The Day of Reckoning is here, or will be in 2013. The next president and Congress will need to make huge decisions about taxes and spending. And those actions will help determine whether America’s economic future will be one of a) renewed growth and prosperity or b) shared scarcity and managed decline. Putting it another way, will the 21st century American Way be the dynamic, entrepreneurial capitalism of Schumpeter or the static, state capitalism of Keynes?
Which is why Mitt Romney’s economic agenda, all 59 points of it, has been mildly disappointing. Merely pointing out the myriad failures of Obamanomics may be enough to swap out the Oval Office’s current occupant. But that tactic is insufficient to create a mandate for bold change. America’s choices must be made clear and explained to voters in 2012.
And Romneynomics seemed all about keeping the spotlight on the other guy’s shortcomings. Romney’s tax plan—eliminating investment taxes for the middle class—was recycled from 2008. And his approach to entitlement reform was maddeningly airy: “As president, Romney’s own plan will differ [from Paul Ryan’s approach to fixing Medicare], but it will share those objectives.”
But no more. Romney has made several moves of late ensuring that if he’s the nation’s 45th president, Americans will have cast an affirmative vote for something.
First, Romney said his policies would help U.S. growth accelerate to 4 percent annually. Gutsy. Recall how Tim Pawlenty was mocked mercilessly for setting a 5 percent growth target. Overall, U.S. GDP growth has averaged 3.3 percent the past 50 years. But many economists think aging America will need to settle for growth closer to 2 percent long term. Romney, however, seems to agree with consultant McKinsey that a higher retirement age and smarter immigration policy, along with smarter regulation and pro-investment tax policy, could allow the United States to maintain its historic growth rate, if not higher. More importantly, the target represents a rejection of the declinist mentality.
Second, Romney has basically adopted Paul Ryan’s Medicare reform plan—helping seniors pay for private insurance—with the twist of giving seniors the option of sticking with a government program. By embracing a pro-market, patient-centered approach, Romney has invited Team Obama to attack him for trying to “privatize” Medicare as surely as if he advocated phasing out the system entirely. Another bold call.
Third, Romney proposed capping government spending at 20 percent of GDP and cutting $500 billion from government spending during his first term. Not only does this directly strike at the liberal consensus that spending as a share of output must rise as America ages, it invites another Obama attack: the GOP nominee is proposing economy-killing austerity.
So now Romney will have to advocate and defend—if he is the nominee—not just attack and deride. And America will have a choice, not just an echo.