Another View -- Rich Ashooh: Obama's rhetorical trick is to blame Romney for the recessionRICH ASHOOH
November 01. 2012 12:39AM
The cornerstone of the Obama reelection seems to be this: blame the recession on Mitt Romney. You've heard the talking point, said by the President or one of an army of surrogates: "We can't afford to return to the very same trickle-down policies that got us into this mess in the first place." In other words, Mitt Romney supports ideas that caused the recession and presumably will cause it to continue if he is elected.
It's a tricky play, attempting as it does to avoid blame for the President and frame Romney at the same time, but a necessary one since everything the administration has tried to turn the economy around has failed. More troubling is that this "avoid and blame" strategy removes all doubt about the President's complete lack of understanding of the causes of the recession, and therefore a lack of ability to fix it.
When the President and others talk about "the very same policies," they are no doubt referring to tax cuts. Without oversimplifying the factors that led to the recession, there are two unmistakable, generally agreed upon and overwhelming drivers of the crisis: a housing bubble spurred by policies that overextended mortgage credit beyond sound limits, and the creation and use of financial instruments that securitized these unsound arrangements.
Tax cuts, by any objective analysis, don't enter into it. In fact, the much-debated 2001 and 2003 tax cuts at issue today were exactly the policies that sustained our financial house in the wake of the horrific and out-right attack on our economy on September 11, 2001. The President himself validated their effectiveness in tough times when he approved extending them.
Even the liberal Washington Post repudiates Obama's "very same policies" argument. On October 7, in its "Fact Checker" column by Glenn Kessler, the Post rejected the President's assertion that tax cuts were behind the crisis, rating it 3 out of 4 "Pinocchios" - one shy of a "whopper" - stating that "it is time for the Obama campaign to retire this talking point." When the Washington Post is telling the Democratic nominee that the centerpiece of his campaign messaging is false, something is clearly amiss.
The President has stated his solution to the joblessness plaguing the nation: hire more police, firefighters, construction workers and teachers, and raise taxes to pay for it. In other words, he wants more government stimulus. It won't work. It did not work when he did it the first time, in 2009. Why does he insist on pushing a failed policy?
Economist Paul Krugman, an ally of the administration, stated that the $800 billion 2009 stimulus didn't work because it was too small by two-thirds. Therefore, instead of $800 billion spent on a failed policy, in a second Obama administration Americans can expect to be saddled with an additional $1.5 trillion on a failed policy - doubling our current deficit.
This thinking belies a fundamental lack of understanding of the economy. The types of jobs the President wants to pay for with taxpayer dollars are a reflection of economic prosperity, never the cause of it. The President fails to understand this, despite four years on the job.
There are three ways to introduce stimulus to the economy. One is to take it via taxes and distribute it as government spending, as the President is proposing now. Another is to borrow it and distribute it as government spending, as the President did in 2009. Both are wrong-headed.
Mitt Romney has a different plan, and it is the right one. The way to stimulate the economy is through increased private sector investment. Right now, according to the Federal Reserve, American businesses are sitting on at minimum $2 trillion in cash, reluctant to invest out of uncertainty over these very policies. It's no wonder. Why invest what the President is promising to take? Under President Romney, the right policies with the right leadership will encourage the investment of these dollars directly into research, hiring, capital equipment and training - eliminating the government middleman and fueling an economic resurgence that no government-sponsored economic bailout can match.
The President insists that what has failed will work, if we only do more of it. Mitt Romney's approach - fiscal discipline, tax reform, expanding trade and harvesting all our energy resources, will have immediate and long-term benefits, and unleash a long-overdue recovery. Obama had his chance. It's time to give Mitt Romney his.
Rich Ashooh of Bedford is chairman of the Josiah Bartlett Center for Public Policy.