Some believe that Mitt Romney will bring real economic change to America if he wins the US Presidential election next month. While others believe that a Romney victory won’t make any significant difference to America’s economic fortunes. This article explores both sides of the debate so that you can decide for yourself.
Romney will bring change
Right now the polls suggest that Mitt Romney is ahead in the race to become the 45th US President. If he wins, Romney promises to make some significant changes to US economic policy. As Allister Heath points out in today’s City A.M., “Romney has pledged to fire Ben Bernanke, the Fed’s boss, though this will probably just mean that his term won’t be renewed when it expires in 2014. While any successor may of course end up maintaining existing policies, many Republicans are interested in exploring alternative monetary arrangements, such as a return to a commodity-based non-fiat currency, or at the very least new monetary rules for the Fed.”
In the 3 October Presidential debate, Romney said that he would “repeal and replace” Dodd-Frank, a bill signed into law by President Barack Obama on 21 July 2010. Dodd-Frank has spawned 8,000 pages of regulations, and its changes affect all federal financial regulatory agencies and almost every part of Americas financial services industry. As Mr Heath points out, if Romney does repeal it, “the shockwaves in the City could be huge, as the new EU regulatory apparatus is being built on the assumption that Dodd-Frank will go ahead. The regulatory gulf between London and Wall Street could suddenly become huge.”
What was clear from the Presidential debates, is that Romney, and his vice-presidential candidate Paul Ryan, favour policies that are much more inline with Austrian free-market thinking. The pair want to cut taxes, make North America energy independent, open up more trade, particularly in Latin America, address Americas failing education system, and balance the US budget.
Romney has also said that he will “champion small business” because small businesses are responsible for around 60% of new jobs in the United States.
As Mr Heath concludes, “The big question is whether a Romney presidency combined with a Republican Congress would only cut tax – or whether it would also restrain spending, and begin to reform the entitlement programmes that threaten to bankrupt America.”
Romney won’t bring change
A more cynical observer of the Romney campaign might point out that his five largest campaign contributions all came for large US investment banks.
2012 Top Presidential Contributors
Note: The organizations themselves did not donate, rather the money came from the organizations’ PACs, their individual members or employees or owners, and those individuals’ immediate families. Organization totals include subsidiaries and affiliates.
It is perhaps not all that surprising to see Goldman Sachs at the top of the list of campaign contributors, since their ties with the White House are well documented. President Barack Obama’s 2008 presidential campaign received $994,795 in donations from Goldman’s employees and their relatives. And while Goldman Sachs’ lawyers negotiated with the Securities and Exchange Commission (CES) over civil fraud charges, Goldman’s chief executive Lloyd Blankfein visited the White House at least four times, meeting both Barack Obama and his top economic adviser, Larry Summers.
Lawrence Jacobs, a University of Minnesota political scientist, has said that “almost everything that the White House has done has been haunted by the personnel and the money of Goldman.”
All of this raises doubts about Romney’s independency and his ability to push through banking reform.
Earlier this year billionaire financier George Soros joined the debate saying that there isn’t all that much difference between Obama and Romney. He also said that many other hedge fund managers in the United States are backing Romney because Obama wants to raise their taxes.