March 24, 2023

The Agenda: What Romney’s Words Tell Us If He’s Elected

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, like 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.

Kitty Bennett contributed research.

This article has been revised to reflect the following correction:

Correction: November 3, 2012

An earlier version of this article said that of two rounds of financial aid to General Motors and Chrysler, only the second round had to be repaid. Both the first and the second were required to be paid back.

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