Romney's Economic Model compared to austerity in Europe

What do you guys think of this NY Times opinion piece that his plan will cause backwards growth as austerity has in Europe and Greece?





http://www.nytimes.com/2012/10/25/opinion/kristof-romneys-economic-plan.html?smid=fb-share&_r=0

Romney’s Economic Model
By NICHOLAS D. KRISTOF
Published: October 24, 2012


Mitt Romney’s best argument on the campaign trail has been simple: Under President Obama, the American economy has remained excruciatingly weak, far underperforming the White House’s own projections.

Damon Winter/The New York Times
Nicholas D. Kristof
.


Amid Cutbacks, Greek Doctors Offer Message to Poor: You Are Not Alone (October 25, 2012)
Related in Opinion

Editorial: The Austerity Trap (October 24, 2012)
Times Topic: United States Elections



But Obama’s best response could be this: If you want to see how Romney’s economic policies would work out, take a look at Europe. And weep.

In the last few years, Germany and Britain, in particular, have implemented precisely the policies that Romney favors, and they have been richly praised by Republicans here as a result. Yet these days those economies seem, to use a German technical term, kaput.

Is Europe a fair comparison? Well, Republicans seem to think so, because they came up with it. In the last few years, they’ve repeatedly cited Republican-style austerity in places like Germany and Britain as a model for America.

Let’s dial back the time machine and listen up:

“Europe is already setting an example for the U.S.,” Representative Kenny Marchant, a Texas Republican, said in 2010. (You know things are bad when a Texas Republican is calling for Americans to study at the feet of those socialist Europeans.)

The same year, Karl Rove praised European austerity as a model for America and approvingly quoted the leader of the European Central Bank as saying: “The idea that austerity measures could trigger stagnation is incorrect.”

Representative Steve King of Iowa, another Republican, praised Chancellor Angela Merkel of Germany for preaching austerity and said: “It ought to hit home to our president of the United States. It ought to hit all of us here in this country.”

“The president should learn a lesson from the ‘German Miracle,’ ” Representative Joe Wilson of South Carolina, a Republican, urged on the House floor in July 2011.

Also in 2011, Senator Jeff Sessions of Alabama, the top Republican on the Senate Budget Committee, denounced Obama’s economic management and said: “We need a budget with a bold vision — like those unveiled in Britain and New Jersey.”

O.K. Let’s see how that’s working out.

New Jersey isn’t overseas, but since Sessions and many other Republicans have hailed it as a shining model of austerity, let’s start there. New Jersey ranked 47th in economic growth last year. When Gov. Chris Christie took office in 2010 and began to impose austerity measures, New Jersey ranked 35th in its unemployment rate; now it ranks 48th.

Senator Sessions, do we really aspire for the same in America as a whole?

Something similar has happened internationally. The International Monetary Fund this month downgraded its estimates for global economic growth, with only one major bright spot in the West. That would be the United States, expected to grow a bit more than 2 percent this year and next.

In contrast, Europe’s economy is expected to shrink this year and have negligible growth next year. The I.M.F. projects that Germany will grow less than 1 percent this year and next, while Britain’s economy is contracting this year.

Karl Rove, that sounds a lot like stagnation to me.

All this is exactly what economic textbooks predicted. Since Keynes, it’s been understood that, in a downturn, governments should go into deficit to stimulate demand; that’s how we got out of the Great Depression. And recent European data and I.M.F. analyses underscore that austerity in the middle of a downturn not only doesn’t help but leads to even higher ratios of debt to economic output.

So, yes, Republicans have a legitimate point about the long-term need to curb deficits and entitlement growth. But, no, it isn’t reasonable for Republicans to advocate austerity in the middle of a downturn. On that, they’re empirically wrong.

If there were still doubt about this, we’ve had a lovely natural experiment in the last few years, as the Republicans in previous years were happy to point out. All industrialized countries experienced similar slowdowns, and the United States under Obama chose a massive stimulus while Germany and Britain chose Republican-endorsed austerity.

Neither approach worked brilliantly. Obama’s initial economic stimulus created at least 1.4 million jobs, according to the nonpartisan Congressional Budget Office. But that wasn’t enough, and it was partly negated by austerity in state and local governments.

Still, America’s economy is now the fastest growing among major countries in the West, and Britain’s is shrinking. Which would you prefer?

I’m not suggesting Obama distribute bumper stickers saying: “It Could Be Worse.” He might want to stick with: “Osama’s Dead and G.M. Is Alive.”

Yes, there are differences between Europe and America. But Republicans were right to call attention to this empirical experiment.

The results are in. And, as Representative King suggested, the lessons “ought to hit all of us here in this country.”

A version of this op-ed appeared in print on October 25, 2012, on page A31 of the New York edition with the headline: Romney’s Economic Model.

 

I don't get it because math isn't my friend...but what I really wanted to say was....


Wowzwers to your avi! Yummylicious!

 

Thanks.

Austerity def from Wiki:

Austerity
From Wikipedia, the free encyclopedia
For other uses, see Austerity (disambiguation).
For the current opposition to present-day austerity measures, see Anti-austerity protests.
In economics, austerity refers to a policy of deficit-cutting by lowering spending via a reduction in the amount of benefits and public services provided.[1] Austerity policies are often used by governments to try to reduce their deficit spending[2] and are sometimes coupled with increases in taxes to demonstrate long-term fiscal solvency to creditors.[3]
Supporters of austerity predict that under expansionary fiscal contraction (EFC), a major reduction in government spending can change future expectations about taxes and government spending, encouraging private consumption and resulting in overall economic expansion.[4]
Critics argue that, in periods of recession and high unemployment, austerity policies are counter-productive, because: a) reduced government spending can increase unemployment, which increases safety net spending while reducing tax revenue; b) reduced government spending reduces GDP, which means the debt to GDP ratio examined by creditors and rating agencies does not improve; and c) short-term government spending financed by deficits supports economic growth when consumers and businesses are unwilling or unable to do so.[5] In October 2012, the International Monetary Fund announced that its forecasts for countries which implemented austerity programs have been consistently overoptimistic, suggesting that tax hikes and spending cuts have been doing more damage than expected, and countries which implemented fiscal stimulus, such as Germany and Austria, did better than expected.[6]

 

Thanks Jordan.

I know what austerity is Hun. I was joking. I just really wanted to say u look hawt in your avi.
Didn't know how to segue into it based on an economics post.

:smt050

 

Actually this is reversed. Obama's plan leads toward austerity, not Romney.
President Barack Obama plans to raise revenue by imposing $1 trillion in new taxes on the U.S. economy that will destroy nearly 1 million jobs. Governor Mitt Romney plans to raise revenues by pursuing policies that will create more taxpayers through increased private sector employment. The Obama approach channels austerity policies in Greece and Spain which have sought to narrow budget deficits by massive tax increases.

Here is Ernst & Young's independent study on Obama's tax plan. It will cost us more than 700,000 jobs- http://www.nfib.com/LinkClick.aspx?fileticket=OMV7uZczVaM=&tabid=1083

Romney would seek to increase tax revenues as part of the overall effort to restore balance to the federal budget. But those revenues would come from policies that increase economic growth and employment, and thereby increase the tax base.

 

Funny how Warren Buffet who is unequivocally the most successful investor in stock market history, has and still supports Obama. But I guess you understand the economy better than he does right?? Or does he support socialists who villainize corporations for the hell of it?? :smt042

 

Who still believes letting the Bush tax cuts expire for the 1% is going to tank the economy???

You've got to be kidding me.

A top marginal income tax rate of 39% is the end of American free enterprise as we know it???lol

 

Or even more to the point show us how the tax cuts expanded the economy... oh wait it didn't. It was an EPIC FAIL

 

the one percent

 

For Obama, this election's in the bag. He's got this....

During debates #2 & #3, Romney incriminated himself on ALOT of the statements he made. Also, he piggy-backed off of President Obama's statements, which isn't healthy for any politician. At one point, he said that if he became president, he'd never raise taxes on no one.

Now, I'm just a math teacher, so I don't know shit about "numbers" (LOL), but the last time I checked, in order to balance out the economy, you have to raise taxes on someone, right? Why not raise it on the group of people who can actually afford it?

 

What you don't realize is that 54% of small business owners file as individuals, so moving the top tax rate to 39% will hurt many families. I guess Obama doesn't realize that everyone isn't a hedge fund billionaire that makes over $250,000.

 

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. During the Bush presidency, the unemployment rate averaged 5.3 percent. 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.

According to J.D. Foster, Obama’s “job deficit” — the difference between current employment and the jobs Obama promised to create by the end of 2010 – stands at a staggering 7.6 million workers. The 2010 deficit is $1.471 trillion, or 10 percent of GDP, while the debt is $9.2 trillion, or 62.7 percent of GDP. (From January 20, 2001, to January 20, 2009, the debt held by the public grew $3 trillion under Bush, from $3.3 trillion to $6.3 trillion; in 20 months.

People lie...numbers don't.

 

90-94% of small businesses don't gross 250K a year.
Give me a new right wing talking point.

 

And apparently the concept of cause and effect is lost on you my friend. Paying for Christmas gifts on a credit card and that passing the bill to the next guy doesn't make you Santa Clause even thought that's how some will see you. What industry was created as a result of any regulation put forth during the Bush years? A rise in GDP followed by a credit crunch doesn't equate to new industry and wealth being created it speaks to more consumption with borrowed dollars. So GDP can be up but it does us little good if in the process we need to borrow money in order to sustain it. It greatly reduces the real numbers. Same goes for unemployment numbers based on credit. Just because you have a car that you bought for 30,000 doesn't mean you have 30000 grand worth in assets.

 

James has to be the only person I know who talks up the Dubya economic record.
But I guess that's easier to do if you leave off the last 2-3 years of Dubya's term.

And to call the first two months of Dubya's administration a true recession is pushing it.

 

People lie about numbers all the time.

Next?

 

The numbers are the numbers. I know everyone has this prejudice against George Bush, but you cannot knock his economic record. The economic downturn happened in his last year. Obama likes to complain about what he inherited. Reagan inherited a much worse situation and had things corrected within months of taking office.

 

James no offense you're a knowledgeable and intelligent guy, but Reagan DID NOT inherit a worse economic situation than Obama did upon entering office.

WHen you make bizarre statement like this, you sound more ideological IMO and less philosophically conservative.

The economy was shedding 800K a MONTH when Obama entered office.
The U.S. and global economy wasn't contracting when Reagan became POTUS.

Is that the new right wing talking point, that Reagan turned around a worse economy in less time than Obama?? OMG.
:shock:

You should send a letter to the RNC and Mitt Romney, I'm sure they'd love to use this new bit of economic history in a campaign ad to highlight the incompetence of the Obama administration.

 

Reagan came into office with 10.6% unemployment and a top tax rate of 70%. America would have easily become Europe is he hadn't implemented supply side economics.

Nobody is arguing that Obama came into a declining economy, the argument is what he did to fix it. He felt he was qualified to run for the job, but doesn't want to take any responsibility of where we're at now. If I got a job as a manager of a department that is losing money and four years later I'm still saying "hey it's the last guys fault" then I would be unemployed. But you Obama lovers sweep everything under the rug. So enjoy the next four years of zero economic growth while Obama goes around to basketball games and Jay Leno on Air Force One.

 

Why would we be prejudice against dubya??