What Romney Has Said Offers Clues if He Wins

By JACKIE CALMES

WASHINGTON — What would a President Romney have done?

For nearly four years, Mr. Romney has attacked President Obama’s responses to the worst economic crisis since the Depression, the decisions that have defined the Obama presidency — on the stimulus package, auto industry rescue, home-foreclosure measures and financial regulation.

Mr. Romney has been less clear about what action he would have taken instead. What follows are snapshots of his reactions then and now, which provide a sense of how he might have responded if he had been in the Oval Office and how he might approach economic policy should he be elected president on Tuesday.

STIMULUS Mr. Romney was an early advocate of some government action and criticized President George W. Bush for not seeking a stimulus measure before departing. But mostly he slammed Mr. Obama, within days of the inauguration, for the $831 billion package of spending and tax cuts that a Democratic-led Congress soon passed. He called it bloated with spending that would take too long to help the economy. (The total grew to $1.4 trillion as some provisions were renewed.)

By the end of 2009 Mr. Romney declared the stimulus a costly failure, though nonpartisan studies found that it had helped create or support millions of jobs. He cited a weak recovery, slower than even the Obama administration’s projections, and a stubbornly high unemployment rate.

But Mr. Romney’s own prescriptions were mixed. In February 2009, as the stimulus bill was being enacted, he suggested $450 billion in tax cuts for middle-income Americans and federal money for unspecified “urgent priorities.” He called tax cuts “twice as effective” as spending for spurring the economy, a contention that many economists dispute.

That December, Mr. Romney called for Washington to pull back, though unemployment had hit 10 percent. “Shrinking government and reducing government jobs is healthier for the economy, but this option was never seriously considered,” he wrote.

His position mirrored that taken by many conservatives at the time in the United States and in Europe, which became something of a laboratory for the idea that Keynesian policy had been proven ineffective and that slashing spending and reducing deficits would lower interest rates, promote investment, shrink the government’s interference in the marketplace and put the economy on a sounder footing for the long run.

Britain and other nations that adopted austerity policies encountered deeper economic troubles. In the United States, few nonpartisan economists support government austerity in a downturn. Mr. Romney, suggesting some belief in the central tenet of Keynesian economics — that government spending can temporarily make up for a lack of demand in the private sector — has subsequently said that he would enact budget cuts he supported with an eye toward whether the timing would have a negative impact on a still-weak recovery.

AUTO BAILOUT In late 2008 President Bush approved $25 billion in aid for General Motors and Chrysler. Ford, in better shape, declined aid but backed it for the others since liquidating two of the Big Three automakers would bankrupt many suppliers, imperiling Ford.

That help proved insufficient. Mr. Obama, advised by a task force he formed after taking office, forced G.M. and Chrysler through a government-managed bankruptcy, lending them $60 billion more so they could keep operating while restructuring. This amount, unlike the first, had to be repaid.

The decision was politically risky, given the growing populist backlash at the time to bailouts like those already given to banks. Mr. Romney opposed the actions by both Mr. Obama and Mr. Bush to provide direct government aid to Detroit, and in November 2008, he wrote an Op-Ed article in The New York Times calling for the companies to be given new management and restructured through the bankruptcy process, with the prospect of government loan guarantees only afterward. He has defended that stance even as the bailout helped the companies return to profitability and add jobs.

Mr. Obama’s plan also required a bankruptcy that forced new union contracts, new managers and investments in fuel-saving technologies. The difference was that Mr. Romney ruled out any bridge loan from taxpayers. He said the government should only guarantee private loans, and only when the companies emerged from bankruptcy. “Detroit needs a turnaround, not a check,” he wrote in the Op-Ed article.

But there was little if any private financing available to the automakers at the time. Romney ads this week in Ohio say the revived automakers are sending jobs to China, a charge the automakers have denounced as false. One ad ends, “Mitt Romney has a plan to help the auto industry.” It offers no details, but the Romney campaign has suggested that he would have built more safeguards into any bailout package against moving production from the United States to other countries and that his promised crackdown on China’s trade and currency practices would have discouraged Chrysler from deciding to build Jeeps for the Chinese market in China rather than in the United States.

HOUSING The hangover of depressed home values and foreclosures since the housing bubble burst has been perhaps the biggest drag on the recovery, analysts say. Yet remedies are financially and politically complex, as Mr. Obama found. Polls show most Americans oppose bailouts for neighbors who got mortgages they could not afford or owe more than their homes are worth. Incentives for lenders to modify troubled mortgages have helped far fewer people than Mr. Obama predicted.

Until recently Mr. Romney offered a free-market alternative: do nothing. Last November in Nevada, the state with the highest foreclosure and jobless rates, he told The Las Vegas Review Journal: “Don’t try and stop the foreclosure process. Let it run its course and hit the bottom.”

Mr. Romney did express interest in then “helping people refinance homes.” And more recently he has seemed to suggest that the government policy could have some role in helping spur a recovery. Last week in Reno, he said, without elaboration, “When I’m elected, we’re going to finally get this housing market going.”

FINANCIAL REGULATION Mr. Romney has long proposed to “repeal and replace” the 2010 Dodd-Frank law tightening regulation of financial institutions. He has emphasized “repeal” and not defined a replacement. But Mr. Romney, who expressed general support for the role of regulation in the first presidential debate, has offered hints.

“There’s some parts of Dodd-Frank that make all the sense in the world,” he said. “You need transparency, you need leverage limits.”

Past comments and language in his manifesto, “Believe in America,” suggest that Mr. Romney supports several objectives of Dodd-Frank: Authorizing the government to wind down failing institutions, to avoid a Lehman Brothers-like crash that threatens the system; requiring transparency for complex financial instruments like derivatives, and requiring institutions to keep a larger buffer of capital.

He has suggested support for some version of the new consumer-protection bureau, which Congressional Republicans opposed. While calling it “perhaps the most powerful and unaccountable bureaucracy in the history of our nation” in a statement in January, he also proposed “to fix the flaws in this new bureaucracy.”

Mr. Romney often attacks Dodd-Frank for supposedly designating five banks as “too big to fail,” freeing them to take risks, confident of a bailout. “We need to get rid of that provision,” he said in the debate.

But if his position makes clear his opposition to the “too big to fail” concept, it ignores one thing: such a provision does not exist in the law.

Newburyport Dems

Saturday, November 3, 2012