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In the larger economic debate, Democrats and the left in general are largely focused on one goal: demand. Policymakers should, the progressive argument goes, do everything possible to boost demand, since this rests at the heart of the larger problems — more demand would mean more jobs, more growth, more production, more trade, etc.
The right disagrees. In fact, Republicans tend to believe the opposite — we don’t need to boost demand; we need to deal with the real problems like regulations, taxes, and some amorphous sense of uncertainty.
Demand, in the conservative model, is largely irrelevant. It’s why Republicans consider the very idea of generating economic activity through unemployment benefits and food stamps to be completely ridiculous.
Apparently, Mitt Romney forgot the larger debate and temporarily switched sides yesterday.
Yesterday morning one of the party’s front-running presidential candidates contradicted that orthodoxy. Asked to explain his critique of President Obama’s economic views on MSNBC yesterday, Mitt Romney alleged that “he doesn’t understand how the private sector works.” What in particular does the president not understand? Demand!
“The president thinks that if you have cash on your balance sheet that means you’re gonna go hire people. No, you hire people if you have customers. The president doesn’t understand what makes the American economy go. I do.”
Wait, Romney thinks the key businesses expanding their workforce is greater demand? To borrow a Josh Lyman line, “That’s the other guys.”
Do congressional Republicans know Romney is saying stuff like this? Because they certainly don’t agree with this approach. Businesses don’t need customers, GOP officials argue, they need fewer regulations, a smaller tax burden, and the comfort that comes with knowing that health care reform will go away forever. Then they’ll lower their prices and expand their worforce. Customers will come eventually.
In trying to disagree with President Obama, Romney accidentally endorsed President Obama’s economic argument. While hoping to make the case that the president “doesn’t understand” the economy, Romney inadvertently proved he “doesn’t understand” the economic argument underway in Washington.
Wait, it gets worse.
In the same paragraph, Romney mocked the idea that companies with cash on their balance sheets will necessarily hire more workers. On this, he’s correct. But also note that Romney’s economic plan includes big tax breaks for corporations … so they’ll have more cash on their balance sheets.
And this guy’s entire campaign is predicated on the notion that he’s a business whiz? No wonder Romney failed so miserably to create jobs in Massachusetts and the private sector.
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Todd for VT House on September 29, 2011 4:35 PM:
Demand-side economics? So we're all Keynesians now, er...again?
Ron Byers on September 29, 2011 4:40 PM:
Romney is in the wrong party.
Too bad the Republican agenda is set by Roger Ailes and Rush Limbaugh. One is a political hack and the other is a failed baseball press flack. Both are good at charging ahead without thought. Both have made a living outside the real economy. Neither has any idea how the economy works. Nor does either care. Both are working with people who want to be entertained, but don't really want to think about what their "leaders" are actually saying.
bloomingpol on September 29, 2011 4:47 PM:
We should all send him the link to this simple explanation of the job creation cycle: http://www.connectthedotsusa.com/images/FavSlides/JobsWages/JobCreationCycle.jpg
dede21206 on September 29, 2011 4:49 PM:
The number one job creator in any economy in any country
is a worker with extra money in their pocket to spend.
Period.
If the only jobs that are available are minimum wage, or barely above that, our economy, and our country will fail.
Henry Ford knew that. Paying his workers enough money, so that they could also be consumers of his product, was what made Ford a successful business.
A person, let alone a family, let alone a country, cannot survive without well paying jobs.
It's common sense.
It's simple math.
bloomingpol on September 29, 2011 4:49 PM:
And after he looks at that image (http://www.connectthedotsusa.com/images/FavSlides/JobsWages/JobCreationCycle.jpg)remind him that there are no tax cuts in the cycle. Not necessary, Mitt, no need.
Gregory on September 29, 2011 5:02 PM:
Demand, in the conservative model, is largely irrelevant.
Which is why the "conservative model" should be mocked relentlessly until it's no more fit for discussion in polite company than Communism.
mellowjohn on September 29, 2011 5:04 PM:
"Apparently, Mitt Romney forgot the larger debate and temporarily switched sides yesterday."
not to worry; he'll switch back... and forth... and back...
ifthethunderdontgetya™³²®© on September 29, 2011 5:05 PM:
The right disagrees. In fact, Republicans tend to believe the opposite...
I disagree, they don't believe in anything right now but making things worse in a cynical bid to retake power.
~
DAY on September 29, 2011 5:31 PM:
Each January employers send their employees their "tax form".
And the employees take the piece of paper to H & R Block, and pay money to have their taxes "done".
(often borrowing against their refund at the same time.)
Is it any wonder that Republicans can flim flam voters?
Joe Buck on September 29, 2011 5:43 PM:
Steve, you're asking for a consistent argument, forgetting that you're talking about Mitt Romney. He'll take any given position on any given day, and if an attack on Obama appears to score points, he isn't going to ask whether it agrees with what he's said before.
Larry on September 29, 2011 5:44 PM:
Little mentioned is the growing inequity in wealth and inome between the rich and middle class. What happens when the majority of the consumers in a consumer dominated (70%) economy have increasingly less money to spend? The economy will remain stagnant, demand will remain tepid as long as middle class wages remain depressed. Corporate America wants consumers to buy their stuff, but they are unwilling to sacrifice some of millioms they pay CEO's for better rank n file wages. Message to big business: Your workers are also your customers. Equalize pay and the consumer will begin to consume.
o correlation between tax rate and job creation:
My partners and I own three small businesses. We employ 185 people and have been in business since President Nixon. Demand is collapsing; Times are tough... But I want to make one point: The tax rate has nothing to do with our hiring practices. LOWER THE TAX RATE TO ZERO AND WE WILL NOT HIRE ONE PERSON. Why? Lack of consumer demand. Show me the customers and then we will hire and invest in growth. My customers have shrinking disposable income. The growing disparity between rich and poor is the culprit. The people do not have the purchasing power to grow the economy. Reducing the debt solely on the backs of the middle and lower class will be counter-productive.
emjayay on September 29, 2011 6:14 PM:
Yes Larry, Republicans seem to think that all the riches lavished on the already wealthy come from the sky or somewhere. No, wealth is generated by the whole economy. Every cent that is sucked up by the already wealthy is a cent that is not going to someone else. You just have to look at the economy as a whole, not on your ideology that claims that whatever money anyone manages to make is created somehow by that person and so they deserve to collect whatever amount they can. Obvious to anyone not blinded by a totally self centered ideology.
However, even considering stuff this for a second is Class Warfare and Marxism. Not, you know, math. Or Macroeconomics 101.
montag on September 29, 2011 6:35 PM:
Having worked in a bank, my circle of friends may be more financially literate than most, but most folks know that demand is the problems. My Republican friends go along with the Party malarkey because they want to get rid of the black guy in their White House.
rrk1 on September 29, 2011 7:54 PM:
When our economy was healthier 70% of it was driven by consumer demand. When consumers don't have any money there isn't any demand. What is the mystery about that? If we had a manufacturing economy, as we once did and the Chinese do now, and those products were sold abroad as well as at home we'd be in good shape. But we gave all that away, now we're wondering why there's a problem?
The Rethugs know it. The banks know it. The business world knows it. If the bought-and-paid for MSM weren't bought-and-paid for we might see daily coverage about the lack of demand. As it is they spur on the delusionary nonsense of the Rethugs in their relentless attempt to take over the country.
Matt on September 29, 2011 8:14 PM:
There are three possible explanations here, all of which are plausible. We've covered the first two:
1) Romney got confused/stupid.
2) Romney is reflexively flipflopping.
But don't count out the third:
3) Romney is once again obeying the First Rule of Modern Republican Campaigning: whatever your weakness is, accuse your opponent of it.
We know he knows it. Hell, just the other day he was railing against Obama as a Harvard elite, a group which would include him, three of his sons, and half of his campaign staff.
Romney's weakness on economic policy is... his economic policy. So he deliberately accuses Obama of having his plan, and claims Obama's plan as his own. Who's going to call him on it? A few lefty blogs? How many GOP primary votes did this washingtonmonthly.com post cost him?
It might be the other things, but don't anyone try to tell me that's not plausible.
Hmmmmm on September 29, 2011 8:33 PM:
The president should borrow a line from Stephen Colbert and tell Mitt Romney "Thank you for agreeing with me." Preferably in one of his stump speeches. Over and over, day after day.
Registeredguest on September 29, 2011 9:09 PM:
Imagine the Boos an answer like that will get at the next republican debate.
stratplayer on September 30, 2011 11:14 AM:
I have to wonder if Romney is trying out a bit of liberal dog whistle here. Obama does, in fact, suck on the question of stimulating demand, and Romney may well be signaling that he'll do better in that regard, so we should take his primary campaign rhetoric with a colossal grain of salt. Wishful thinking on my part?