Due to my renewed interest in politics, I’m thinking about being actively involved in supporting a 2012 presidential candidate. Kevin Brown suggested that I take a look at his favorite – Mitt Romney – who just came out with a book on some critical issues in American politics. My thought prior to reading the book was that Romney might be my type of candidate because of his strong business qualifications, which tend to lead to pragmatism, and because of his Mormonism, which might lead toward more tolerance of other beliefs. While I found the economic pragmatism, I didn’t find much social tolerance.
In several instances, Romney has taken positions that can be demagogued by the radical right:
- Support of the TARP and the stimulus. Although responsible Republicans supported these programs, the radical right was free to “just say no.” The current Senatorial campaigns of McCain and Crist are in grave danger because of their support of these programs.
- Belief in global climate change and that human activity is a contributing factor. Again, most reasonable people accept this, but not the radical right. To reduce his chances of being demagogued for his position, Romney has adopted an ingenious, plausible action plan – i.e., instead of spending trillions of dollars to reduce global warning, we should spend the money in the future to deal with the effect of global warning, if it occurs.
- Not in favor of cutting taxes. Romney believes that both parties share responsibility for the exploding national debt. He thinks Democrats are too focused on increased spending and Republicans are too focused on cutting taxes. Nowhere in the book does Romney repeat the absurd position of the radical right that cutting taxes is a good way to increase long-term revenue. If that were true, Democrats would want to cut taxes so they would have more money to spend. (Both parties agree that cutting taxes can provide a short-term economic stimulus.)
- Mandated health coverage. The Massachusetts health plan was developed by Romney, and it includes mandated coverage, which is the component of ObamaCare that is subjected to the strongest conservative, constitutional argument. Romney is left with the weak argument that mandated health coverage should be developed state-by-state, not uniformly by the national government.
- Tax reform. Romney is concerned that potential benefits of the FAIR tax or Value-Added Tax are out-weighed by the practical uncertainties that they would create.
- Social Security. Romney intelligently opposes the privatization of Social Security. This position is more compelling in light of the recent stock-market fluctuations and the elimination of pensions by most employers. It makes perfect sense to plan for retirement to include the stability of Social Security and the volatility/growth of a 401k/IRA.
In addition to these preceding positions, which I found imminently reasonable and highly pragmatic, I noticed several other positions that contained great insights. My favorite was the importance that Romney placed on productivity, which requires innovation, which causes dislocation, which government should do more to ameliorate. I was also intrigued by Romney’s suggestion that entitlements should not be considered as mandatory or automatic. Because entitlements comprise such a large percentage of government expenditures, we will be able to achieve a balanced budget only by cutting entitlements.
There are two other Romney recommendations that I endorse – (1) exploding medical costs can be contained only when incentives for overtreatment are reversed, and (b) a tax-swap involving (a) a carbon-oil tax and (b) other offsetting tax reductions (such as reducing income tax rates) has great potential for reducing our energy dependence on foreign oil.
My disappointment with Romney concerned his social positions. I had hoped that he would be tolerant and nonjudgmental toward people who chose to live differently than the Religious Right, but instead he seems intent on converting them. Romney is strongly pro-life, anti-gay marriage, and pro-religion. He thinks that people who believe in legalizing marijuana are hedonists, not real Americans who are living for something greater than themselves.
As of today, I am inclined to support Romney because his economic philosophy is so consistent with mine, but I will remain open-minded to other candidates who show more social tolerance.
The following is a detailed summary of the book:
No Apology, the Case for American Greatness, by Mitt Romney, St. Martin’s Press, 2010
Mitt Romney believes that America has played a critical role in fostering peace and freedom throughout the world and that it can continue to play this role only if it remains economically and militarily strong. This book examines issues that affect the ability of America to remain strong.
In Chapter One, Romney identifies the four contenders to world leadership:
- America’s power is based on economic freedom and political freedom;
- China’s power is based on free enterprise and authoritarian rule;
- Russia’s power is based on its energy resources and authoritarian rule; and
- Iran’s power is based on violent jihadism – conquest and compulsion.
To ensure continued American leadership, Romney suggests that all government programs needs to be evaluated first on whether they make us stronger or weaker.
In the second part of Chapter One, Romney describes how Obama is taking America’s foreign policy in a different, dangerous direction. Since the end of World War II, American foreign policy had three pillars – active involvement in world affairs, active promotion of American values (democracy, free enterprise, and human rights), and a collective security umbrella for America and its allies. By contrast, Obama wants America to be an arbitrator rather than an advocate; he wants American to be more nonjudgmental towards those who have different values; and he apologizes for American arrogance, unilateral actions, and unjust interference. Shortly after No Apology was published, Obama was quoted as saying at the Nuclear Security Summit, “whether we like it or not, we remain a dominant superpower, and when conflicts break out, we get pulled in.” Conservative commentators have taken Obama to task for the comment, and Mitt Romney would assert that he likes very much for American to remain a dominant superpower.
In Chapters Two, Three, and Four, Romney provides (a) his description of why historically, great powers decline (they shut their borders, became isolated from progress, and fearful of competition), (b) his explanation of why it is important for American to remain a great power (we are one of the “good” countries, and our competitors (China, Russian, and Iran) aren’t so good, and (c) his evidence of why America is declining as a foreign power (weakening nuclear, counterinsurgency, land-war, air, and naval capabilities, discontinuities – nations leapfrogging our technologies, and faltering allies).
Chapter Five begins the core of the book. Romney asserts that America can remain strong only if its economy is strong, and our economic strength is based on our productivity. Romney suggests that productivity is so important that it “should be a constant in the media and in the minds of citizens. And the importance of productivity transcends ideology. Whether you are interested in spending more on benefits or you want to add to defense, achieving your objective depends on the nation’s productivity.”
Romney believes that long-term productivity can be achieved only through continual innovation. He quotes from Alan Greenspan, “Creative destruction – the scrapping of old technologies and old ways of doing things for the new – is the only way to increase productivity and therefore the only way to raise average living standards on a sustained basis.” Unfortunately, innovation causes hardship to some, and this causes well-intentioned people to resist innovation. Business and unions continually petition the government to protect them against new competitors who have innovated. Romney’s advice to the government is – “the most important thing government can do to promote innovation and productivity is to not block it, as by preventing creative destruction.” But Romney wants to ameliorate the localized harm caused by creative destruction – “For all the benefits that productivity improvements bestow on the many, we need to make sure that the cost is not borne by the few…. As a nation we must do everything we can imagine to help the affected people transition to new and productive employment.”
Chapter Five also includes a discussion of the bank bailout (TARP) and the stimulus program. Romney agrees that the TARP and stimulus were needed, but criticizes their implementation:
- “Secretary Paulson’s TARP prevented a systematic collapse of the national financial system; Secretary Geitner’s TARP became an opaque, heavy-handed, expensive slush fund. It should be shut down.”
- “…as the magnitude of the economic slide became more pronounced, a second stimulus was called for…. The ‘all-Democrat’ stimulus that passed in 2009 will accelerate the timing of the start of the recovery, but not as much as it could have had it included genuine tax- and job-generating incentives.”
And finally, Chapter Five includes a discussion of various proposed tax reforms. Romney is intrigued by a Fair Tax (a national sales or consumption tax of 25-30%), but he is reluctant to endorse something so revolutionary because of critical uncertainties – such as whether people quit buying things just to avoid taxes. At a minimum, he would want to structure the tax to avoid a windfall to the rich and a hit to the middle class. Romney hates a value-added tax because he thinks government would use it to supplement its income instead of using it to eliminate the income tax. (Indeed, as I write this note, it appears the Democrats are planning that.) Romney’s preferred tax plan would be to simplify the code, eliminate taxes on middle-class savings, and consolidate corporate and individual taxes on the same money.
In Chapter Six, Romney suggests that our generation of Americans will have to be careful to avoid being branded as “The Worst Generation.” He believes this branding may be appropriate because we were granted so much from our parents and, in turn, we might give our children an oppressive national debt. To avoid this inglorious end, we need to address “the entitlement nightmare,” and we do this my creating public awareness that pushes the issue to the front burner. One idea – “In 2008, the liberal Brookings Institution and the conservative Heritage Foundation joined forces to recommend that our elected officials stop considering all entitlement spending as ‘mandatory and automatic,’ because it is not, after all. Congress and the president have the power to appropriate spending as they see fit, even for so-called mandatory programs like entitlements.”
Regarding Social Security, Romney says, “But given the volatility of investment values that we have just experienced, I would prefer that individual accounts were added to Social Security, not diverted from it, and that they were voluntary.”
Regarding Medicare, Romney wants to move away from the current fee-for-service reimbursement system and move toward more efficient systems, such as per-person or per-diagnosis plans. But he concedes that this won’t be enough to fix Medicare; it will need a more fundamental alteration (apparently beyond the scope of this book).
Regarding taxes, spending, and deficits, Romney says, “There are people in both parties who see the budget as something of a game of chicken. Some Democrats are eager to spend so much that Republicans have to raise taxes, and some Republicans, on the other hand, are intent on lowering taxes so much that Democrats have to cut spending. Both sides take great satisfaction in their respective battle plans: the Democrats for spending more and the Republicans for taxing less. My vote is for the Republicans, but in either case, deficits cannot be accepted as part of political tactics; there is simply too much as stake…. There are times when deficit spending may be an appropriate bridge to finance a national emergency or to stimulate a depressed economy, but it should not be a permanent part of the budget.”
In Chapter Seven, Romney addresses national health insurance. Romney is exceptionally knowledgeable because he extensively studied hospital operations when he was a business consultant and, as governor he led the adoption of mandatory health insurance in Massachusetts. Romney carefully describes the differences between his initial proposal and the plan eventually adopted by the state legislature:
- Under Romney’s proposal, everyone was required to buy insurance or show that they could pay for their own medical costs. The legislature removed the option to self-insure.
- Romney’s proposal excluded some expensive treatments, but the legislature added coverage for dental care and in vitro fertilization.
- Romney proposed a large penalty for employers who didn’t provide health insurance, but the legislature significantly reduced the penalty.
- Romney proposed that everyone should pay at least a portion of the premium, with a sliding scale based on income. A subsequent governor decided that the lowest-income people would pay nothing.
Despite these developments, Romney believes that the Massachusetts plan is working. But the Mass plan is not the Obama plan. Romney opposes ObamaCare because of the public option (subsequently deleted form the bill) and because mandatory health insurance should be tailored by each state to meet their needs; let the states be “laboratories of democracy.” In the event ObamaCare is adopted, Romney proposes the inter-state sale of health insurance to increase competition.
In the second part of Chapter Seven, Romney discusses in-depth his plan to force-down medical costs, something that he notes was beyond the scope of the Mass plan. Romney describes some popular proposals – electronic records, on-line reporting re: prices and quality (so-called transparency), and malpractice reform – but concludes that they are not enough. Real change will require bringing the free-market to health care. Currently, health care has a multitude of incentives for over-treatment or over-use (he refers to the New Yorker article comparing costs and treatment in El Paso vs. McAllen), and Romney wants to see incentives (such as co-pays and deductibles) that discourage unnecessary visits and treatments. (Incidentally, this is why ObamaCare is trying to tax Cadillac plans to death, but labor unions deferred the tax until 2018.) Romney wants to shift toward consumer, doctor, and hospital incentives, such as paying doctors for the quality of their work instead of the quantity of their work. Romney is not hopeful re: managed care (HMOs) because top-down controls don’t work like bottom-up incentives.
In Chapter Eight, Romney discusses education. Because of serious warning signs, Romney has concluded that education is deteriorating in America and this threatens its economic and military leadership. Similar to other issues discussed by Romney, he believes that the examination of data can lead to solutions. Data has shown that reducing class size or spending more money do not lead to improved academic performance, but the quality of teachers does. To improve the quality of teachers, we need to select the best and brightest, work to improve their skills, and monitor performance. “Intervention” is needed if teachers or schools that do not perform. Because of Romney’s love of data, he loves No Child Left Behind. Although he doesn’t directly discuss the appropriateness of the feds in education, he notes that, “Only the federal government had the clout to force testing through the barricade mounted by the national teachers’ unions.” Vouchers are politically infeasible, but charter schools are a viable and promising alternative for school choice.
Chapter Nine deals with energy independence. Romney concedes that climate change is occurring – “the reduction of global ice caps is hard to ignore” – and that human activity is a contributing factor. But Romney does not suggest that American respond by making dramatic changes to its economy. Instead he suggests that it, on one hand, reduce emissions where economically reasonable (where consistent with our objective of reducing dependence on foreign oil) and, on the other hand, prepare to mediate the effects of sea level changes on affected populations. Spending money to reduce global warming is inefficient because reducing global temperature by a very small amount requires enormous investment.
Romney favors the aggressive pursuit of domestic energy sources such as oil, gas, coal, nuclear, wind, and solar. He doesn’t see any great benefit to four so-called game changers:
- Carbon cap-and-trade – an energy tax that will have minimal effect on global warming;
- Government standards such as CAFÉ – not big enough to change the game;
- Oil or carbon tax – would fatten government and be too regressive; and
- Tax swap – would penalize industries and people that depend on energy.
Of the four game-changers, the tax swap might work if some of the weaknesses could be ameliorated.
In Chapter Ten, Romney describes those American values that make us great:
- Americans like to work, and that makes us productive. However, welfare is eroding our work ethic. Our safety-net programs must be reformed to reward work.
- Americans value education.
- America respects risk-taking – “As a nation, when we salve our collective need for security by regulating and burdening the risk-taker and heavily taxing the reward they receive for risk and innovation, we deaden the entrepreneurial spirit and imperil the American economic engine.”
- Americans are a religious people. And even if they aren’t religious, they believe in a purpose greater than themselves, such as their family, community, or country. They aren’t hedonists, except for those few who want to legalize marijuana.
- Americans are patriotic, pro-life, anti-same-sex marriage, strict constructionists, and informed voters.
Chapter Eleven closes the book by listing 14 Leading indicators that reflect whether America is effectively leading the world, such as the prevalence of freedom in the world, a national security assessment, relative productivity, and national debt.
The Epilogue lists 64 steps that will support the three pillars that sustain a free and strong America – a strong economy, a strong military, and a free and strong people.