What did Mitt Romney learn from the Bush years?

July 27, 2012

Mitt Romney is taking flack for a series of unintentional insults and breaches of protocol he delivered to his hosts in Britain. "Mitt Romney is perhaps the only politician who could start a trip that was supposed to be a charm offensive by being utterly devoid of charm and mildly offensive," snarked the Telegraph. The most devastating rejoinder, however, came from the British Prime Minister, David Cameron, who said:

"We are holding an Olympic Games in one of the busiest, most active, bustling cities anywhere in the world. Of course it's easier if you hold an Olympic Games in the middle of nowhere."

The words you're looking for are "oh, snap!"

But most of Romney’s Mr. Bean-like international bumbling is harmless, and will soon be forgotten. It's what he said during his interview with NBC's Brian Williams that's actually worth paying attention to:

WILLIAMS: And let’s talk about domestic– the economy before we wrap things up. The major planks of your job plan, lower taxes, both corporate and marginal rates, and reduce regulation. Explain how that would be different from what George W. Bush tried to push through?

ROMNEY: Well, let me describe– actually, there are five things that I believe are necessary to get this economy going. One, take advantage of our energy resources, particularly natural gas, but also coal, oil, nuclear, renewables. That’s number one. A huge opportunity for us, and doing so is gonna bring manufacturing back, because low-cost, plentiful energy is key to manufacturing, in many industries.

Number two, trade. I want – to dramatically increase trade and particularly with– with Latin America. Number three, take action to get America on track to have a balanced budget. Now those three things, by the way, are things which we have not been doing over the last few years, which I think are essential to getting this economy going again.

Number four, we’ve got to show better training and education opportunities for our current re– workers and for coming workers. And then finally what I call restoring economic freedom. That means keep our taxes as low as possible, have regulations modern and up to date, get health care costs down. These things will restore economic freedom.

So my policies are very different than anything you’ve seen in the past. They’re really designed for an America which has some new resources, energy being one of them, trade with Latin America being another, and the need for a balanced budget now more urgent than ever before.

Lower taxes, fewer regulations, more domestic energy production, promises of deficit reduction that are quickly overwhelmed by increased defense spending and reduced tax revenues, and glossy rhetoric about economic freedom pretty much defined the Bush administration's economic policy. And how did that economic policy work out?

It was a disaster.

This graph is by David Leonhardt of The New York Times. It looks at five-year growth periods since 1955. The two periods that span the Bush years -- 2001-2005, and 2006-2010 -- come in dead last:

The jobs picture wasn't much better. This graph, by Joshua Picker, compares job growth under Bush's business cycle with job growth under the preceding business cycles. And it gives Bush a handicap: It doesn’t count 2008, when the recession begins. But even with the handicap, the Bush years again perform poorly:

See them? They’re the smaller bars on the right.

And note again that that graph ends before the financial crisis. A financial crisis that is at least partially attributable to the deregulatory attitude that said we should let the banks do pretty much whatever they want because they would never crash the financial system -- an attitude that dominated in the Bush (and Clinton) years.

Once you add that in, Bush has the worst record since Herbert Hoover. Every single measure we might want to track -- jobs, growth, median household income, poverty, uninsurance, new firm creation, participation in the labor force -- goes in the wrong direction. And yet Romney can't explain how his policies differ from that of George W. Bush.

One of my frustrations with campaign coverage is there's a tendency to look at substantive deficiencies in ideas as political problems. So this gets talked about as a messaging issue: Romney needs a better answer to the question, 'how do you differ from Bush?'

But it's not a messaging problem. Romney doesn’t need a better answer to how are your policies different than Bush’s. He needs policies that are actually different.

As New York Magazine's Jonathan Chait wrote, Romney's answer "indicates a larger problem: Republicans haven’t really internalized the degree to which Bush’s policies truly failed to produce strong economic growth. They blame him for letting spending grow too high, and they recognize that the crash was a bad thing, but conservative rhetoric almost uniformly fails to acknowledge that even pre-crash growth under Bush was absolutely miserable."

It also almost uniformly fails to acknowledge that we live in a world completely reshaped by the 2008 financial crisis.

These last few years have been extraordinary -- and not in a good way. We have been through, and in some ways are still in, a once-in-a-many-generation economic storm.  And nothing in Romney's agenda is responsive to that fact. There's no new thinking here. Nothing that is clearly about the unusual problems we face in this moment. Nothing that a Republican in 2007, or 2005, or 1999, or 1991, couldn't have proposed. Romney is like a doctor looking at a patient with acute pneumonia and prescribing, as he does during routine physicals, diet and exercise.

And while some Republicans have broached interesting financial regulation reforms -- Paul Ryan embraced the Hart-Zingales's plan, while Jon Huntsman got pretty close to saying he would break up the big banks -- Romney hasn't told us what he's for. All he's said is that he'll roll back Dodd-Frank, which is to say he'll return policy to something more like what it was before the financial crisis.

In this case, the Obama campaign is actually a telling contrast. Think back to Obama’s 2008 campaign. What did he run on? Well, getting out of Iraq. But his big ideas domestic ideas were a health-care plan, a middle-class tax cut called Making Work Pay, and a plan to cap carbon emissions, and he promised that all of it would be paid for because we had to get deficits down.

But by the time he entered office, the economy had begun to collapse and so, and this is really the key, his policies actually change. It’s not that he didn’t support the other stuff, or try to pass it later. But the first thing he did, even before being sworn in, was lobby Congress to release the second tranche of TARP money. And after his inauguration, his first initiative as president, was a massive, deficit-financed stimulus bill.

This year, his campaign's biggest idea is the American Jobs Act, which combines big but temporary tax cuts for workers and small or expanding businesses with aid to state and local governments, a huge but temporary effort to rebuild our nation's infrastructure, and an extension of expanded unemployment benefits.

Whether you agree with these policies or you just hate them, they are, if nothing else, clearly connected to the current state of the economy. They are ideas to get people back to work now, to get money in people’s pockets now, to reward businesses for hiring new workers now. No Democrat was running around the country talking up state and local aid or unemployment benefits in 2008, or 2004.

The same simply can't be said for Romney's plan. And that's because, to the great misfortune of a country which could really use a good economic debate right now, the Republican Party's economic policy thinking is, at the moment, stuck in pretty much the same place it was before the crisis.

Further reading:

- Mitt Romney's jobs plan.

- The American Jobs Act.

- 'Before the recession', which looks at Bush's economic record before the financial crisis hit.

- My Rachel Maddow show segment on this topic, which covers much of the same ground, but includes an interview with economist Jared Bernstein.

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Dylan Matthews · July 27, 2012