Stimu-less: What Romney should've saidEDITORIAL
July 05. 2011 10:47PM
Mitt Romney is being criticized for saying that President Obama's policies have made the economy worse. They have, but Romney uses the wrong words.
Romney first said Obama made the recession worse. Officially the recession ended in the third quarter of 2009. Lately, Romney said that Obama's policies have made U.S. economic growth 'anemic.' Since the recovery began, GDP growth has averaged 2.8 percent a quarter. Growth could and should be better, and what there is cannot all be attributed to Obama's policies, but it's hard to call it 'anemic.'
What Romney should say is this: Yes, we have had GDP growth since the third quarter of 2009, and some of that is because of federal stimulus spending. But if the economy is doing so great, why has unemployment risen from 7.6 percent in January of 2009 to 9.1 percent? It's because the stimulus created a growth mirage, and business owners can see it, so they aren't hiring.
As Fortune magazine editor Shawn Tully wrote of Obama's stimulus plan last September, 'By basic economic math, it's impossible to raise GDP by borrowing from one group of people who would otherwise save that money, and transferring it to another group of people, and to the government, to spend. Savings, in the short term, have precisely the same impact on national income as spending.
'The reason couldn't be simpler: All savings are spent. Let's look at the big picture. GDP measures all spending on all the goods and services that America produces. Savings translate, dollar for dollar, into a major component of that total spending: investment. All the money that the administration successfully moves from savings to consumption simply channels one type of spending to another, in precisely offsetting amounts. It's like filling a swimming pool from one end, and draining it from the other end. The level doesn't change.'
The administration released its latest stimulus report on Friday before the July 4 weekend. Why? Because it showed that Washington spent somewhere between $185,000 and $250,000 per stimulus job created. And as that stimulus spending has slowed, so has the economy. Now we are deeper in debt, with higher unemployment, and an economy that is contracting. Obama bought temporary growth at an extremely high price, spiked the unemployment rate, put us deeper into debt, and ignored alternatives that could have provided more stable long-term growth without the massive debt and with more jobs. So yes, he made the overall economic situation worse than it would have been were an economically literate President in charge. Why Romney, who prides himself on his economic acumen, cannot find a way to say that is a mystery.