They Are Both Keynesians Now


Ezra Klein anticipates the Romney debt balloon:

There will almost certainly be deep spending cuts if Romney is president, but both the Romney and Ryan proposals include trillions of dollars in unpaid-for tax cuts and defense spending. If Republicans decide to assume that deep tax cuts will lead, through supply-side magic, to larger revenues, their deficit-reduction plans might well end up increasing the deficit over the next few years, even if it does so in a regressive way. Remember, wrote Business Insider’s Joe Weisenthal, “Republicans were pro-deficit, and pro-entitlement expansion under Bush and Reagan. Deficit cutting only became part of the party’s ideology under Obama.” Compared to anything Obama is likely to get from a Republican House, that is, at least in the short term, a much more expansionary, Keynesian approach. But it’s also an awful precedent. In a sense, Republicans are holding a gun to the economy’s head and saying, “vote for us or the recovery gets it.”

The graph showing government retrenchment is via TPM. Allahpundit wonders how plausible this is:

[Romney is] not going to do something which he thinks will force a major economic contraction; does he try to build congressional majorities to delay deep cuts by replacing recalcitrant tea partiers with Democrats, knowing that the optics of that might only increase his headaches? If he thinks that conservatives will grant him a honeymoon period after he’s sworn in on issues as critical as the size of the federal budget and the speed with which meaningful cuts are made, I think he’s kidding himself. But maybe Klein’s right that this can be finessed by signing Paul Ryan’s budget — and getting to work on entitlement reform, assuming that Romney has the nerve to do so.

If you assume that the sanest, most feasible approach is stimulus-now-retrenchment-later (because sunsetting Bush's tax cuts and the sequestration process would mean an almost certain double dip recession), then the practical immediate question in this election is: what brand of stimulus-now-austerity-later admixture do you prefer?

In that choice, it seems to me we have two options on the table. The first is Romney's: huge defense spending increases and lower tax revenues than the Bush regime, accompanied by turning Medicare into a voluntary voucher scheme, where you will henceforth be guaranteed only the healthcare your voucher affords. The second is Obama's: sunsetting the Bush tax cuts on those earning over $250,000, more infrastructure investment, cutting defense spending (though they're getting way too squishy on that), and more serious cost controls in Obamacare and Medicare (higher premiums for the wealthy, an end to fee-for-service, rationing at some point) to slow spending in the long run.

To put it bluntly, Romney favors more tax cuts, more defense spending and decimating Medicare. I don't think much of this is popular, especially the latter. Ponnuru is onto something:

Most people believe the [entitlement] programs need reform. But in a Pew poll in 2011, Americans favored preserving benefits to reducing deficits by almost 2-to-1. By 56 percent to 33 percent, they worried more about Social Security benefit cuts than about tax increases. In a March 2012 poll, just 26 percent of the public favored the Republican idea of changing Medicare so that beneficiaries pick a health plan and get a “fixed sum of money” to meet the costs.

That's your attack. You also point out, in the final stretch, that voters risk handing over the entire government to the most radical Republican party in decades if they elect Romney alongside a GOP House and Senate. Obama can be framed as the indispensable negotiator for half the country in the coming fiscal showdown.

Here's your positive message: Obama inherited an economy in free-fall and the most obstructionist opposition in decades. He prevented a second Great Depression, achieved a halting recovery, passed universal healthcare and won as solid a victory against al Qaeda as is conceivable. What he needs to argue is that this is just the beginning of a national renewal, a downpayment on the rest  – by insisting that long-term debt reduction can be done now, that immigration reform must be achieved for the next generation of Americans, and that the insane tax code can be rescued from the special interests.

Obama will not win by playing safe, it seems to me, or defensively, so that external events determine his fate, and Romney can crudely but mercilessly try to blame all our woes on the incumbent. Obama's brand is inextricable from reform, and his campaign must be designed to break the Republicans' resistance to such reform. You don't need a new slogan. "Yes We Can" needs just some tinkering.

"Yes We Must" is more 2012.