Given that Americans are very clear that the economy and unemployment are the "most important" problems facing the country, it was no surprise that the first half of last night's Republican presidential debate was peppered with questions about matters economic. Only problem is that the seven Republican candidates on stage didn't have much to offer up in the way of solutions/answers. And the few times we did get specifics it was often flat out wrong. Case in point: Both Mitt Romney and Michele Bachmann were quick to mention that the sweeping health reform bill will cut $500 billion in Medicare spending. That's a surefire way to court the senior vote. But it's not true. The health care act will reduce the rate of growth in Medicare by that $500 billion. That's not a cut. It's slower growth. Big difference.
We've still got a long way to go before the nominating conventions, let alone the general election. For the sake of the 14 million unemployed -- and the fact 16.5 percent of the civilian working population is either out of work, or not able to find a full time job -- I sure hope we get a more substantive discourse soon. From both sides of the aisle. Just yesterday President Obama was out pushing patience as a centerpiece of his job-creation plan. That came on the same day that Obama's former economic adviser Larry Summers suggested we need a far more proactive stimulus plan to avoid having the desultory five past years years turn into a Japan-esque lost decade for economic growth. (For the record, Summers' Financial Times piece delivered on specifics: Extend this year's payroll tax into 2012, broaden it to include employers as well as employees, and increase the cut from two percentage points to three.) Moreover, the Jeffrey Immelt-led jobs council created by the President announced plans yesterday to help spur the creation of one million jobs over the next two years. Sound impressive? Well, that represents just 7 percent of the near 15 million unemployed. No matter if you lean left or right, Monday was not exactly a stellar day if you're looking for ideas on how to make a serious dent in the jobs problem.
Economic Roundup of the Republican Debate
The seven candidates were asked to introduce themselves with a short opening statement. Only Newt Gingrich referenced the unemployed -- "When 14 million Americans out of work we need a new president to end the Obama Depression." Everyone else chose to tick off their great family values -- not exactly a Newt strength -- mentioning how long they have been married, the number of kids and grandkids. Nothing wrong with that, but nor does it have much to do with the economy and jobs that are the front and center concern of Americans.
Here's are the few economic nuggets I gleaned from the 2-hour debate:
If Brazil and China can grow at 5 percent, so can the U.S. Tim Pawlenty dismissed as "hogwash" anyone who doubts his position that if elected he can get the economy to grow at a 5 percent pace by reducing taxes, cutting regulation and supporting undefined "pro-growth" initiatives. According to Pawlenty, if Brazil and China can grow that fast we can too. So much for the well-respected notion that there's a big difference between emerging and developed economies.
And for what it's worth, the last time U.S. GDP grew at an annual rate of at least 5 percent was during the late '70s and early 1980s, at a time when inflation was pretty much crippling the economy. I was also unsure how Pawlenty could reconcile his pro-China example with his suggestion that the U.S. needs to get tough on enforcing fair trade. "I'm not for being stupid and I am not for being a chump." But a key reason China gets to grow so fast is that the U.S. (and others) haven't forced it to let the yuan float.
Reduce the capital gains tax rate to zero and jobs will materialize. At least that's the idea Herman Cain is pushing. Give the wealthy a bigger break on their profits and they will hire more. He also wants to give total amnesty to corporations willing to repatriate profits they have idling offshore. Santorum pretty much said the same thing. As MoneyWatch's John Keefe covered, tax cuts are part of our fiscal problems, which makes it hard to see the efficacy of more cuts.
Get rid of financial regulation and the jobs will materialize. Gingrich said if we just got rid of Dodd-Frank and Sarbanes-Oxley, corporate American would be unshackled and the good times would roll once again. Maybe Newt wants to check out a recent poll that showed Americans think Washington is way too easy on Wall Street. Plus, there's an odd lack of logic in that argument: Whether you like Dodd-Frank or not, it came after the recession. It's hard to see how getting rid of it will solve pre-existing problems.
Repeal Health Care Reform and jobs will materialize. Rick Santorum cited the "oppressiveness" of the health care reform bill on business as a reason we are seeing a "double dip" recession. Bachmann added that the bill is a "job killer" and suggested that the Congressional Budget Office says the reform bill will cost us 800,000 jobs. But that's just not the case.
To suggest that a bill that wasn't passed until 2010 and won't go into effect until 2014 is somehow responsible for the millions of jobs lost in 2008 and 2009 when the financial crisis swept in just doesn't add up. Nor is there any indication that the bill will in fact have a big impact on future employment trends. I also wish debate moderator John King had asked the candidates who vowed to repeal health care reform what plans they have for addressing the 32 million Americans who would once again be left uninsured if the Affordable Care Act was abolished.
Social Security? What's the Big Deal? There was just one question asking what the candidates propose in the way of benefit cuts. Yet only Cain was asked to answer. For the record, he offered up the same privatized account plan, George Bush floated in 2005 that landed with the thud heard all around Washington.
Medicare: It's Broke. Face It. An audience member asked how the candidates would make sure Medicare is solvent for the next 50 years. Credit to Ron Paul for some refreshing truth talking: "It's not solvent and won't be solvent." Paul explained that the average Medicare beneficiary ends up spending three times as much as he contributes to the program over during his work years. Pawlenty also framed the program as insolvent, and intriguingly said he will put forth his own plan on how to reform the program. Stay tuned on that. The only outright support for the Ryan Medicare plan came from Rick Santorum, on the basis that the voucher system is no different than what current beneficiaries have with Medicare Part B. I don't have space to get into how wrong that is.
Housing Help? Nope. This topic barely got any air time. Pawlenty correctly pointed out that the Obama loan modification plans have been a failure. Pawlenty's suggested fix is that "the market is going to have to adjust." Paul was even more direct, stating that part of the problem is that the government intervention has just forestalled what needs to happen. "If we keep propping it [the housing market] up it's [falling prices] going to last another 10 years. We need to get prices down to clear the market."
The Deficit? What Deficit. To be fair, this is as much a failure of the debate moderator as the candidates. There was barely any discussion of what the candidates would do to deal with the deficit. All we got was Romney suggesting that the only way the Republicans will agree to raise the debt ceiling is if President Obama gets serious about spending cuts. "Where are the president's ideas?" Romney asked. A good question. But this was a Republican debate. And what we didn't get was an honest explication from each candidate on exactly how they would address the deficit, our debt and a whole host of other economic issues that are gnawing at Americans.
Photo courtesy Flickr users irrational_cat
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