The Economic Case for Romney-Ryan

The Economic Case for Romney-Ryan

By Robert Tracinski - October 11, 2012

All elections are about "the economy, stupid," as the old saying goes. This one more so than usual. We are now five years from the beginning of the recession. The economy has technically recovered, but there is some doubt about that; if official statistics are undercounting inflation, which is likely, we may still be in a recession. Certainly, this doesn't have the usual characteristics of a recovery. There has been no surge of growth to bring us back to prosperity and no real improvement in employment. In fact, there is widespread speculation that we could be heading back down into a new recession.

It goes without saying that the trillions of dollars in stimulus, both through federal spending and through money-printing at the Federal Reserve, have depressed the economy instead of stimulating it, giving us the weakest economic recovery on record. Literally. This year may end up being the worst non-recession, non-depression year of economic growth on record. The second-worst year: 2011.

The alternative is to stop trying to stimulate the economy through artificial means, and instead to get the government out of the way, to keep taxes low and reduce regulatory barriers, so that the economy can recover naturally and sustainably on its own.

All of that is an argument against another term for Barack Obama and in favor of his opponent, because the president has learned nothing from the failure of his policies. President Obama was elected precisely because of this stubborn refusal to recognize the failure of the statist ideal. Four years ago, that gave him an aura of optimistic idealism. Four years later, it gives him an aura of arrogant, out-of-touch dogmatism. It makes him seem-as it did in last week's debate-as if he just doesn't care and he's not even trying. And while I don't trust Mitt Romney to understand exactly the right course of action to reverse our direction, he has been talking about a real reversal in direction, about avoiding tax increases and reducing regulation.

In particular, in vowing to repeal Obamacare, Romney has endorsed the first actual rollback of the welfare state that I can recall. For decades, Republicans have contented themselves with merely slowing the growth of the welfare state, adding to it at a lower rate and with some "market-oriented" window dressing. At best, they have fought a desperate rear-guard action, but they have not gone on the offensive against big government. This is the first time that they have attempted to remove a major addition to the welfare state after the law has actually been passed. If they can do it-and that depends on winning the presidency and control of the Senate in this election-then it will be an important new precedent.

But beyond all of that, there is one overwhelmingly compelling reason to support the Romney-Ryan ticket. They have taken the right stand on one issue in particular that ought to be at the center of the political debate: not just the size of the federal debt, but the basic structural problem that is driving us toward an economic "death spiral" of unsustainable borrowing.

In this fifth year of the "Great Recession," it may not feel like things can get any worse, but they can. A lot worse.

Mitt Romney occasionally talks about how we're headed to where Greece is right now. It's a thoroughly valid comparison, but I suspect it doesn't have the punch that it should because most people don't really understand what is happening in Greece, so they don't understand the parallels to what is happening in the United States.

We have to understand what really drives a sovereign debt crisis. Government borrowing triggers a crisis when a country piles up so much debt that it starts having difficulty making the interest payments. This is the point at which a debt becomes so big that it cannot be paid back.

The crisis in Greece was set off in 2009 when a new political party came to power and revealed that the nation's debt was higher than previously thought. It was not a mere mistake. Previous governments had cooked the books and hidden part of the country's debt years earlier so that Greece could appear to meet the debt targets required for adoption of the Euro. This was all done with a nudge and a wink on the part of the European Union, because the common currency was viewed as a political goal that was more important than economics.

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Robert Tracinski is editor of The Tracinski Letter and a contributor to RealClearMarkets.

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