Earlier this year, while campaigning in Michigan, Mitt Romney made the mistake of expressing his inner Keynesian. “If you just cut, if all you’re thinking about doing is cutting spending, as you cut spending you’ll slow down the economy,” he said, earning the immediate scorn of anti-tax conservatives. From that point on, the former Massachusetts governor has been careful to hew to the GOP’s traditional line, reiterating the party’s belief that tax and spending cuts will lead to economic growth and new revenues. But in his recent interview with Time’s Mark Halperin — which you should read in full — he relies on Keynes to show why he wouldn’t commit to deep spending cuts in the first year of his administration:
Halperin: Why not in the first year, if you’re elected — why not in 2013, go all the way and propose the kind of budget with spending restraints, that you’d like to see after four years in office? Why not do it more quickly?
Romney: Well because, if you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5%. That is by definition throwing us into recession or depression. So I’m not going to do that, of course. [Emphasis mine]
Now that Romney is the nominee, I’d be surprised if he received pushback from conservative activists for this rhetorical embrace of Keynesian logic. They may not like it, but they also want to win, and an attack would be counterproductive.
That said, this does raise questions about the dynamic between Romney and congressional Republicans if he’s elected president. Republicans are eager to implement the Ryan plan, and have made it the centerpiece of their domestic policy agenda. Romney is committed to the same agenda, but he also seems willing to pass the Ryan tax cuts and then delay the more radical elements, in order to maintain economic growth (and boost his popularity).
I have no doubt that party leaders and more typical Republicans would go along with this; they’re most concerned with cutting taxes on the rich, and spending cuts or not, I don’t think they would forgo the opportunity. But I can’t say the same for the more ideological Republicans who were elected in 2010, and nearly sparked a second recession out of pique with the administration. They seem to actually believe in the need for radical spending cuts, and it’s unclear whether they would go along with Romney’s plan to push cuts down the road. If the primary against Richard Lugar is any indication, the Tea Party is still unsatisfied with the orthodoxy of the GOP establishment, and its affiliated members might revolt against a package that doesn’t include a significant reduction in the size of government.
If the past Republican administration is any indication, most conservative will rediscover their belief in Keynesian economics, and go along with Romney’s plan to cut taxes without any offsets. The deficit would explode, but that would be less important than the central goal of lowering rates on the rich. On the other hand, we might actually have a new brand of Republicans, and as I’ve argued in the past, this places Romney in a small box, where his only choice is to implement the goals of congressional Republicans. To quote Grover Norquist, “We don’t need someone to think. We need someone with enough digits on one hand to hold a pen.”