Opinion

Six points where Mitt Romney and his economic advisers are mostly wrong

Mitt Romney’s economic plan is largely based on a whitepaper written by several “heavyweight” economists. The problem is, it's riddled with fundamental flaws. Here are six points where Mitt Romney and his economic advisers are mostly wrong about what ails the American economy and how to fix it.

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2. 2009 stimulus act

Although Romney supported the bailout of the banks, he opposed Mr. Obama’s bailout of the auto industry. He also opposed Obama’s 2009 stimulus act, officially titled the American Recovery and Reinvestment Act. Romney’s economic heavyweights use flawed logic in challenging the stimulus. They cite studies that apparently show that the Act’s “cash for clunkers,” “housing” programs, and “green” investments did not stimulate the economy.

But only a small percentage of the stimulus was devoted to these programs. For example, cash for clunkers accounted for less than 1 percent of the Act’s spending. Furthermore, the independent and nonpartisan Congressional Budget Office (CBO) and several independent economists have estimated that the stimulus added significantly to both economic growth and employment.

What if Romney had won the GOP primary in 2008 and become president? What if he had followed the advice of his economic advisers? It’s fair to assume he would have 1) blocked the bailout of GM and Chrysler; 2) not pursued the 2009 stimulus act; and 3) replaced Ben Bernanke, the chairman of the Federal Reserve Board (Fed), with a person who would not have adopted the monetary stimulus policies that have kept interest rates low.

Romney would have likely adopted the same type of “tight” fiscal and monetary policies that led to the Great Depression, and we likely would have had Great Depression II. After independently reaching this conclusion, I heard Alan Mulally, CEO of Ford Motor Company, which was not bailed out, express a similar view on Fox News.

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