Days before the president reveals his plan, the GOP frontrunner provides his vision. How does Romnemployment stack up?
As a management consultant, Republican presidential candidate Mitt Romney made a living by telling firms to cut jobs. But he wants Americans to know that he can create jobs too. The former Massachusetts governor released his plan for job creation this week, which will coincide nicely with President Obama's Thursday speech on the topic. How are his ideas? As you might expect, some are good, some are bad, some are okay, and some are irrelevant.
Romney's plan obviously leans to the right, but he's further to the center than most other potential GOP nominees, like Rep. Michelle Bachman, Gov. Rick Perry, or Rep. Ron Paul. That provides an interesting spectrum of ideas from his plan. Below I'll evaluate some highlights that stand out from his "Believe in America." The analysis is focused on how these ideas would help to solve the unemployment problem in the near-term. That's the clear challenge for the U.S. economy at this time.
Increasing Energy Production
Romney provides a lengthy explanation of ways in which he would increase domestic energy production, particularly for carbon-based resources. These ideas aren't likely to excite green energy advocates, but they are practical. Not only would additional production create jobs, but additional supply would help to keep oil prices down. The summer's slowdown in hiring was due in large part to rising energy prices dampening consumer confidence and spending.
Personal Retraining Accounts
This is one of the more novel ideas contained within Romney's plan. He advocates a system of "Personal Reemployment Accounts" for unemployed Americans. Participants who need retraining to find work would have access to additional funding. Since this recession has at least a partial structural component, considering all of the job losses in housing-related sectors like construction and financial services, many Americans would benefit from switching industries. During retraining they would also exit the workforce in a meaningful way and return with better skills to fill a job opening.
Raise Visa Caps for Highly Skilled Workers
Sending foreign-born highly skilled workers away from the U.S. is a truly strange strategy. These are individuals who aren't easily replaced by U.S.-born workers, so you can't legitimately blame slower job growth on their presence. But more importantly, they help U.S. firms to be more competitive. As entrepreneurs they will also directly create jobs.
Lower the Corporate Tax Rate
U.S. companies have a disadvantage when competing with firms based in other countries with lower corporate tax rates. So Romney is correct that the playing field needs to be leveled so that the U.S. can better compete. Yet any decline in the corporate tax rate must include corporate tax reform. The goal here shouldn't be to merely push down the effective tax rates of giant corporations who already manage to pay little in taxes, but to cut taxes across the board so smaller and midsize corporations can compete better with the big guys and create more jobs.
Dodd-Frank, Obamacare, and Other Regulation
Romney provides a lengthy discussion of how regulation impedes job creation. He's right, and he also appears to understand that we don't want to throw the turnips out with the weeds here. But we'll have to see the details on what he would repeal and hold on to before judging this flank. Some regulation has a place in securing a safer, fairer economy. But a huge portion of the regulation created over the past three years is doing more to stifle job growth than to allow it to flourish.
More Free Trade Agreements
As Romney points out, for nations that we have free trade agreements with, the U.S. generally has a trade surplus. So while some jobs may go overseas, more are created within our borders. More free trade agreements would help, but the job creation they would provide isn't likely to be instantaneous. They would probably provide more medium-term hiring.