Mitt Romney – Keynesian Devotee?

This is a VERY good read from Forbes.com into Mitt Romney’s tax and monetary policies.

Mitt Romney Is Stuck Because He’s Not A Pro-Growth Republican

In the article, it states that Romney wants to “eliminate the tax on capital gains, dividends, and interest for those earning less than $200,000 per year.”

The author, Paul Hoffmeister, chief economist at Bretton Woods Research, LLC and a leading supply-side authority, takes great issue with this limitation.

But Romney’s defense of not completely eliminating the tax on capital gains, dividends, and interest is shocking.

In an interview with Fox’s Chris Wallace on December 18, Romney said: “I’m saying don’t raise taxes on anyone. I want to make sure that with the precious dollars we have, if we can provide the tax relief, that those dollars go to middle-income Americans. The people that have been hurt in the Obama economy are — are not the wealthy. The wealthy are doing just fine. The people that have been hurt are people in the middle class. And so I focus the — those precious dollars that we have — I focus that on the middle class.” In other words, let’s only cut taxes for the middle class because they have been hurt the most by the recession.

Based on the supply-side economic model, Mitt Romney and his tax platform will hurt the very people that he is trying to help. His plan will scarcely benefit middle and lower income Americans, effectively delivering four more years of the current economic stagnation. The wages and livelihoods of middle and lower income Americans will only begin to improve when investable capital becomes abundant, and what Mitt Romney is proposing will not make investable capital abundant. If Mitt Romney understood the supply-side model and specifically how capital formation increased real wages, he would never make such a defense.

Romney’s defense is rooted in the belief that those who have suffered the most economically deserve to have more money in their pockets. This is the Keynesian prescription of putting money into people’s pockets to spur consumer demand. More money in people’s pockets does nothing for capital formation, which is why Keynesian stimulus plans do not work.

Call his economic policies populist, class warfare-based or Keynesian.  Just don’t pretend they are in any way, shape or form supply-side.

Let me go back to one of Romney’s quotes from above:

I want to make sure that with the precious dollars we have, if we can provide the tax relief, that those dollars go to middle-income Americans.

He’s talking about money from the perspective that it is the government’s and not that of the wage earners and the taxpayers to begin with.  This guy just doesn’t get it.  Ironic that a venture capitalist by trade doesn’t understand the basic precepts of capital formation.  Then again, Jon Corzine headed up Goldman Sachs for years.

Here’s the big reason to be wary of Mitt Romney, though.

since 1896, only supply-side Republicans have become President. Voters only elect Republicans that credibly support sound money and low taxes.

This was true from McKinley, Roosevelt, and Taft between 1896 and 1908, to Harding and Coolidge during the 1920′s, to Reagan and George W. Bush during the last 30 years. Of course, some Republicans faked it during their campaign and won; for example, Eisenhower (1952), Nixon (1972), and George H. W. Bush (1988). And, predictably, “austerity” Republicans have never been elected president; for example, Hoover (1932), Goldwater (1964), George H.W. Bush (1992) and Dole (1996).

To that list I would add McCain (2008).

Romney isn’t even trying to fake being a supply-sider. Occasionally you may hear the words “pro-growth” come out of his mouth, but he has no clue what that really means.  Romney is another Bush ’92, Dole ’96, McCain ’08 in the making.  Need further proof of this?  Those three have all come out and backed Romney now with the last of them, McCain, doing so yesterday.

If you want to nominate a loser, then vote for Romney.  Otherwise, look somewhere else.