Why Mitt does not need an Economic Plan

by Miguel de Icaza

Mitt Romney does not need to have an economic plan. He does not need to have a plan to cut the deficit or to cut services.

It is now well understood that to get the US out of the recession, the government has to inject money into the economy. To inject money into the economy, the US needs to borrow some money and spend it. Borrowing is also at an all-time low, so the price to pay is very low.

Economists know this, and Republicans know this.

But the Republicans top priority is to get Obama out of office at any cost. Even at the cost of prolonging the recession, damaging the US credit rating and keeping people unemployed.

The brilliance of the Republican strategy is that they have convinced the world that the real problem facing the US is the debt. Four years of non-stop propaganda on newspapers and TV shows have turned everyone into a "fiscal conservative". The propaganda efforts have succeeded into convincing the world that US economic policy should be subject to the same laws of balancing a household budget (I wont link to this idiocy).

The campaign has been a brilliant and has forced the Democrats to adopt policies of austerity, instead of policies of growth. Instead of spending left and right to create value, we are cutting. And yet, nobody has stopped the propaganda and pointed out that growth often comes after spending money. Startups start in the red and are funded for several years before they become profitable; Companies go public and use the IPO to raise capital to grow, and for many years they lose money until their investments pay off and allows them to turn the tide.

So this mood has forced Obama to talk about cuts. He needs to be detailed about his cuts, he needs to be a fiscal conservative.

But Economists and Republicans know what the real fix is. They know they have to spend money.

If Romney is elected to office, he will do just that. He will borrow and spend money, because that is the only way of getting out of the recession. That is why his plan does not need to have any substance, and why he can ignore the calls to get more details, because he has no intention to follow up with them.

Obama made a critical mistake in his presidency. He decided to compromise with Republicans, he was begging to be loved by Republicans and in the process betrayed his own base and played right into the Republican's plans.

Posted on 04 Oct 2012