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| Mitt Romney's five-point economic plan divides Massachusetts voters | Mitt Romney's five-point economic plan divides Massachusetts voters |
| (7 days later) | |
| Until last week, Richard Sotell was losing heart. The Boston-based investment manager is a Mitt Romney donor who has met the candidate on several occasions, both as the Massachusetts governor and as the would-be president. | Until last week, Richard Sotell was losing heart. The Boston-based investment manager is a Mitt Romney donor who has met the candidate on several occasions, both as the Massachusetts governor and as the would-be president. |
| Despite a global financial meltdown that has finished off nearly every other world leader, Romney didn't seem to have the momentum to unseat President Barack Obama. But all that changed after Romney trounced Obama in their first debate. | Despite a global financial meltdown that has finished off nearly every other world leader, Romney didn't seem to have the momentum to unseat President Barack Obama. But all that changed after Romney trounced Obama in their first debate. |
| With opinion polls showing Romney gaining support since then, Sotell, the founder of investment adviser Kraematon Group, says this is finally Romney's opportunity to spotlight his real talent. "Obama has one terrific skill set, and that's campaigning. But we don't need the most popular guy in the room; we don't need the guy who is best on Letterman. We need a man with an economic plan," he says. "Mitt Romney is that man." | With opinion polls showing Romney gaining support since then, Sotell, the founder of investment adviser Kraematon Group, says this is finally Romney's opportunity to spotlight his real talent. "Obama has one terrific skill set, and that's campaigning. But we don't need the most popular guy in the room; we don't need the guy who is best on Letterman. We need a man with an economic plan," he says. "Mitt Romney is that man." |
| The Guardian came to Boston, the capital of Romney's home state, to examine his economic plan as the year-long election battle enters its final stage. With growth, jobs and the deficit likely to be crucial in deciding the election, our series will move on to West Virginia to look at poverty and inequality – one of the biggest issues facing the US and yet barely mentioned directly by the candidates – and then to North Carolina to investigate the relationship between Barack Obama's stewardship of the economy and his struggle to rekindle the hope of 2008. | The Guardian came to Boston, the capital of Romney's home state, to examine his economic plan as the year-long election battle enters its final stage. With growth, jobs and the deficit likely to be crucial in deciding the election, our series will move on to West Virginia to look at poverty and inequality – one of the biggest issues facing the US and yet barely mentioned directly by the candidates – and then to North Carolina to investigate the relationship between Barack Obama's stewardship of the economy and his struggle to rekindle the hope of 2008. |
| Obama inherited the deepest economic slump since the great depression when he was elected in 2008. He has presided over the weakest recovery since the second world war. The slow, unsteady pace of recovery has allowed Romney to lambast Obama for his lack of a growth strategy. "The president doesn't have a plan. I do," Romney said on the stump in Virginia this week. | Obama inherited the deepest economic slump since the great depression when he was elected in 2008. He has presided over the weakest recovery since the second world war. The slow, unsteady pace of recovery has allowed Romney to lambast Obama for his lack of a growth strategy. "The president doesn't have a plan. I do," Romney said on the stump in Virginia this week. |
| Romney's blueprint has five major themes: a $4.8tn tax cut spread over the next 10 years; a proposal to cut government spending to less than 20% of national output; energy self-sufficiency; better schools; and a tougher approach to America's trade relations with China. | Romney's blueprint has five major themes: a $4.8tn tax cut spread over the next 10 years; a proposal to cut government spending to less than 20% of national output; energy self-sufficiency; better schools; and a tougher approach to America's trade relations with China. |
| Many economists are sceptical about the plan. They doubt the sincerity of anti-Beijing rhetoric, given that China owns one third of the bonds sold by the US to finance its debts. Many believe that Romney's energy self-sufficiency means ripping up environmental safeguards in favour of big oil. | Many economists are sceptical about the plan. They doubt the sincerity of anti-Beijing rhetoric, given that China owns one third of the bonds sold by the US to finance its debts. Many believe that Romney's energy self-sufficiency means ripping up environmental safeguards in favour of big oil. |
| But most significantly, few but the most avid supply-siders think that big tax cuts aimed primarily at the better-off is the answer to America's growing debt problem. Most in fact think the combination of tax breaks for the wealthy combined with austerity for everybody else will make the problem worse. | But most significantly, few but the most avid supply-siders think that big tax cuts aimed primarily at the better-off is the answer to America's growing debt problem. Most in fact think the combination of tax breaks for the wealthy combined with austerity for everybody else will make the problem worse. |
| Simon Johnson, a former chief economist at the IMF and now a professor at MIT in Cambridge, said the tax-cutting approach was tried by the previous Republican president, George Bush. "It didn't work then and it won't work now," he said. Robert Frank, an economics professor at Cornell, said Romney's approach defied every textbook ever written, and if the lion's share of tax cuts went to the better-off, they would tend to save rather than spend the windfall. | Simon Johnson, a former chief economist at the IMF and now a professor at MIT in Cambridge, said the tax-cutting approach was tried by the previous Republican president, George Bush. "It didn't work then and it won't work now," he said. Robert Frank, an economics professor at Cornell, said Romney's approach defied every textbook ever written, and if the lion's share of tax cuts went to the better-off, they would tend to save rather than spend the windfall. |
| Sotell disagrees. He says the debate on taxes is a sideshow, and the president has declared "class war" on high earners for political gain. America is paralyzed, says Sotell. Business leaders hold billions on the sidelines fearing what Obama will do to taxes, regulation and the cost of his landmark "Obamacare" legislation. Further down the road the US faces a demographic time-bomb: baby-boomers are retiring and expect benefits that the US can no longer afford. | Sotell disagrees. He says the debate on taxes is a sideshow, and the president has declared "class war" on high earners for political gain. America is paralyzed, says Sotell. Business leaders hold billions on the sidelines fearing what Obama will do to taxes, regulation and the cost of his landmark "Obamacare" legislation. Further down the road the US faces a demographic time-bomb: baby-boomers are retiring and expect benefits that the US can no longer afford. |
| "And what's Obama talking about? Millionaires and billionaires not paying enough tax. That's not going to solve the problem," he says. "We owe $16tn; we added another trillion this year. If you tax the top group another $100bn, how does that offset anything?" | "And what's Obama talking about? Millionaires and billionaires not paying enough tax. That's not going to solve the problem," he says. "We owe $16tn; we added another trillion this year. If you tax the top group another $100bn, how does that offset anything?" |
| For Sotell, Romney showed an ability to compromise with a largely Democratic legislature when he was governor of Massachusetts. Obama has sown nothing but discord, he argues. Romney is a man with a proven track record in finance and a man who, like Sotell, believes economic growth is driven by private enterprise and not government spending. | For Sotell, Romney showed an ability to compromise with a largely Democratic legislature when he was governor of Massachusetts. Obama has sown nothing but discord, he argues. Romney is a man with a proven track record in finance and a man who, like Sotell, believes economic growth is driven by private enterprise and not government spending. |
| The latest polls suggest that Romney's message may now be reaching more ears. But Bruce Stokes of the Pew Research Center says the outlook for either candidate is far from certain. "If Obama is going to win, it's despite all the economic numbers. Despite the fact that some of the swing states voters think Romney would do a better job," he says. | The latest polls suggest that Romney's message may now be reaching more ears. But Bruce Stokes of the Pew Research Center says the outlook for either candidate is far from certain. "If Obama is going to win, it's despite all the economic numbers. Despite the fact that some of the swing states voters think Romney would do a better job," he says. |
| And philosophy aside, Romney's plan is "wafer thin", according to Kevin Gallagher, director of the global development programme at Boston University. "He doesn't have a sophisticated plan to put to the Office of Management and Budget to be costed. Even Bush did that. | And philosophy aside, Romney's plan is "wafer thin", according to Kevin Gallagher, director of the global development programme at Boston University. "He doesn't have a sophisticated plan to put to the Office of Management and Budget to be costed. Even Bush did that. |
| "An independent thinktank has tried a simulation, and it found that the plan doesn't add up. It would increase the deficit by $400bn a year. Romney says that would be filled by closing tax loopholes – but without specifying exactly how." | "An independent thinktank has tried a simulation, and it found that the plan doesn't add up. It would increase the deficit by $400bn a year. Romney says that would be filled by closing tax loopholes – but without specifying exactly how." |
| What both sides do agree upon is the scale of the problem ahead. Whoever wins the election will face immediate and tough decisions to take on the deficit. Under the compromise reached between the White House and Congress in the summer of 2011, tax breaks will expire and spending will be cut in January 2013. These will be worth 4% of US GDP – enough to tip not just the US but the entire global economy back into recession, according to the IMF this week. | What both sides do agree upon is the scale of the problem ahead. Whoever wins the election will face immediate and tough decisions to take on the deficit. Under the compromise reached between the White House and Congress in the summer of 2011, tax breaks will expire and spending will be cut in January 2013. These will be worth 4% of US GDP – enough to tip not just the US but the entire global economy back into recession, according to the IMF this week. |
| Gallagher says Romney's experiment with the sort of austerity policies being pursued in Europe risks leading to lower growth, higher unemployment and rising national debt. Romney's supporters say that cutting spending will pave the way for lower taxes. Entrepreneurs will respond by growing their businesses and hiring more workers. | Gallagher says Romney's experiment with the sort of austerity policies being pursued in Europe risks leading to lower growth, higher unemployment and rising national debt. Romney's supporters say that cutting spending will pave the way for lower taxes. Entrepreneurs will respond by growing their businesses and hiring more workers. |
| In the warehouses of south Boston's burgeoning innovation district, there's a different take on the economic battle. Tom Pincince, president of Digital Lumens, a hi-tech Boston business making energy-efficient lighting, says the political bickering is among the biggest problems his business faces. Growth is already great for the firm – not least because they promise to slash lighting bills to the bone. But customers are nervous. | In the warehouses of south Boston's burgeoning innovation district, there's a different take on the economic battle. Tom Pincince, president of Digital Lumens, a hi-tech Boston business making energy-efficient lighting, says the political bickering is among the biggest problems his business faces. Growth is already great for the firm – not least because they promise to slash lighting bills to the bone. But customers are nervous. |
| He dismisses the idea that tax cuts add jobs. "I am not going to hire more people because my taxes are cut," Pincince said. "I will hire more people if my business is doing well." What annoys him is all the political infighting. He says government's first job should be to create an environment where customers feel confident enough to spend more money. Romney has just two more weeks to convince America that he is the man for that job. | He dismisses the idea that tax cuts add jobs. "I am not going to hire more people because my taxes are cut," Pincince said. "I will hire more people if my business is doing well." What annoys him is all the political infighting. He says government's first job should be to create an environment where customers feel confident enough to spend more money. Romney has just two more weeks to convince America that he is the man for that job. |
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