Romney and the Austerity vs Stimulus debate


In Romney’s victory speech in Florida he used some flowery rhetoric and good feeling one-liners.  When looking beyond the fluff there were some serious flaws in his thinking.  He said, “I want you to remember when our White House reflected the best of who we are, not the worst of what Europe has become.”  I think his point was to compare European socialist policies as similar to what is being done by President Obama.  His point may have also been European socialism has caused the EU tremendous hardships and America is going down that same path with Mr. Obama in office.

To his first point, the President has not instituted any socialist programs.  I have said this multiple times but it is worth reiterating; government involvement in a market or in the economy is not the same as socialism.  Claiming all Democratic policies are socialist is merely vitriol used by the GOP to fire up their base.

The larger and more important issue is Mr. Romney argues if the President’s policies stay in place then we are destined to become like the crumbling EU.  The problem is the President and the European leaders have responded to this recession with entirely different methods.  The EU decided reining in spending and austerity measures was the proper response while America opted for a stimulus approach.  America’s recovery has not been stellar but it has far exceeded the recovery in Europe.  In actuality the biggest threat to America’s recovery is the worsening of the European economy.

It is the classic austerity vs. stimulus debate in which stimulus has proven to be the victor.  Yet, even with only modest growth in GDP and an unemployment rate above 8 percent Republicans still want less spending.  Government spending is precisely what saved our economy.   Everyone agrees at some point government will have to decrease spending but not right now. Cutting spending now will only hurt our already fragile economy and increase the likelihood of a double dip recession.

Later in Mr. Romney’s victory speech he said, “I will cut the spending in government.” Sounds like his plan is more in line with the Europeans.

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2 thoughts on “Romney and the Austerity vs Stimulus debate

  1. Very good post! Nice to see someone else tackling this issue. It’s truly amazing how the GOP has such a difficult time acknowledging that the problem is on the demand side of the equation and how stimulus will do more in the short-term to get jobs back. This will then lead to a jumpstart to the private sector.

    Keep educating people:-)

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