Romney: The Ideological Pragmatist

The conventional wisdom says Romney is the candidate. That's probably right. The other, still standing candidates are too flawed to be taken seriously. The long string of entertaining debates did what the process is supposed to do. It exposed those flaws and gave us a fairly clear picture of who Mitt Romney is and what he purports to stand for.

And the economy is to be the issue. Presidential elections with an incumbent running are normally a referendum on how well the economy is doing. Everyone presumes that the economy will continue a jobless recovery and remain on the cusp of a double-dip recession. In essence, the economy is not generating the aggregate demand necessary to restart itself. And that is the struggling economy that Obama is going to have to defend.

The president will probably argue that decisive action pulled the world economy back from depression's edge and rescued our financial system. But the ensuing stimulus package and other actions were, because of Republican obstinacy, simply not big enough to handle a full-bore depression and a politically impregnable banking system. The economy therefore stumbles along, buoyed by a weakened attack on healthcare costs, a successful rescue of the auto industry and a cowardly attempt to rein in the financial sector.

Romney presents himself as the practical, pragmatic businessman and efficient manager. He actually believes, with Calvin Coolidge that: "The chief business of the American people is business." He believes that the country needs little more than low taxes and free markets to achieve and maintain economic prosperity. He sees lax management as the problem The American economy just needs tough management, like the firms he salvaged at Bain & Company. He really believes and you see that faith when he will not back off from statements like "Corporations are people, my friend" and "I love to fire people."

Unfortunately for Mitt Romney's position, that business model can be and is always manipulated to serve an agenda: we call it politics. It is politics when his campaign promises fall in line with the tea party mantra: smaller government (abolish some agencies, especially those serving the poor and elderly), lower taxes for the wealthy (reduce the corporate income tax and eliminate many taxes on capital gains, interest and dividends) and less regulation (eliminate regulations that "unduly burden the economy" or favor organized labor. So, will Romney govern as a real conservative or as a pragmatist?

"Romney is," according to the Washington Post, "far to Bush's right" on taxing and spending. He has not flip-flopped but just moved to the right with the times and his party! The tea party should appreciate.

Romney may be boring but he is not subtle. He is proposing total tax cuts of $6 trillion over the next 10 years. He would not just keep the Bush tax cuts for the wealthy, he would do away with the estate tax and lower the corporate income tax. He would also cut overall discretionary spending and begin to privatize Social Security, Medicare and Medicaid. That is a lot more than pragmatism and efficiency.

What Romney and the Republicans are going for is the shift of wealth and power that comes with shifts in income distribution. It is not so much the economy as their share of it and that's what we are fighting about. Alan Krueger, Chairman of the Council Economic Advisers, has shown that income inequality in the United States is greater than at any time since the 1920s. Over the past 10 years, $1.1 trillion of income has shifted annually from the rest of us to the top 1% of families. They just want more.

This has enormous consequences. Intergenerational mobility has fallen in America and is now lower than in Europe. We can no longer claim to be the land of opportunity. Similarly, inequality affects aggregate demand. The rich have a higher propensity to save so each year they spend less of that $1.1 trillion than the middle class would have. If the middle class had gotten that money, they would have spent more of it and annual consumption would have been about $440 billion higher each of the past 10 years. This would boost GDP by about 5% per year and the great recession would be over.

This platform will get Romney the nomination. But implementation of the platform would be perverse. It would exacerbate income inequality. It would starve the economy of spending in the face of high unemployment and anemic growth. It would impose austerity on an already hurting middle-class. It could even bring the crash that we so narrowly avoided in the fall of 2008.

Let us hope that, if elected and facing reality, Romney would be smart enough to become the pragmatist and flip-flop. This is not the time for ideology to determine our taxing and spending.