Tag Archives: Mitt Romney

Time to Boil Political Frogs

united states currency seal - IMG_7366_web

united states currency seal – IMG_7366_web (Photo credit: kevindean)

It must be an election year!  How do I know, because politicians of both parties are spouting talking points about the need for fiscal responsibility even while they do the opposite.  These same politicians have set up themselves and the rest of us for what is being called the ‘fiscal cliff’ at the beginning of 2013.

The fiscal cliff is the consequence political evasion, ill-considered gimmicks and cynicism.  Because the cost of enacting the ‘Bush tax cuts’ on a permanent basis was seen as politically unacceptable without also cutting spending by like amounts—also seen as unacceptable, Congress did neither.  Instead Congress jumped into the pot of cold water and turned on the heat by adopting the Bush tax cuts, giving them an expiration date, never expecting the water to boil on their watch thus engaging in the age old sport of driving up the deficit while complaining about all the spending.  This was not the finest hour for Republican leadership not because they got the policy wrong but because they bungled the execution and accountability. Had Republicans made the Bush tax permanent there would be no tax cliff.  Had they adjusted spending to match revenue the deficit would be substantially smaller today even counting the first round of stimulus spending. And ten year later Republicans in Congress are still on shaky grounds preaching about fiscal responsibility.

The other part of the fiscal cliff is made possible by another politically correct but imminently silly gimmick called sequestration.  This scheme allowed for the extension of the Nation’s debt ceiling sufficient to pay the bills but ordered automatic cuts in spending divided equally between defense and non-defense programs.  The Democrats agreed to this because they had no choice if they wanted to get the President’s debt ceiling measure approved in a divided Congress.  The Republicans agreed to it because it exacted a pound of flesh from the President’s backside because he needed something and decided to take the beating to get it.  Longer term, the Republicans believed they would win the next election and (avoid having their frog boil) by undoing sequestration for at least defense programs to avoid the cliff even if they sacrificed a few nondefense programs to claim they were cutting the fat out of the budget.

President Obama and the Congressional Democrats made the consequences of the tax cliff manifestly worse than the Republicans by driving up government spending, programs, staffing levels and industrial policy grants to favored players.  In typical Washington fashion any discussion of slowing down the INCREASE in Federal spending as a percentage of GDP is labeled as a ‘cut’ and YouTube videos of Paul Ryan pushing grandma over the cliff in her wheelchair suddenly appear.

“A Pox on Both Your Houses!”

That is the American public’s reaction to these stunts.  But here we are—careening down the 2012 election highway way above the speed limit heading toward the cliff.

In 2008, we voted for Barack Obama because we wanted to believe in his message of hope and change.  We wanted to be part of a historic presidency that celebrated to the world everything we cherished in the American dream.   We wanted to demonstrate that America was still the world’s leader and superpower.  We wanted to again reinvent America to face our economic problems squarely and to be that beacon of hope and change that a desperate world in 2008 desperately needed.

But President Obama has disappointed us instead by playing bait and switch, divided us by endless class warfare, apologized abroad for America’s vision of freedom and world leadership, and undermined our sense of optimism and American exceptionalism that drives Americans to confront challenges with a ‘yes we can’ spirit.  The challenge for President Obama in the 2012 election is America still longs for the 2008 hope and change historic Presidency he promised.  But President Obama abandoned hope and change—and us—after the 2008 election.  We do not like this ‘new normal’ and we don’t want four more years of what he’s given us.  The President has lost the benefit of our doubt and he has very little time left to try to change our minds.

The Republicans are set to nominate Mitt Romney.  He has the business experience a recovering America desperately needs.  He has the executive management and leadership experience the President lacked and we’re now paying for our ‘hiring mistake.  We are persuaded that Mitt Romney will be a good manager of America’s programs, services and finances.  The problem for Mitt Romney is so far he has been unable to ‘close the sale’ with us because while we need a good manager for America’s economic recovery—we still want a hope and change leader to restore America’s potential, self-confidence and global leadership.

Having been baited and switched once before on hope and change we are reluctant to sign up for another ‘squishy promise’ even one of competence and business savvy.  To close the sale Mitt must be more than the un-Obama.  He must inspire us more.  He must reveal his strategy in more detail so we can KNOW this time what is in the bill before we vote for it.

We want to hold our President accountable to deliver what he promises to deliver.

There are worse fates than a competent, but boring President.  But we have waited so long for hope and change and we don’t want to settle for less.

The polls tell us the campaign is a dead heat.  I believe the polls are REALLY telling us that Americans still want to believe in the 2008 hope and change Obama.  But Obama must persuade us that he still believes in hope and change.  We’re listening!  But if the 2012 Obama keeps giving us more of the same class warfare, hyper partisan, left of center rhetoric with continuing bad performance results, Americans are more likely than not to vote for competent but boring Mitt than take a chance of four more years of Obama under-performance.

The heat has been turned up under the Congressional frog with the tax cliff.  But like it or not the President and now Mitt Romney are also in the same pot as the Congressional frog.  Whoever proposes the most rational and achievable political strategy to avoid the fiscal cliff, rescue the nation and jump start our economic recovery will win our votes. A deal that avoids the tax cliff BEFORE the election is what we expect, but if we don’t get one there will be plenty of frog legs on the menu.

We Must get Confident of Recovery

Consumer confidence in the last month fell to 39.8 according to Bloomberg.  It was the lowest point in two years.  The President responded to the defeat of his own jobs program by the Democrat-led Senate by returning to the campaign trail to blame Republicans for being obstructionists.  This is either the audacity of hope in the Harry Truman 1948 strategy of running against a do-nothing Congress to an upset victory—or an admission that even the President knows he is headed for defeat.

Meanwhile, back at the bottom line the story looks somewhat different.  The stock market rallied after the EU tried yet another scheme to stabilize the Greek tragedy in their midst.  It may be smoke and mirrors again, but the markets clearly applauded the continued efforts and the willingness of the Germans to step up yet again.  Corporate earnings are coming in as expected with a few misses explainable by plausible or one time events.  The best news was the Baltic Dry Index which measures shipping of raw materials and commodities was up for August signalling positive future economic growth.

Why the conflicting signals?

While the markets are preparing for better times ahead based upon improving fundamentals, consumers still feel abandoned and uncertain.  The thing holding us back now is that lack of confidence.  The cause of that lack of confidence is the widely held perception that the country is not going in the right direction.  The President’s policies not only have not made things better, but arguably are making them worse longer.  His strident campaigning and vilification of his opponents far from helping him just reinforce our view that the President is in over his head and that we made a big mistake in believing in his audacity of hope!

As the President gets more shrill the Republicans are interviewing replacements and so far we have everyone’s second choice, Mitt Romney, as the guy still standing after the mud slinging of many banal debates.  We know who we don’t want but we don’t yet know who we might get.

But recovery is not about politics it is about confidence.  Confidence enough to unleash hoarded cash in business bank accounts by hiring people instead of buying equipment, materials and other companies.  Confidence enough to make bets even while uncertain about the future.  Confidence that rational regulation and reasonable taxes will eventually be ahead for us.

For business the reality is while there still is uncertainty affecting confidence there is also worry about being left behind so business spending is forward looking, positional, strategic in focus.  For individuals, consumer confidence is a reaction to the present, worry about the future, uncertainty about jobs, kids college education and retirement as individuals we focus on the price of gasoline and the unemployment rate while not realizing it is a lagging not a leading indicator.

So what?

So we have not yet talked ourselves into a recession but it was close.  What stopped the economy from going over the cliff a second time?  It was the fundamentals combined with something missing for a while—just enough optimism—to make a difference.

This is the worst message for President Obama.  The people are more optimistic as the election gets closer not because your policies are working but because they can count down the days remaining on your clock, Mr. President.  The cruelest irony is while you travel the country accusing your opponents of everything nasty and mean, you look nastier and meaner than your opponents and thus we have lost confident in you and are riding out your term.  Even if things get better—much better—we still won’t vote for you again, Mr President, because we realize you don’t believe in the same American dream we still crave and are confident we can have again—after the next election.

That is the true genius of America.  We vote with our votes!

Super Committee Target #2: Want Jobs? Go for Growth

And I do not mean growth in the Federal spending.

But Bloomberg reports that President Obama’s address to Congress will call for about $300 billion in additional spending for extending the payroll tax cuts, aid to local government to reduce layoffs of teachers and first responders, and some more of those shovel ready infrastructure projects. The President’s plan will pay for this $300 billion in short term stimulus with “revenue increases” long term.  Translation: higher taxes. The White House signaled that the President will make longer term recommendations to the super committee next week probably in another speech.

The problem the President faces is the $300 billion supplemental stimulus proposed is mostly a continuation of current policies and thus is unlikely to create many jobs, encourage much growth or raise confidence enough to unleash hoarded cash. With the combination of the high unemployment, the horrible zero net jobs report for August, and the political sparing, we are losing sight of the real problem and instead are focused on symptoms and gimmicks.  The result is we risk a long stay at in the ditch before the tow truck arrives to pull us out.

The President must give one ‘hellava’ speech September 8th to persuade a skeptical public he ‘gets it’. But his words will be compared with substantive proposals by other candidates.  Jon Huntsman released his last week.  This week Mitt Romney laid out a 59-point plan to get growing again.  The President is late to the jobs plan party so his plan must measure up to some of the good ideas of his competitors’.

So here is my check list to compare President Obama’s speech with Jon and Mitt’s plan.   √=me too.

Proposal

Jon Huntsman

Mitt Romney

President Obama

 

 

Tax Reform

Revenue-neutral personal income tax simplification with 8%, 14%, 23% rates.No deductions/creditsNo Alt Min Tax

No Cap Gains Tax

Cut Corp Tax from 35% to 25%

No Tax on Cap Gain, Div., Interest < $200k income

No Estate Tax

Extend:payroll tax holiday
unemployment ins.both expiring Dec. 31.

Reform?

 

Regulatory Reform

Repeal ObamaCareRepeal Dodd-FrankRein-in EPA

Curb NLRB labor regs

Reform FDA permits

Patent Reform

Privatize Fan & Fred

 

Postpone ozone and other EPA rules to 2013

?

 

Energy Independence

Grow USOil & Gas Production.End energy subsidies

?

 

Free Trade

OK trade deals: South Korea, Panama, ColumbiaNew Free trade deals: India, Taiwan, Japan

China trade sanctions as currency manipulator

Will send trade deals to Congress when they agree with labor conditions

 

Spending Reduction

5% spend cut =$20 BlnCap spend @20% of GDPRestructure Fed Gov’t Balc’d Budget Amend.

?

 

 

Workers & Immigration

Retrain workersRetain H1b foreign skills

Green card with diploma

Immigration reform

Let unemployed retrain as unpaid interns and still draw unemployment.

 

Job creation is important, but the unemployment rate is a lagging indicator.  It is our report card on our performance addressing the real problems with our economy—lack of GDP growth and uncertainty.  Unemployment is still high because US GDP growth is weak and uncertainty is paralyzing us.  Fix those two things and unemployment rates will drop as business spends its hoarded cash to create jobs to produce products and services to satisfy growing demand.

There are many good ideas on these lists from the candidates for President Obama to applaud and adopt, but most of them will take time and bipartisan cooperation to achieve.  That’s the problem.  The next President is not going to be chosen for fourteen months, then add three more until January 20, 2013, then time to get the new administration officials confirmed and on the job.

The bottom line is we can’t wait that long for real action focused on getting growth going again. So the supercommittee has an opportunity to bring us together around a bold plan to jump start GDP growth, restore confidence, reduce uncertainty and create jobs.