Some may think we are in the frying pan now, but we could be taking an inadvertent leap into the fire, too, with the wrong choice. The choices are not simple.
Until now, Mitt Romney has spent energy criticizing Obama's record and identifying goals and priorities, but he has remained vague on the details of the “how to's.” Calling the Paul Ryan debt reduction plan “marvelous,” he left us wondering whether he embraced it completely. By picking Paul Ryan as his running mate, Romney is now presumed wedded to the Ryan plan unless he is specific about the parts with which he disagrees. He should not be allowed to be vague anymore.
There will be much debate about whose ox will be gored by the plan Paul Ryan has proposed. Seniors, in particular those who care about a social safety net (Catholic bishops cal the Ryan plan not moral), investments in our future in education, infrastructure, cutting edge research and development, everyone not military or not wealthy, will need to sit up and take notice. Stay tuned: We will hear much about that in the coming months.
Regardless of any blowback on segments of constituencies, the GOP/Romney/Ryan share the same simplistic theory: Cutting taxes and shrinking government creates jobs and reduces the debt. We all like to pay less taxes, too, so it has tempting bling.
There are other ways to reduce the deficit that are more balanced, more effective, and are less painful. That approach was outlined in the Simpson-Bowles proposal, which President Obama has come close to embracing. If he more openly pits Simpson-Bowles against the Ryan plan, he will have a more powerful card to play than just touting upward statistical trend lines.
If the goal is to reduce the deficit by launching austerity, as Ryan proposes, his plan will accomplish the opposite. The Ryan plan would actually increase the deficit, per a recent Congressional Budget Office report.
Likewise the cost of Romeny's pledge to repeal Obamacare would also cost the federal treasury more than keeping it, per the CBO.
It is also possible that the Ryan plan would deal recovery a painful setback. This may be the slowest recovery in our lifetime, but it is also the worst recession in our lifetime. We are half way there in restoring lost jobs. Economists looking at history have seen it takes eight years to recover from such a financial sector collapse.
We do know it is possible to slide backward if government spending is cut in the middle of a recovery. It happened before. Writing in Forbes, magazine in April, John T. Harvey tagged “The Ryan Budget: A mistake of Historic Proportions.” Harvey looked at the history of the Great Depression recovery. Government spending was cut with the GOP backlash to FDR's New Deal and recovery stalled, taking three more years to repair the damage. The reason? Consumer demand dried up. It is that same old GOP approach tried mid-Great Depression that Ryan is proposing and Romney has embraced.
That makes sense. Over 70 percent of the Gross Domestic Product is driven by consumer spending. Business is not motivated to gamble investments or make more things just to store it in a warehouse without faith demand will increase, lowered taxes on big business or not.
Recently Mitt Romney proposed a tax plan, claiming it would lower taxes on the middle class. Per the respected independent Brookings Institute/Urban Institute Tax Policy Center, and with all three fact checkers in concurrence, Romney's newest tax plan would raise taxes on the middle income, the largest group of consumers, by $2,000 per year, giving them less money to spend, killing off consumer demand even more.