Romney: The Closet Keynesian

[Montag]

The Closet Keynesian
By Matthew Yglesias

Sepember 5, 2012
http://www.slate.com/articles/business/m...rity_.html

excerpt:

Last week’s Republican National Convention was long on criticisms of the Obama administration and extremely short on policy proposals. But the week did give us several important hints about a Romney administration’s likely economic policy. And the news is good, indicating that Republicans are prepared to swiftly jettison a lot of terrible economic theories they’ve opportunistically embraced since November 2008 and do what it takes to keep the economy on track.

To appreciate the significance of this, you have to understand what a vast and swift revolution has taken place in Republican Party economic thinking in the past several years. Democrats and Republicans have traditionally disagreed about a lot of things, but one thing they have agreed on is the ability of expansionary fiscal and monetary policy to bolster a depressed economy. That was true when the Reagan administration rode out the brutal-but-brief 1982 recession with giant budget deficits and huge interest rate cuts, and it was true right through the George W. Bush administration. Bush started off his term touting his tax-cut plan as vital economic stimulus and Paul Ryan was a loyal spear-carrier in the Keynesian cause. Near the end of the Bush administration, the story was the same, as Democrats and Republicans came together to pass a stimulus measure by overwhelming margins.

But then came Barack Obama’s election.

If Democrats and Republicans have agreed that fiscal stimulus works, they also traditionally disagreed about how to do it. Democrats like to increase government spending, both because this has a higher “multiplier” in standard models and also because Democrats tend to believe that public services are very valuable. Republicans prefer tax cuts, both because this is administratively faster and simpler, and also because the GOP tends to think that public spending isn’t very useful. The Obama administration, cognizant of these points of agreement and disagreement, outlined a stimulus proposal that was partially weighted toward Democratic ideas but also chock-full of tax cuts. But as exhaustively documented in Michael Grunwald’s new book, The New New Deal, Republicans made a strategic decision to oppose Obama’s stimulus plans en masse.

Initially, this involved criticizing the details of Obama’s stimulus while remaining open to the concept of fiscal stimulus and indeed backing a package that was in many respects similar to Obama’s. But then the GOP went off in a very different direction.

[PassionateProgressive]

To all: just watched the first part of a documentary series that explains the significance of Keynsian economics. Title was Commanding Heights - The Battle for the World Economy. The first segment in the series was called The Battle of Ideas - Keynsian Economic Theory vs. Hayakian Theory....

I can't say that this makes me want to vote for Romney - I'm Third Party all the way. But I can say that it contributes to my distrust of the ongoing propaganda campaign set up to demonize him.

[Montag]

(09-06-2012 01:22 PM)PassionateProgressive Wrote:  To all: just watched the first part of a documentary series that explains the significance of Keynsian economics. Title was Commanding Heights - The Battle for the World Economy. The first segment in the series was called The Battle of Ideas - Keynsian Economic Theory vs. Hayakian Theory....

I can't say that this makes me want to vote for Romney - I'm Third Party all the way. But I can say that it contributes to my distrust of the ongoing propaganda campaign set up to demonize him.

It's a crude form of Keynesian similar to what Reagan did (involving regressive tax cuts and more spending on "defense"), which ballooned the national deficit. That Rethugs are so ostensibly, currently, worried about. The only possibly positive feature would be retaliatory measures against China for state intervention into their economy.