Mitt Romney on Budget & Economy
Former Republican Governor (MA)
ROMNEY: Look, we can spend our time talking about what happened three years ago and what the cause was of our collapse. But let's talk about what's happened over the last three years. We've had a president responsible for this economy for the last three years, and he's failed us. He's failed us in part because he has no idea how the private sector works or how to create jobs. On every single issue, he's made it harder for our economy to reboot. And as a result, we have 25 million Americans out of work. I can tell you that this is time to have someone who understands how the economy works, who can get America working again. Instead of dividing and blaming, as this president is, let's grow America again and have jobs that are the envy of the world. And I know how to do it.
ROMNEY: My intent is to help the people who have been most hurt by President Obama's economy. And the people who have been most hurt are the middle income families of America. And that's why my plan says that if middle income families want to save their money, anybody earning under $200,000 and not pay any taxes on interest, dividends or capital gains, zero tax on their savings, that's the plan I'm for. And I will get that done in my first year.
ROMNEY: The key to balancing the budget--having spent 25 years in business, I know something about taking waste out of enterprises--I'd love to do that to the federal government. And there is massive waste. But we're not going to balance the budget just by pretending that all we have to do is take out the We're going to have to cut spending. And I'm in favor of cutting spending, capping federal spending as a percentage of GDP, at 20 percent or less, and having a balanced budget amendment. That's essential to rein in the scale of the federal government. And there's a second part to balancing the budget, and that's growing the economy again. The right answer for America is to stop the growth of the federal government and to start the growth of the private sector.
ROMNEY: Oh, sure. And I'll tell you, if you think that the country is, like Texas, going swimmingly well, then somebody who has done that is just terrific. But if you think the country needs a turnaround, that's what I do. If we're going to get this economy going, we've got to do seven things:
ROMNEY: The Federal Reserve has a responsibility to preserve the value of our currency, to have a strong American currency, such that investors and people who are thinking about bringing enterprises to this country have confidence in the future of America and in our currency. People will not invest in this country and create jobs in this country for the American people if they don't have belief in our currency. Of course we should see what the Fed is doing. There should be some oversight to make sure that it's acting properly. But at the same time, we recognize that we need to have a Fed Why do I say that? Because if we don't have a Fed, who's going to run the currency? Congress? I'm not in favor of that. I'd rather have an agency that is being overseen rather than have the United States Congress try and manage our currency.
A: I'm happy to take a look at the Massachusetts record, because when I came in as governor, we were in a real freefall. We were losing jobs every month. We had a budget that was way out of balance. We were able to turn around the job losses. At the end of four years, we had our unemployment rate down to 4.7%. The policies that will get us working again as a nation are policies I understand having worked in the private sector. Look, if I had spent my whole life in government, I wouldn't be running for president right now. My experience, having started enterprises, having helped other enterprises grow and thrive, is what gives me the experience to put together a plan to help restructure the basis of America's economic foundation so we can create jobs again. Our president doesn't understand how the economy works. I do, because I've lived in it.
The question is not the people that are not paying taxes at the low end. The question is not the people who are very, very rich. The question is, how about middle-income Americans?
Who are the people most hurt by the Obama economy? And the answer is the middle class. The great majority of Americans are having a very, very difficult time. And our effort has to be to find ways to reduce to burden on those people.
And that's why I've proposed that anybody who's earnin $200,000 a year and less ought to be able to save their money tax-free, no tax on interest, dividends, or capital gains. Let people save their money, invest in America, and not have to give more money to the government. The middle class needs our help.
ROMNEY: No, I'd be looking for somebody new. I think Ben Bernanke has over-inflated the amount of currency that he's created. QE2 did not work. It did not get Americans back to work. It did not get the economy going again. We're still seeing declining numbers in prior quarter estimates as to what the growth would be. We're growing now at 1% to 1.5%. The plan I put forward will grow our economy at 4% per year for four years and add 11.5 million jobs. That's a very different approach than Ben Bernanke's taken, and it's a demonstrably different approach than Barack Obama has taken, and that's in part because we have very different life experiences.
A: I'm not going to give you an exact time-frame, but I can tell you this, that if you spend your life in the private sector, you understand that what Pres. Obama has done is the exact opposite of what the economy needed to be done. There are really seven things that need to be done:
A: The bailout program was not a success because it wasted $17 billion. When the auto company CEOs went to Washington asking for money, I said the right process is not big check from Washington, but instead letting these enterprises go through bankruptcy, getting rid of the unnecessary costs, and re-emerge on their feet again. Instead, the Bush administration and the Obama administration wrote checks to the auto industry.
Q: You wrote in Nov. 2008, "If GM, Ford and Chrysler get the bailout, you can kiss the American automotive industry goodbye." Were you wrong?
A: No, I wasn't wrong, because if you read the rest of the op-ed piece, it says they need to shed unnecessary costs. If they just get federal checks, they're going to be locked in with high UAW legacy costs. They'll never be able to get on their feet. They have to go through bankruptcy. And it turned out that that's finally what they did.
A: Every time you have an occasion to take something from the federal government and send it back to the states, that's the right direction. And if you can go even further and send it back to the private sector, that's even better.
Instead of thinking in the federal budget, what we should cut--we should ask ourselves the opposite question. What should we keep? We should take all of what we're doing at the federal level and say, what are the things we're doing that we don't have to do? And those things we've got to stop doing, because we're borrowing $1.6 trillion more this year than we're taking in.
Q: Including disaster relief?
ROMNEY: We cannot afford to do those things without jeopardizing the future for our kids.
Our own lack of vision led to the collapse of our financial markets and our economy. It precipitated a global recession, triggered the loss of $12 trillion of our citizens' net worth, and dealt a sharp blow to world freedom. We simply did not see that so-called subprime home mortgages, liar loans, and nonqualified loans had the potential to cause such destruction.
There may be a dangerous strain of self-interest among the citizenry in democracies as well. If citizens in a democracy foster short-term self-interest rather than promoting the long-term interest of the nation--placing themselves above their descendants--there is little likelihood that they will vote for visionary transformative leaders who advocate difficult change and sacrifice.
As virtually every American discovered beginning in fall of 2008, a strong economy is also the foundation of our citizens' prosperity: Americans have experienced the impact of a weakened economy. But beyond the lows of recession and the highs of expansion, the sustained wealth of our families and communities is also driven by workforce productivity.
Whether you are interested in spending more on benefits or you want to add to defense, achieving your objectives depends on the nation's productivity.
But Secretary Paulson's proposal was not aimed at saving sick Wall Street banks or even at preserving jobs on Wall Street. It was intended to prevent a run on virtually every bank and financial institution in the country. It did in fact keep our economy from total meltdown.
The President has already moved to stop our economy's downward spiral. Parts of the stimulus will, in fact, do some good. But too much of the bill was short-sighted and wasteful. Every single Republican in Congress voted in favor of a better stimulus plan, one that focused on creating jobs immediately. But Congressional Democrats couldn't restrain themselves from larding up their bill with tens of billions of dollars for their political friends. Republicans wanted to stimulate the economy, Democrats wanted to stimulate the government. Conservatives in the House and Senate stood their ground and voted no--and they were absolutely right.
A: Well, the list is very long. The last time we had a recession, President Bush recognized the best thing you can do is lower taxes and put forward a tax bill. And John McCain was one of only two Republicans to vote against it. He does not understand the first lesson of Reaganomics, which is, you cut taxes to grow the economy.
Q: What would you do differently than the president would do?
A: There are two things that I’d add to the legislation that relate to long-term growth incentives. One is to say to people who are making under $200,000 a year, they ought to be able to save their money, tax-free, no tax on interest, dividends or capital gains. And secondly, for people 65 years of age & older, my view is that they should not have to have payroll taxes taken out of their incomes.
A: Mayor Giuliani is a wonderful fellow. But he’s spent his life working in the governmental sector. I spent my life working in the private sector. And when it comes to trying to help see jobs come back, see our economy stronger, voters are going to want somebody who really understands how the economy works, and someone who has run something and someone who can, from the outside, finally get inside Washington and turn the place inside out
Q: Tell us why voters should support you over John McCain.
A: Sen. McCain is an honorable and courageous individual. But he has been in Washington all of his career. And I don’t think you’re going to see change in Washington by somebody who’s been such a part of it all of these years. I think people recognize that it’s essential to have somebody who’s had a job in the economy, who knows how the economy works and can fight to bring good jobs for middle-income Americans.
A: Well, I like mine better. And there are two reasons. One is mine has a very large dose of long-term growth incentives. It’s not just designed to be a short-term stimulus, but rather a long-term growth boost. Not only by allowing capital expenditures to be expensed over these next two years, but also lowering the corporate tax rate so that we can get more businesses to stay here and grow here. So you really have to divide my incentive plan between those things that are long-term in nature and those things that are short- term and stimulative. And I think it probably divides about 50-50.
A: I’d go aggressively after the housing market to make sure that servicing organizations combine in some cases, perhaps forming cooperatives to work together with homeowners to keep homes that are absolutely not necessary to going into foreclosure, to keep them with homeowners in them so that we don’t dump housing product in the housing market and cause a further reduction in housing prices.
A: This is, indeed, a time of extraordinary challenges in this country, and the overspending in Washington and the overpromises that we’ve made are certainly among those challenges. But this is not a time for us to wring our hands and think that the future is bleak. In fact, the future is bright. We need leadership to rein in excessive spending, and to help America grow. The best answer for our economic woes is to make sure we have good jobs for our citizens, good schools for our kids, good health care for everyone, and that we have policies that promote the growth of the nation. We can have a level playing field around the world, get ourselves off of foreign oil, reduce the excessive spending in Washington, and have a bright future for our kids. This is based upon the strength of the American people. If you want to see a strong America, you don’t look to Washington; you look to ways to strengthen the American people.
A: Well, we don’t have to run a deficit to pay for the things that are most important because we can eliminate the things that aren’t critical. We have, in the federal government, 342 different economic development programs, often administered by different departments. We don’t need 342. We probably need a lot fewer than 100 of those. We have 40 different programs for workforce training. There are probably 5 or 6 that are really working. We can get rid of some of those. And so what anyone in the private sector’s learned how to do is to focus their resources on those things that have the biggest impact, that are most important. Surely, protecting our country and our defense of our military is critical [as are healthcare and schools]. And the sacrifice we need from the American people, it’s this: it’s saying let the programs that don’t work go. Don’t lobby for them forever.
A: Every bill that comes forward that’s got pork in it and earmarks that are unnecessary, we’ve got to veto them and send them back. But it’s got to be broader than that. We’re going to have to see fundamental changes in the way Washington works. We’re just not going to get out-of-the-box thinking with inside-the-Beltway politics.
ROMNEY: Well, we both agree with the need to cut taxes and have fought to do so. [But] Mayor Giuliani fought to keep the commuter tax, which was a very substantial tax, an almost $400 tax on commuters coming into New York.
GIULIANI: The difference is that under Governor Romney, spending went up in Massachusetts per capita by 8%; under me, spending went down by 7%. I brought taxes down by 17%. Under him, taxes went up 11% per capita. I led, he lagged.
ROMNEY: It’s a nice line, but it’s baloney. Mayor, you got to check your facts. #1, I did not increase taxes in Massachusetts; I lowered taxes. #2, the Club for Growth looked at our respective spending record. They said my spending grew 2.2% a year; yours grew 2.8% a year. But look, we’re both guys that are in favor of keeping spending down and keep taxes down. We’re not far apart on that.
A: I’ve got very different statistics than you do. First of all, there were no censuses taken during that time period, and so any numbers on population are just estimates by various folks. Second, when I came in to Massachusetts, we were losing jobs every single month. Our budget was out of balance by some $3 billion. We turned that around.
ROMNEY: If I’m elected president, I’m going to cap non-defense discretionary spending at inflation minus 1%. That would save $300 billion in 10 years. And if Congress sends me a budget that exceeds that cap, I will veto that budget. And I know how to veto. I like vetoes. I’ve vetoed hundreds of spending appropriations as governor. And frankly, I can’t wait to get my hands on Washington!
[After the inauguration, we did a full] bottom-up analysis, resulting in some somber news. The budget gap for the next year was closer to $3 billion. Further, there was a shortfall in the current year of $600 million. Immediate cuts were necessary to prevent a possible cash crunch. The budget for the next year would test the entire administration team: finding $3 billion would be a real stretch.
The vision had already been set: it was the heart of last year’s campaign. I was determined not only to adhere to our themes, but also to fight for every single promise I had made.
So, the answer would have to be new revenues--marketing and sales. The good news was that companies had already signed on as sponsors, most of them at higher support levels than in prior Olympics. But that was also the bad news: the usual suspects had already been rounded up.
Romney, CEO of the Salt Lake Olympic games, said his experience in Utah taught him waste can be found & rooted out. ”We took things out that were waste, that were unnecessary, the folderol that wasn’t essential to carrying out the mission of a great Olympics,“ Romney said. ”The same thing, I believe, can happen in government.“
Democrats running for governor noted that Romney’s Olympics relied heavily on government subsidy, pulling as much as $1.5 billion from taxpayers.
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