Saturday, July 28, 2012

Will Mitt Romney’s Plan for Countering the Recession work?

This election season, many Americans, as well as many millions of people around the world are paying close attention to the outcome. Perhaps never before have so many people felt that the outcome could significantly impact their own personal lives. After all, the political gridlock in Washington has prevented any sort of meaningful progress in the last four years. Couple that with a number of largely ineffective and expensive programs passed and maintained by the previous two administrations, and there are a great number of people who are simply fed up with the system as it stands.

The Republican contender for office, Mitt Romney, promises cuts in excessive spending and fiscal responsibility, but is his plan really going to turn the economy around? He’s already indicated that his first official act in office would be to strike down Obama’s health care act and replace it with his own -- a guaranteed way to waste two years in office -- one year of Obama’s term getting the bill passed, and then another year of his to pass his own. Is that really the best way to spend time? Constantly reworking and poking your predecessor’s work? To be fair, pretty much every president does largely the same thing. That being said, Romney’s plan to repair the economy does have a number of good points that bear looking into. Additionally, the plan isn’t so far right of the middle that congressional Democrats will laugh if they’re asked to approve the plan. It’s a plan that could work, but be warned- it’s not an instant fix, and there are portions of the plan that simply don’t have enough “oomph” to do any real good- in a word, they’re more or less an election-year Band-Aid meant to curry favor with swing voters who’ve become dissatisfied with what Obama hasn’t managed to accomplish.

Corporate tax cut- Romney’s plan includes a slight corporate tax cut from the 35% tax rate currently in effect to 25%. One of the problems with this is that most corporations don’t actually pay 35%. The rate quoted doesn’t take into account deductions taken for salaries and other costs of doing business. The plan is to take some “burden” off of the “job creators” to keep them from moving jobs overseas and get them hiring, but in the real world, doesn’t do much for small businesses, including businesses that aren’t able to take the same deductions, and won’t put capital into consumers’ pockets, where it can be spent on goods and services that might help jump start the economy.

20% of GDP spending limit - Everyone should live within a budget. Simple as that. The idea of capping federal spending to 20% of GDP is a good idea, particularly since Obama’s four years have seen this number rise to 24.4% of GDP. The problem is that cutting to this level will require a good number of cuts to many programs that are being termed “entitlement programs.” Naming these programs as they are requires a hard look at our society, and how we as a nation move ahead. Some of the entitlement programs that could get trimmed, if not cut all together, include the Pell grant, veteran’s benefits and the G.I. Bill, the child and dependent care tax credit, and the mortgage interest tax deduction, along with the more commonly-thought of medicare, food stamps and public housing assistance.

All told, Romney’s plan is very reasonable, and like many other politicians’ plans, is just close enough to the middle that swing voters may not be turned off by it. Will it work? That remains to be seen. If he’s voted into office, it’s safe to say that it can’t be any worse than what’s going on right now. An instant fix, though? No, unfortunately that just isn’t in the cards.

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