What Would Romney Do?

In FXD's most recent post, my fellow Pennyon contributor exhorts the American people to "move past" Romney's hypocritical 2006 health care reform law, and realize that we should be focusing on the former CEO's economic insight instead of his record on social reform. I could not agree more with FXD's sentiment that we should be aiming our attention at the dire economic situation in which Americans now find themselves. Someone, however, should pass the memo on to Romney. Instead of moving on from the issue of health care, Romney said in his first official campaign speech yesterday that his agenda "begins with a complete repeal of Obamacare."

In the same speech, Romney received raucous cheers when he delivered the line "Barack Obama has failed America." With such an assertion, it is important to imagine an alternate universe where President Romney was sworn in as the 44th president of the United States three years ago. What would Romney have done so as to not fail us like Obama has? Well, for starters, he apparently would not have implemented a health care reform bill which included an individual mandate, expanded Medicaid, and utilized exchanges, much like he did in 2006. But at the request of FXD, we will leave that aside.

Regarding economic policy, two of President Obama's first major pieces of legislation were the auto bailout and the stimulus package -- both opposed by Romney. "Let Detroit Go Bankrupt," wrote Romney in a New York Times Op-Ed. Romney asserts that "if General Motors, Ford, and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye." Oh, really? Later, in the summer of 2009, the Obama Administration decided to prop up the auto industry in exchange for fundamental restructuring. Since then, the industry has regained its footing, the bailout has cost much less than anticipated, and according to Secretary Geithner in his recent Washington Post Op-Ed, it saved roughly one million jobs. Confronted with the facts, Romney has engaged in an all-too-familiar display of flip flopping. Regarding Obama's auto bailout, Romney's spokesperson claims that "Mitt Romney had the idea first." To be fair, many of the ideas described in Romney's opinion piece found themselves into the eventual Obama package, such as the requirement for restructuring. But the crucial aspect -- the propping up of the auto companies with Federal aid which Romney allegedly opposed-- helped the companies stay alive during their restructuring, saving, in Geithner's estimate, roughly a million jobs.

Moving on to the stimulus, Romney favored a plan with tax cuts, and limited spending on "essential" projects. In looking at Obama's Stimulus, we find that $260 billion went toward tax benefits, while $202 billion went to contract, grant, and loan programs. Of the various programs, the vast majority (over $162 billion) went to education, transportation, energy/environment, infrastructure, and housing. Are they essential enough, Mr. Romney?

Rounding out the rest of the stimulus is the $184 billion directed toward entitlements, the majority of which supplied Medicaid and unemployment insurance with funding. Without these funds, scores of jobless Americans would have been unable to subsist for very long. Wouldn't our President have failed America, as Romney claims Obama has, if he let the unemployed go without medical care and without enough money to put food on the table?

To be sure, the stimulus package passed by Congress and signed by President Obama was a vastly insufficient response to the economic cataclysm America faced. Despite this, the Congressional Budget Office, a non-partisan federal agency which analyzes economic and budgetary data, estimates that the stimulus package saved anywhere from 1.4 to 3.4 million jobs.

It's safe to say that Romney's plan, given its' smaller scope consisting of tax cuts and modest temporary spending increases, would not have been as successful. It's not clear how Romney's stimulus would have brought about recovery, aside from his claim that permanent tax cuts would act as an economic panacea. But lets assume, for a moment, that had Romney been in office, our President would not have "failed us," and the economy would be turning upwards as I write this column.

So in this alternate universe, the economy has regained traction, and addressing the federal budget becomes issue Number 1 for President Romney. How exactly does Romney plan on reconciling his permanent tax cuts with a balanced budget? The answer hinges on "regain[ing] control over...entitlement spending on programs such as Social Security and Medicare." To be sure, these two programs will be giant fiscal burdens in the future if they are not reformed, but won't the burden be increased by less revenue? Of course they will be. But again, much like his health care hypocrisy and his bailout blunder, we will move on.

When analyzing the two, Romney's proposal for the future sounds strikingly like Congressman Paul Ryan's budget plan. No wonder, then, that Romney has voiced his support for the Ryan Plan. Both plans hinge on cutting taxes and overhauling Medicare. Mr. Ryan proposes to do this by turning Medicare into a voucher system. In essence, the Government will give coupons away to the elderly so that they can fund their own medical care. The amount the Government allots is pegged to general inflation, which moves at a much slower pace than rising medical costs.

The important take away here is that the Ryan Plan, which President Romney would pass if he were in office right now, does nothing to control costs; it merely cuts off access. There will come a time in the not-so-distant future, when the vouchers given out under Ryancare/Romneycare 2.0 will not cover medical costs for our elderly population. When this happens, millions will be unable to pay for their most basic medical care as they age. The thought of denying our elder population of health care is unconscionable to me. But even if one were to take it as a necessary evil for the sake of our fiscal security, there is one giant obstacle: any system that cuts off care to the elderly will never last.

The elderly population votes in the highest percentage of any cohort, and once their healthcare starts to run out, they will go to the polls. And they will flock there in droves. Political pressure will mount and before long either the vouchers will increase or Medicare as we know it will be reinstated. There is no way around it: an aging population will not allow its health care to be taken away (which is the reason why Ryan starts the voucher system only for those currently under 55). For true reform of Medicare, cost controls must be implemented within the health care system. President Obama has recognized this by containing costs via his health reform bill and by appointing the Health Care Advisory Board, which will study ways to cut costs in Medicare.

Romney's support for the Ryan budget and his pledge to immediately repeal the Affordable Care Act demonstrate that the former Governor does not fully grasp what it takes to balance the federal budget in the long run. And in the short term, it doesn't appear that we would be much better off had Romney been living at 1600 Pennsylvania Avenue these past three years. With no auto bailout, and a much smaller stimulus package the American economy would have been much worse off. Millions more would be jobless now, cut off from unemployment insurance and with limited access to healthcare. Now that is an alternate reality where leadership would have failed America, with Mitt Romney - not Barack Obama - to blame.