Romney: Spending Cuts Will Kill the Economy
If you've read one Paul Krugman column, you've read them all. Alongside his unabating clarion call for ever more stimulus spending, Krugman decries spending cuts of all sizes, shapes and colors, and despises the idea of a balanced budget. This clip just about sums up his entire body of work since 2007, and encapsulates the Obama administration's approach to the economy for the duration of his term in office.
Leading the charge to slash spending, on the other hand, Paul Ryan has repeatedly made the case that we face a crushing burden of debt which must be addressed right away lest we hit the point of no return.
And where does Candidate Romney fit into the mix? Speaking today in Shelby Township, Michigan, Gov. Romney situated himself in the Krugman school of economics. "If you just cut, if all you're thinking about doing is cutting spending, as you cut spending you'll slow down the economy," Gov. Romney stated. "So you have to, at the same time, create pro-growth tax policies."
Though Krugman and Romney agree that spending cuts would worsen the economy, there is, to be sure, a major distinction between the conclusions each man draws. According to Krugman, spending cuts are bad; therefore, we must increase spending. Romney has stated that spending cuts, if not coupled with pro-growth tax policies (which he plans to outline this week, incidentally), would be lethal.
But is the underlying assumption here that spending cuts on their own would slow down the economic recovery a correct one? If Krugman, Obama, and Romney are correct on this, then Paul Ryan and his emphasis on spending cuts have been folly.
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Comments:
Sep '10
Re: Romney: Spending Cuts Will Kill the Economy
Sending money to the Department of the Interior (selected at random) so they can spend it only after a Byzantine contracting process helps the economy?
Huh?
Seriously, check out the contracting processes for any branch of the government and ask yourself if that's the best way for the nation's resources to be used.
Romney is wrong.
Edited on February 22, 2012 at 3:09amJan '11
Re: Romney: Spending Cuts Will Kill the Economy
Well I won't say Paul Ryan is a fool, but Kenneth Rogoff, one of the leading economists on debt crises, said in 2011:
Q: Politicians use your work to argue for deep spending cuts now to trim our debt. Do you agree?
A: If we tighten too fast, the economy will implode on itself. We didn't get here in two years, and we shouldn't try to get out of it in two years. But at the same time the idea that we can worry about the future later, that's false. It's not just about cutting spending. The tax take probably needs to go up. We need to clean up the tax system.
Sep '10
Re: Romney: Spending Cuts Will Kill the Economy
Now I get it, that extra spending explains why Greece is in such sound financial shape.
Nov '11
Re: Romney: Spending Cuts Will Kill the Economy
I saw this, and then I saw the Hot Air post about "labor unions playing an important role in our economy," and I was going to scream. But on closer examination, the labor union quote is fine.
Whether he's right or wrong, I don't see how Romney is calling Ryan a fool. Ryan is calling for pro-growth tax reform with his spending cuts, too -- Romney is moving Ryan-ward.
Also, although he calls for cuts in discretionary spending, Ryan's focus on the debt is the need for entitlement reform -- gradual cuts in the future, focusing on the trajectory. The reforms have to be made now.
Jul '10
Re: Romney: Spending Cuts Will Kill the Economy
But is the underlying assumption here that spending cuts on their own would slow down the economic recovery a correct one? If Krugman, Obama, and Romney are correct on this, then Paul Ryan and his emphasis on spending cuts have been folly.
Or it means that spending cuts alone are insufficient.
Mar '11
Re: Romney: Spending Cuts Will Kill the Economy
So, which is worse? Rick Santorum, man of faith, discussing Satan's game plan, or Mitt Romney, economic super-genius, going Keynesian?
Every time I even begin to swing over to Mitt, he be-twerps himself again.
Nov '11
Re: Romney: Spending Cuts Will Kill the Economy
Leigh:
Also, although he calls for cuts in discretionary spending, Ryan's focus on the debt is the need for entitlement reform -- gradual cuts in the future, focusing on the trajectory. The reformshave to be made now. · 2 minutes ago
I think that is exactly the point. Spending, shmending. If we don't do entitlement reform there won't be any money to spend on anything, and as Romney says, we have to start growing. Seems to me Romney is at least pointed in the right direction.
Aug '11
Re: Romney: Spending Cuts Will Kill the Economy
We are so screwed.
Jan '11
Re: Romney: Spending Cuts Will Kill the Economy
From what I understand of this, a truly sudden series of cuts would have a short-term negative effect on the economy, just as any major realignment would. So technically, Romney may have a point, and it may be the smart thing to say in a general election.
That said, this is just the latest in the series of ::facepalm:: like statements Romeny's made in the last few months that make me worry. If he gets the nomination, we're going to have to work in overdrive to keep him focused. Which is unsettling...
Jul '10
Re: Romney: Spending Cuts Will Kill the Economy
It's a complex answer. Yes, in the immediate term simply cutting spending will harm the economy in the sense that less money means government employees will be cut with all of the impacts that has on their personal spending, etc. There are also assumptions involved regarding the marginal propensity to consume by the government spending the money relative to the person from whom it was originally taxed. However, in the long term, it benefits the country in other economic measures like getting the deficit smaller relative to GDP which increases creditworthiness and lowers debt financing. Krugman's idea that cuts are bad therefore we should increase spending is a non sequitur.
However, I also agree that tax revenues need to be increased to help close the deficit. The way to do this is to eliminate loopholes in the tax code and to reform the tax code uniformly so that the tax base is broadened while at the same time lowering rates on business and investment gearing it more towards consumption. Romney is correct that we need pro-growth tax reform coupled with cuts. Simple cuts are not enough to help the economy without spurring private investment to replace it.
May '10
Re: Romney: Spending Cuts Will Kill the Economy
Percival: So, which is worse? Rick Santorum, man of faith, discussing Satan's game plan, or Mitt Romney, economic super-genius, going Keynesian?
Every time I even begin to swing over to Mitt, he be-twerps himself again. · 5 minutes ago
Satorum did not discuss Satan's game plan on the campaign trail. All his 4 year old remarks tell us about his way of being in office is that he's genuinely religious and less likely to buckle under political pressure to do what he thinks isn't right.
Economically, he's for cutting spending.
So, put me down for thinking Romney's keynesianism is worse. Much.
Edited on February 22, 2012 at 4:19amNov '11
Re: Romney: Spending Cuts Will Kill the Economy
Percival: So, which is worse? Rick Santorum, man of faith, discussing Satan's game plan, or Mitt Romney, economic super-genius, going Keynesian?
Every time I even begin to swing over to Mitt, he be-twerps himself again. · 8 minutes ago
So yeah, there's this guy named Gary Johnson...
Mar '11
Re: Romney: Spending Cuts Will Kill the Economy
katievs
Percival: So, which is worse? Rick Santorum, man of faith, discussing Satan's game plan, or Mitt Romney, economic super-genius, going Keynesian?
Every time I even begin to swing over to Mitt, he be-twerps himself again. · 5 minutes ago
Satorum did not discuss Satan's game plan on the campaign trail. All his 4 year old remarks tell us about his way of being in office is that he's genuinely religious and less likely to buckle under political pressure to do what he thinks isn't right.
Economically, he's for cutting spending.
So, put me down for thinking Romney's keynesianism is worse. Much. · 1 minute ago
I know, katie. I'm just trying to get that other thread out of my noodle.
Sep '10
Re: Romney: Spending Cuts Will Kill the Economy
Harding cut spending by more than 50 percent. It seems to me the following decade turned out okay. Everyone at the trough will adjust eventually, then our economy can really, truly recover.
Apr '11
Re: Romney: Spending Cuts Will Kill the Economy
You're familiar with the Laffer Curve? Like tax cuts, which put money in people's pockets, government spending puts money in people's pockets. Each of these measures means that by borrowing a dollar, you can get more than a dollar's worth of activity. People on the right talk about this as dynamic rather than static accounting for taxes, and rarely talk about the same thing for spending, but essentially all economists recognize the general truth. The fights are about the size of the multipliers, where we are on the Laffer curve, etc, and questions of specific details where the multipliers have odd effects, not really about their existence.
There is simply no way to cut the deficit without taking a hit to the economy. There is simply no way to continue to borrow like this without demolishing the economy.
Apr '11
Re: Romney: Spending Cuts Will Kill the Economy
katievs
Percival: So, which is worse? Rick Santorum, man of faith, discussing Satan's game plan, or Mitt Romney, economic super-genius, going Keynesian?
Every time I even begin to swing over to Mitt, he be-twerps himself again. · 5 minutes ago
Satorum did not discuss Satan's game plan on the campaign trail. All his 4 year old remarks tell us about his way of being in office is that he's genuinely religious and less likely to buckle under political pressure to do what he thinks isn't right.
Economically, he's for cutting spending.
So, put me down for thinking Romney's keynesianism is worse. Much. · 12 minutes ago
Do you mean that Romney saying it was wrong, or that Romney is wrong to believe that government spending cuts exact a toll on the economy, employment, etc. in the short to medium term?
Aug '11
Re: Romney: Spending Cuts Will Kill the Economy
As usual, you have clearly captured the situation...such as it is.
Nov '11
Re: Romney: Spending Cuts Will Kill the Economy
After reading the article, the context, and the follow-up clarification from Romney's spokesman, it is entirely possible that all he was trying to say is that tax reform is necessary for growth, and that he slightly misspoke. It's fuzzy.
That is not quite the same as "spending cuts will kill the economy."
I feel like I am turning into a Romney partisan. I'm not! I'm not even sure I'd vote for him if I were in Michigan. But somebody has to play devil's advocate sometimes...
He is certainly not making an argument against cutting spending, unlike Jack Lew and Krugman. He's arguing for pro-growth tax reform with spending cuts. Either he used some weird logic to get there, or likely enough he simply misspoke. The spokesman's statement is clear enough.
Mar '11
Re: Romney: Spending Cuts Will Kill the Economy
I meant that he managed to make himself sound like a Keynesian. Having a steady hand on the wheel will help the economy, even if there is a short-term impact due to spending cuts. Not blowing major cash on Solyndra and other unproductive boondoggles won't by themselves restart the economy, but we are running out of time to get the debt under control. Ryan's plan is pretty gradual in terms of adjustments to entitlement spending, which is where all the real money is anyway.
Re: Romney: Spending Cuts Will Kill the Economy
I'm actually very eager to hear about Romney's new pro-growth tax reform plan. In his current 59-point plan, his first two points are:
Some items that do look like they'd help:
None of these things looks especially substantial to me, so I wonder if the plan he'll be unveiling marks a dramatic shift. If so, that a) has the potential to re-energize his campaign, but also to b) make his skeptics wonder why he's only just now coming up with a new approach.