Skip to comments.The Coming Romney Boom
Posted on 10/12/2012 5:58:01 AM PDT by Kaslin
If Mitt Romney is elected and secures Republican control of both houses of Congress, the U.S. could be poised for a vertiginous economic snapback.
To understand how, consider that the Democratic explanation for our current malaise is utterly fallacious. Mr. Obama and his allies identify the "Bush tax cuts," "two wars that weren't paid for," and "deregulation" as the causes of America's present economic doldrums. But federal outlays as a percentage of GDP under George W. Bush averaged 19.6 percent. Under Obama, spending has ballooned to 24.1 percent of GDP. Much of Bush's spending was temporary (the two wars, one of which Obama expanded). But Obama's spending on new entitlements is permanent and bound to increase over time, further burdening a country already facing an entitlements crisis.
If President Obama really believed that spending "on a credit card" caused our troubles, he wouldn't have spent even more than Bush did, would he? He wouldn't have run up the debt to more than 100 percent of GDP or $16 trillion -- a figure, by the way, that Mr. Obama didn't know when David Letterman asked.
The Bush-did-it excuse also evaporates when you consider that the economy was starting to recover from the 2008 recession by mid-2009. According to Obama Administration figures, real GDP growth reached about 3 percent at the start of 2010. But it began to decline later in the year. What happened in 2010? The two signature initiatives of the Obama presidency were signed into law. Much has been written about the job-depressing consequences of Obamacare, less about the sclerotic effects of Dodd/Frank.
Dodd/Frank was the Democrats' answer to the financial crisis. Written by two men who contributed handsomely to the housing bubble, the law ignored Fannie and Freddie. It was supposed to prevent systemic threats to the financial system and prevent "too big to fail" banks from endangering the economy. Instead, it enshrined "too big to fail" -- which is why Mitt Romney described it as a "big kiss" to Wall Street banks.
Just as Obamacare creates an unaccountable board of 15 "experts" to dictate Medicare spending decisions, Dodd/Frank gave the new Consumer Financial Protection Bureau broad authority to regulate banks, credit unions, securities firms and a variety of other businesses. Yet the CFPB itself is totally unaccountable. Congress has no oversight as it doesn't have power of the purse. CFPB gets its funding from the Federal Reserve. By the terms of Dodd/Frank, the president can remove the bureau's head only under very limited circumstances. And the power of the courts to review CFPB actions is strictly curtailed. "As a whole, Dodd-Frank aggregates the power of all three branches of government in one unelected, unsupervised and unaccountable bureaucrat," explained former White House Counsel C. Boyden Gray, who is challenging the constitutionality of the law.
Dodd/Frank weighs in at more than 1600 pages, and has already spawned more than 8000 pages of regulations -- about 30 percent of the estimated total. Many small banks believe Dodd/Frank is putting them out of business. The Wall Street giants can afford to hire compliance officers, but smaller banks are crippled by the regulations. Compliance costs are cutting into banks' profit margins and limiting the capital available for lending.
Beyond compliance costs, banks and other institutions are stymied by the uncertainty about the 70 percent of Dodd/Frank regulations that have yet to be issued.
Even without tax reform, Mitt Romney and the Republicans could jumpstart an economic resurgence if they did just three things: 1) repeal Obamacare, 2) repeal Dodd/Frank and 3) and reverse the Obama policy of hindering domestic energy production.
As Walter Russell Mead documents in a fascinating series in the American Interest, the United States stands poised to become the world's largest producer of fossil fuels. "The energy abundance that helped propel the United States to global leadership ... is back; if the energy revolution now taking shape lives up to its full potential, we are headed into a new century in which the location of the world's energy resources and the structure of the world's energy trade support American affluence at home and power abroad."
But it will require a president not ideologically blinkered by a ruinous commitment to "green energy."
U.S. businesses are sitting on an estimated $2 trillion in liquid assets. They've been frightened into inaction, waiting for a better climate. It may be at hand.
I never understand why the republicans never go back to the early Bush years. In the aftermath of 9/11, tens of thousands of jobs were lost and the travel and service industry were battered. President Bush brought us back. Unemployment was at about 5.3% for almost all of his first term and half of his second. I remember there were so many unfilled jobs they were hiring retirees back. Illegals were doing the jobs they said Americans didn’t want. I think it needs to be hammered home that when the democrats took over Congress the last two years of the Bush administration — that’s when the downward spiral began. We recovered economically faster from the great depression AND 9/11. Obama’s 1.3% GDP at the end of his first term is inexcusable.
Hit the reset button with a sledge hammer and pray that it works.
Mitt Romney needs to, truly, become a very small government conservative, and then, among many other pro-conservative actions, Mitt needs to, truly, overturn everything involved with, both, The New Deal and The Great Society! Then, I’ll be very impressed with Mitt Romney.
I have predicted that on the day after a Romney/Ryan win, plus regained GOP control of both houses of Congress, the Dow 30 will soar by 3-5%, and continue upward in a freakish run.
I agree with the author of this piece about Obamacare, but will go further in saying it is the single most damaging piece of legislation ever passed by the US Congress.
Note - the democrat party owns Obamacare lock, stock and barrel, and this point needs to be driven home by Romney and Ryan.
We’ve got lots of debt, massive entitlements and aging boomers. Islam and Latin America are also infiltrating.
If this economy gets unshackled and grows, great. But we’ve got some problems in our very soul, and a dynamic economy isn’t the only answer.
Is Mona finally ready to come back from the Darkside? After all, you can get fired from CNN for writing articles like this that actually speak the truth about the failed economic policies of the Obama administration.
I agree these three things would have the most impact, but I hope Sarbanes-Oxley is also on the Romney hit list, and spending needs to be cut drastically for all of the above to do any good.
The second wave is going to be worst than the first. Really wish people would stop playing politics about this issue. Every time they do, I realize that they don't know what they are talking about.
Exactly, the worldwide economy was crashed by the 2006 Pelosi/Reid RAT-Congress.
Senators Obama and Biden were both in the majority of that body and are responsible for "the mess that Obama inherited"...not GW Bush.
BTW...Kaslin always has the best posts.
A couple of things...
When the economy “snaps back”, we’re going to see massive inflation due to the “printing” of so much money through the QEs.
Another thing - the economy is still going to crash, and crash hard. It may be delayed a bit with someone who is not actively pursuing a crash.
The main thing is having a non-communist in power to pick up the pieces.
Indeed. Economic issues aside, who's helming the ship is one thing, but who's swabbing the deck and tending the engines is another.
What about America's human capital? If we fixed the education system today, the first complete products of it wouldn't graduate high school until 2030.
Who will be working, voting...barely paying taxes in the interim?
I'm not knocking Romney, but I expect the best we can hope for is some limited modification of these policies. Progressive thugs at every level of the government/media oomplex will wage a Holy War rearguard action to save these pillars of their faith, and I don't think the John Boehners and Lindsey Grahams are ready to take the media heat necessary to effect any genuine change.
If anything positive happens, it's going to have to be before July, 2013 - and perhaps by executive order.
They won't be perfect, but they WILL make for a pro-business environment and pro-construction culture. I heard there's about $1.4 trillion in liquid assets that businesses are holding...when Romney gets elected, look for business to start investing again.
“Then, Ill be very impressed with Mitt Romney.”
Given all the task at hand for Romney to take on, Repealing Obamacare, fixing Medicare (per Ryan’s plan), Repealing Dodd/Frank bill, fixing SS, energy independence, military rebuild, Fed and Supreme Court judicial appointments, Balanced Budget Amendment, Auditing Fed Reserve etc...
Romney will have in his hands, the opportunities to catapult himself up to the higher echelons of presidential greatness.
That said, We will have to see. He wasn’t my first choice or any choice because of his RINO’isms. But current fiscal and international circumstances that are so dire now may very well push Romney well to the conservative side of governance.
Case in point, the first debate. Romney came out and thoroughly energized the conservative base.
Second point, the electorate has already in primaries elected to run more conservative senators and congressmen. I think of Ted Cruz, from 2010 Mike Lee. Just the booting of Sen. Richard Lugar was stunning.
Given that these more conservative leaders are elected, Congress will push way more to the conservative side.
Fairtax people keep saying that there is about 11-12 trillion dollars held outside of the USA. Purposefully not being brought in to the USA to shield it from confiscatory levels of taxation.
Sooner or later other countries will figure out that dropping corporate taxes, capital gains taxes much lower than the USA’s rates will attract that investment capital. Capital goes where it is treated best they say.
In the short term, should Romney win and the GOP gain 50 or more Senate seats, the economic outlook will strengthen. As the tax cuts under Reagan and Bush II proved, lowering tax rates stimulates economic growth and actually causes tax revenue at all levels (Federal, state, and local) to increase. The supply side model, which liberals call trickle down economics, works.
The longer term prospect is not nearly as good. We are still working with a $16 trillion deficit, and over $200 trillion in unfunded liabilities. There is little political will to cut entitlement programs, and since the days of Eisenhower, the Republicans when in power have not done so, nor generally retracted Democrat advances in government power generally and indeed, under Nixon and both Bushes, modestly increased these areas, under the rubric of compassionate conservatism. Even if Obamacare goes away, the existing structure of Social Security, Medicare, Medicaid, etc., is unsustainable on an actuarial basis.
A second, though lesser, factor is military expenditures. Wars and interventions are expensive, and Romney appears inclined to be more proactive than Obama. We can afford a larger and better equipped military if social programs were cut. History shows that the GOP will not do so. We cannot afford "guns and butter." When the deficits are not reduced, and our ability to borrow declines, our military and prestige will be sacrificed to preserve the benefits of seniors, the poor, retired Federal workers, et. al., not to mention making interest payments on the national debt.
Absolutely true. The price of energy permeates through everything in the economy. Approving the Keystone Pipeline, ending the (illegal) Obama restrictions on drilling in the Gulf, increased development of domestic energy resources, and many other things have at least a chance of happening with Romney. It is for certain energy prices will continue to rise with Obama in office. That is a serious drag on economic activity.
Affirmative action, EPA, big business, excessive state and local laws, government deficit spending, unions, fake green industry, overly-litigious culture (wacky judges and lawyers), etc. all continue to increase and are the real obstacles to higher sales and lower expenses for small business.
While a second nobama term would be disastrous, I’m not looking for Romney to change from the GOP-e positions.
IMHO, the ideal situation would be for Romney to win and then the grassroots to turn it’s attacks on the GOP and begin the process of replacing it with a “no party” party.
This must be done at the grassroots level, where business-knowledgeale Christian citizens (as opposed to political types) get elected to their local town council and state legislatures by being drafting by local supportive groups and not being associated with the Republican party.
The lying about government debt we see in Europe and the U.S. by politicians of practically all stripes continues.
Stopping the U.S. defecit will be extremely difficult for limp-wristed Republicans even if they control both houses and the Presidency because they compromise between wasting zero and wasting 1 trillion at wasting 1/2 trillion, which is still a disastrous loss for fixing things.
As the debt bubble gets bigger, all the financial institutions that own the debt are, in truth, insolvent but they certainly don’t want to admit that nor do politicians (forget the Fed they’re just the enabler).
When they talk about “the system” failing they’re talking about large banks failing, not small ones; they don’t give a rat’s patooty about them.
Yes Romney could stop the zerobama things that have not been implemented yet.
But the horse is already out of the barn and 16 trillion miles down the road by now.
In order for consumer businesses to have higher Sales, consumers need a “boom” of jobs.
The 1990’s was caused by the “boom” of ERP software, the web and Y2K all happening at the same time, creating hundreds of thousands of high-paying jobs. The jobs were NOT high paying because big business was “nice” or wanted to “spur growth”, but because big business was LAZY and STUPID in ignoring those until they were forced into catch up mode to get them done; the web and ERP for competitive reasons and Y2K for calendar reasons. They were DESPERATE, that’s why they opened the company checkbook. Money was no object - this was an emergency brought on by far too many C-levels being jerks and not doing their job of having, oh, I don’t know, something like foresight. After all, the floorsweeper does not have that in their job description, it’s the C-level who’s supposed to be navigating the future. And they let things go until it was far too late for their own employees to have the training and time to do those things. Their answer - like always - outsource. So the smart employees (that no one listened to) quite their jobs and came back as “consultants” and extracted their pound of flesh from jerk employers like the one they left.
There is nothing remotely like that on the horizon. Everyone and every thing can be connected via the internet; that is trivial at this point. Hundreds of thousands of people got out of the IT industry since the 1990’s. So there is an enormous glut of potential IT workers. That’s why companies can’t find IT people now - they’re paying $90k per year for the same job they used to pay $180k per year. Big business is now in the mode of getting people to work as cheaply as possible. That will not produce a “boom” for jobs.
A new technology won’t create a jobs “boom” at this point because by definition it’s only creating jobs for a few smart people.
At this point there are millions of mediocre people needing jobs who are not engineers and scientists; they can’t program their way out of a wet paper bag and don’t even want to. They need what I call “worky-work” jobs, real jobs where you have to create some real value. The big trouble is that every consumer is getting along without needing more “stuff” or “services”, since their household is down a job or two or perhaps quite concerned that they might lose a job. So few people are spending without thinking carefully about just how much they want or need something. We have very conservative consumers now, who carefully pick and choose the few pleasures they grant themselves.
We are starting to pay the price for exporting manufacturing to NON-EPA, NON-UNION third world dictatorship thugocracies. The lovers of the EPA and UNIONS refuse to admit this however, and keep warning the electorate about John D. Rockefeller and Andrew Carnegie.
We needed a candidate for President who would lead in making the fundamental earthquake type changes that are needed, i.e., quitting Federal welfare programs cold turkey, etc.
IMHO, that’s why the only path out is upending the political system by getting Christian citizen politicians to a majority in both houses and the Presidency over the next 10 years or so.
If we don’t, there will come a time when simply sputtering along will fail, since government deficit spending will turn our dollars into play money. We do not need the currency “backed” by anything since that would simply be manipulated (the Spanish empire did this and failed). We do need money creation simply limited to a given percentage of total net worth of the nation. As people save and invest, and the population grows, total net worth increases; a certain amount of that must be able to be held in cash so there is enough to facilitate transactions.
Pure low rate lending to spur economic growth creates a situation where there is too much capital looking for businesses to invest in; there simply are not enough investment opportunities.
Right now, there is 16 trillion “invested” in what taxpayers are going to pay as taxes in the future. Taxpayers will have to pay that all off. 16 trillion. Taxes.
Thanks to guys like “Smilin’ Joe”.
Sorry, that's not likely. The effect of Romney shifting his positions throughout the day depending on the crowd is that everyone in the room thinks he's secretly on their side and is just saying what he needs to get elected. To reduce your disappointment set your expectations for Romney to be the second coming of Nixon, not Reagan.
There is a cubic s--tload of debt deleveraging, public and private, which we must work our way through.
Getting rid of Obamanomics and returning to market principles (the most important of which is that no bank is "too big to fail") can put us on the path to recovery, but no one should delude himself that this is an instant, painless quick fix.
The real challenge for Romney/Ryan will be to get this across to Joe Sixpack while not sounding like they are repeating the Obama script of blaming the predecessor.
Ms. Charen’s dreams about a Republican president and congress pushing through all sorts of reforms and corrective legislation to reinvigorate the economy may end up being little more than wishful thinking.
Even if the Republicans retake the Senate along with the presidency, they will fall short of 60 seats and a “filibuster-proof” majority. This will leave the Senate as the only remaining “firewall” by which the ‘rats can prevent a conservative agenda from being implemented.
And obstruct they will, as never before seen in American politics. There will be no honeymoon period for a President Romney, neither in the halls of Congress nor in the media.
I wouldn’t be surprised to see “Wisconsin style” politics and political theatrics used to block legislation, regulatory reform, etc.
I would not expect to see ANY conservative nominee to replace Ruth Ginsburg pass the next Senate. The ‘rats will try to “Bork ‘em all”.
Then again, there is always “the nuclear option”, to erase the filibuster and go to a simple majority-rule vote. But both sides have backed away from this in the past. Would the Pubbies have the nerve to try it?
First, defeat BO! Next, I do hope that conservatives have plans to run for POTUS in ‘16, if a “President Romney”, truly, isn’t conservative enough on enough issues, which is a probability.
Club for Growth on Romney’s term as Governor, quotes regarding cutting size of government, entitlement reform, tax reform:
“On balance, his record comes out more positive than negative, especially when one considers that average spending increased only 2.22% over his four years, well below the population plus inflation benchmark of nearly 3%.”
“Governor Romney receives credit for reducing actual spending unilaterally in Fiscal Year FY2003, even though he entered office halfway into the fiscal year, because of the tremendous spending cuts he forced down the Legislatures throat in January of 2003. Facing a $650 million deficit he inherited from the previous administration, Romney convinced the unfriendly State Legislature to grant him unilateral power to make budget cuts and unveiled $343 million in cuts to cities, healthcare, and state agencies. This fiscal discipline continued in 2004, in which Romney continued to slash nearly every part of state government to close a $3 billion deficit.”
“To his credit, Romney attempted to cut down on government spending by streamlining many duplicative and wasteful elements of Beacon Hill. Some of his more ambitious proposals were rejected by his über-liberal Legislature. These include: his plans to overhaul the wasteful Boston Municipal Court and close underused courthouses; merge the Massachusetts Turnpike Authority with the Highway Department; decentralize management of the University of Massachusetts; streamline the Alcoholic Beverage Control Commission; and phase out the obsolete Worcester State Hospital where employees outnumber patients nearly 3 to 1.”
“Governor Romney successfully consolidated the social service and public health bureaucracy and restructured the Metropolitan District Commission. Romney even eliminated half of the executive branchs press positions, saving $1.2 million. He also used his emergency fiscal powers to make $425 million worth of cuts in 2006, taking particular aim at local earmarks, instead of allowing the Legislature to dip into the states $1.2 billion rainy day fund. While there is no question that Governor Romneys initial fiscal discipline slacked off in the second half of his term, on balance, he imposed some much-needed fiscal discipline on a very liberal Massachusetts Legislature.”
“Romney fought for legislation that would bring Massachusetts welfare system up to date with federal standards by increasing the number of hours each week recipients must work and establishing a five-year limit for receiving benefits. Much to his credit and to the dismay of many Massachusetts liberals, Romney successfully forced Medicaid recipients to make co-payments for some services and successfully pushed for legislative action forcing new state workers to contribute 25% of their health insurance costs, up from 15%. Governor Romney also deserves praise for proposing to revolutionize the Massachusetts state pension system by moving it from a defined benefit system to a defined contribution system.”
“In May of 2004, Mitt Romney proposed cutting the states income tax rate from 5.3% to 5.0%a measure Massachusetts voters had approved in a 2000 referendum, but was blocked by the State Legislature in 2002. The proposed tax cut would have provided $675 million in relief over a year and a half. When the Massachusetts Legislature refused to budge, Romney proposed the same tax cut in 2005 and again in 2006 with no success. Romney was more successful when he took on the State Legislature for imposing a retroactive tax on capital gains earnings. After a bloody fight, Romney succeeded in passing a bill preventing the capital gains tax from being applied retroactively, resulting in a rebate of $275 million for capital gains taxes collected in 2002.”
more at link....
The Homeschoolers will be tending to the engines, if they don’t go Galt before then.
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