end rules that discourage repatriation of overseas profits.
  • An explicit shout-out to Simpson-Bowles' recommendations on tax reform - broader tax base, simpler, fewer deductions.
  • A cap on regulation that measures compliance costs, and doesn't allow an overall rise in compliance costs.
  • A bit of respect for Dodd-Frank disguised as criticism.
  • Cut, cap, and balance but at 20% of GDP, not the 18% level that most conservatives quote.
What I didn't like:
  • Eliminate estate tax (but this is such a Republican plank, I'm not too surprised).
  • Mention of the illusory tax compliance cost of $400 billion a year. I don't believe we spend 2.7% of our GDP in tax compliance. Where the spending is concentrated, in complex business arrangements,  will likely remain.
  • A poke in the eye at the auto industry over the bail-out--UAW made out, but investors (carefully not called creditors) got screwed. I predict he'll change his tune on this one in the general campaign.
  • Only small fixes to Social Security.
  • A shout-out to Ryan's plan to voucherize Medicare, but with unspecified differences. This void shows how dangerous a definite policy commitment would be. I doubt that Romney will choose the deeply unpopular voucher approach.
  • Turn Medicaid into a block grant. (I'm on the fence as to whether this will be beneficial or not.)
  • Support for a balanced budget amendment that is more a strait-jacket than a workable plan.
  • Tough talk about sanctioning China for currency manipulation.
Gaping holes in the plan:
  • No plan for the uninsured or for lowering health care costs.
  • No specific areas of spending cuts, but a reduction of the federal workforce by attrition.
  • No proposed federal budget with numbers.

So, my overall impression is that the plan isn't extreme considering it came from a Republican: no major tax cuts, a reasonable goal on regulation. But it fails in two essential ways:
  • It isn't a plan unless it contains actual numbers.
  • It isn't honest about what will be painful. 
This plan is meant to get Romney elected, and only then will we find out if he'll grapple with tough issues. I'm sure no one is surprised that Romney is playing it safe.
 ...but don't expect a straight answer.

Should I review Michele Bachmann's plan now? ... No, I'll stick to real candidates.

Update 12/13/11. Romney announced his plans for Medicare reform, and they look a lot like Ryan's plan to voucherize the program.The big advantage of vouchers is that the federal government can decide how much to spend year-to-year. A big disadvantage is that it puts cost-containment onto insurance companies. To be fair, cost-containment is the boogey man in all Medicare plans. ...Oh, it's not a voucher, it's premium support. Don't ask me to explain the non-existent difference between the two.

Wall Street Journal review of Romney's plan

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