Digs at Barack Obama, appeals to religious conservatives and attacks on Obamacare — we know Thursday night’s Iowa debate among the Republican presidential candidates will feature these staples of the GOP diet.
But will any leading candidate articulate a coherent and plausible economic policy?
Obama’s economic policies haven’t saved us. Federal taxes and the national debt are both too high. But stating these truths is different from laying out an economic philosophy or a policy platform. On the eve of the Iowa straw poll, any Republican looking to the top-tier presidential candidates for an actual economic plan is left with thin gruel.
Former Massachusetts Gov. Mitt Romney, instead of offering a real economic vision, points to his very successful record in the private sector. This isn’t as impressive to conservative voters as Romney seems to think. George Soros, after all, has also made a lot of money.
What are Romney’s plans for the U.S. economy? Nothing much, yet. My Washington Examiner colleague Conn Carroll writes in his Thursday column, “On his official campaign website Romney frankly admits he has not yet created a jobs plan,” but instead has some boilerplate principles.
Texas Gov. Rick Perry argues that his record in Texas is enough. This might be true. After all, Texas has boomed relative to the rest of the country. Perry deserves some credit for this, but it’s not as if Texas’ low regulations and zero income tax were Perry’s inventions. Maybe Perry could spread Texas’ prosperity to the other 49 states, but the burden of proof is on him to show how. Skipping this week’s debate amid growing economic turmoil deprives Perry of an ideal chance to do that.
Rep. Michele Bachmann, like Romney, offers up some red meat, but nothing specific. We know she thinks government is too big, but which taxes would she cut? Is there any spending she’d protect? What monetary policy and trade policy does she favor? We don’t know.
Former Minnesota Gov. Tim Pawlenty, on the other hand, has fairly detailed economic plans, but he’s also shown that he hasn’t necessarily done his homework. Liberal blogger Matt Yglesias gave Pawlenty some well-deserved mockery this week for Pawlenty’s false description of monetary policy. In Iowa last weekend, Pawlenty falsely described quantitative easing as this: “the Treasury was buying our own debt. So they were paying off their Visa card with their Discover card.”
In truth, the Federal Reserve was buying Treasurys. The potential problem with quantitative easing is not that we’re rotating debt (in this instance, we’re not), it’s that we’re creating free money out of thin air, which could cause inflation.
The trouble here is not that Pawlenty misunderstands or misspeaks on monetary policy — an arcane subject to most people — but that most conservative politicians are trying to walk two divergent lines when it comes to money and the Fed.
There are competing schools of conservative economics on the question of money printing. The Milton Friedman teaching, held by most Beltway free-market economic thinkers, is that while economic activity remains slow and prices remain steady, the Fed ought to be inflating the money supply in order to prevent economic contraction.
While liberals have a different analysis, their prescription is the same on this score: Print more money. Running on “I agree with Paul Krugman, we need inflation” is hardly a winning issue in a GOP primary.
The only Republican presidential candidate who has evinced a coherent economic policy is Rep. Ron Paul of Texas, who rejects Friedman’s teachings in favor of the Austrian School of economics, grounded in the writings of F.A. Hayek and Ludwig von Mises. Austrian economics (which prescribes a gold standard) rejects money-printing as an economic cure, and in fact blames it for the boom-and-bust cycle that has been so apparent for the past 15 years.
Paul’s arguments appeal more to the conservative base these days, but Friedman’s hold sway among Republican elites.
Another systemic problem hurts the GOP’s ability to put forth solid economic policy: For too long, Republicans have outsourced their economic policy to business lobbyists — a group that often rejects free-market policies. The U.S. Chamber of Commerce supported TARP, stimulus and cash for clunkers, and today they’re getting behind Obama’s idea of an infrastructure subsidy bank. Wall Street loved TARP, of course, and rallies every time Ben Bernanke makes new money out of thin air.
So when Republicans go to the well for campaign contributions and outside support, they’re palling around with guys who have more in common with Barney Frank than Ron Paul. How can you convincingly lay out an argument for free markets after bailing out Wall Street? What do your donors at Boeing think of your call to cut federal spending and subsidies?
Perhaps in Iowa this week, some true economic philosophy can take root among the Republican candidates.
Timothy P.Carney, The Examiner’s senior political columnist, can be contacted at [email protected]. His column appears Monday and Thursday, and his stories and blog posts appear on ExaminerPolitics.com.
