This week Glenn Hubbard, one of Mitt Romney’s top economic advisers, published an op-ed promising to "stop runaway federal spending and debt." It was shockingly vague when it wasn't practically reckless. John Cassidy notes that it all but guarantees a deep new depression, if you believe the evidence from Europe these past few years and standard mathematics rather than supply-side fantasy and scoring so dynamic no one else can replicate it:
Hubbard reiterates that he would aim to reduce federal spending from roughly twenty-four per cent of G.D.P. in fiscal 2012 to twenty per cent by 2016. Romney hasn’t spelled out how he would reach this target, but simple arithmetic suggests he would need to impose about five hundred billion dollars in annual spending cuts, which is equivalent to more than three per cent of G.D.P.
Spending cuts on this scale would be a big shock to an economy that is already sputtering badly. As we’ve seen in other developed countries over the past few years, the imposition of austerity policies can easily turn modest recoveries into renewed recessions. It has happened in the United Kingdom, Spain, and Italy. Romney is asking the American voters to believe things would be different here. The obvious question to ask is: Why?
Well his answer would be: my slashing taxes on the super-rich will unleash the animal spirits of capitalism. But how do you do that when no one else can afford to buy the products? For me, the weakest part of Hubbard's piece was the following:
The Romney plan would reduce individual marginal income tax rates across the board by 20%, while keeping current low tax rates on dividends and capital gains. The governor would also reduce the corporate income tax rate—the highest in the world—to 25%. In addition, he would broaden the tax base to ensure that tax reform is revenue-neutral.
So he would slash rates while ensuring that his plan to end deductions would not contribute to any net increase in revenues. All the while ramping up Pentagon spending. This is a recipe for Bush-Cheney debt again. It's the Bush economic policies repeated as fiscal farce. It is emphatically not what Bowles-Simpson proposed.
For Romney, the years 2000 – 2008 seem to have been etch-a-sketched away. He has learned nothing. Nor has his party.