President Obama does not have a pro-growth plan. He wants to raise taxes on some taxpayers; whatever that will accomplish, growth isn’t one of them. He wants to spend relatively small amounts (in comparison to the size of our economy) on hiring more teachers and infrastructure. No serious economist suggests those will actually jump-start economic growth. In point of fact, the Obama team has no idea how to spark private-sector growth; the Obama team knows how to spend money. But as we’ve learned the hard way over the last 3 1/2 years, spending taxpayers money doesn’t encourage growth or spur job creation.
The intellectual cul-de-sac in which Democrats find themselves in was on display when former Obama adviser Austan Goolsbee had an embarrassing outing on Fox News Sunday:
That’s a mess, but it isn’t Goolsbee's fault. You just can’t square the 2010 Obama who, in early that year and then in explaining the December 2010 deal, argued that raising taxes when the economy was weak was a mistake, with the 2012 Obama who now wants to stick it to the wealthy and small businesses.
But Goolsbee exposes three more problems with the president's campaign arguments.
First, he falsely claims Romney wants a tax cut for the rich. Glenn Hubbard, a Romney adviser corrected him, saying:
[W]hat Governor Romney is proposing is an across-the-board cut in marginal tax rates for households, every household in America by 20 percent. And we’ll have to broaden the base to pay for that. Also, a very deep cut in the corporate rate.
Most economists believe that fundamental tax reform, the Romney plan as a variant of that is very powerful for growth.
I can’t imagine an argument that says that raising marginal tax rates on high income people, many of whom are business owners, is a recipe for economic growth.
One can debate fairness arguments but I’m just not aware of any argument that would suggest getting back to the growth we’d just talked about in the previous question is facilitated by raising taxes, not tax reform. . . . Governor Romney is talking about tax reform, not large tax cuts.
And I guess my question for Austan following yours, Chris, is why would we believe that four more years of this policy, or hiring tax credits or whatever else the president has on the table, will take growth to the next level? I just don’t know of any economic evidence that that’s the case. Each year the administration has forecast that faster growth is around a two-year corner and it hasn’t happened and it won’t until we change course.
The president and his spinners can repeat “Romney wants to give tax cuts to the rich” as much and as often as they want, but it’s just not true.
Goolsbee also repeats another false talking point, namely that the Bush tax cuts didn’t increase growth. This is simply not accurate. Peter Wehner (who now is with the Romney campaign but was not at the time) explained:
Annual economic growth was three times higher under President Bush than under President Obama. Under Bush, the unemployment rate averaged 5.3 percent; under Obama, it has never been under 8 percent. In the wake of a recession that began roughly seven weeks after President Bush took office, America experienced six years of uninterrupted economic growth and a record 52 straight months of job creation that produced more than 8 million new jobs. We saw labor-productivity gains that averaged 2.5 percent annually — a rate that exceeds the averages of the 1970s, 1980s, and 1990s. Real after-tax income per capita increased by more than 11 percent. And from 2000 to 2007, real GDP grew by more than 17 percent, a gain of nearly $2.1 trillion. As for the deficit, it fell to 1 percent of GDP ($162 billion) by 2007.
Is Goolsbee really arguing the 2001 and 2003 Bush tax cuts caused the financial crisis? He doesn’t say so, and I doubt he’d adopt an economic theory for which there is zero evidence. In fact, the causes for the 2008 are well known.
And finally, Goolsbee and later Chris Wallace argue that Romney hasn’t laid out his debt reduction plan. This is another talking point that has been repeated so often we tend to forget it is false. Hubbard, again:
He’s been specific on things like block granting the Medicaid program, which is hardly a non-bold claim. On the tax sided, fundamental tax reform and a healthier economy will produce a revenue share of GDP, much into that range.
Longer term, it’s about entitlements. Governor Romney has said on Social Security that he would raise the retirement age gradually. He would reduce the rate of growth of benefits for upper income households and reduce the rate of growth for benefits for upper income households and Medicare 2. That is a program, one can disagree with it, but it is a program that leads to lower deficits and debt and higher growth.
There is a candidate who has proposed four consecutive budgets with trillion dollar deficits, refused to put out a long-term plan to rescue entitlements and added over 5 $ trillion to the debt. Hint: It’s not Romney.
Maybe Obama has better answers and better attacks than Goolsbee provided. If he doesn’t, he’s going to get a rude awakening at the debates when Mitt Romney introduces him to some facts the president’s spin squad would rather ignore.