Obama vs Romney on the Economy
Here's a side-by-side comparison of President Barack Obama's economic policies versus Governor Mitt Romney's proposals. That makes it easy to compare the two radically different strategies to restore the economy to robust health. They are divided into four categories: Government Spending, Taxes, Monetary Policy and Regulations/Trade/Other.
At different points throughout the campaign, Obama said he would:
- Create 60,000 jobs annually by funding exploration of new natural gas.
- Train two million of the long-term unemployed and double the number of work/study jobs.
- Cut $500 billion from defense spending, and shift to protect against cyber-threats. Create a new Jobs Corps specifically for veterans.
- Public works jobs program. Costs $75 billion to create 1.3 million jobs.
- Provide aid to states to hire more teachers. Costs $85 billion to create 1.5 million jobs.
- Extend unemployment benefits. Costs $62 billion, but will create 1.178 million jobs. (Sources: Obama's 2102 State of the Union Address, The 2011 American Jobs Act)
Governor Mitt Romney was more focused on cutting spending, using the following measures:
- Cap federal spending at 20 percent of gross domestic product. Introduce a Constitutional Amendment requiring a balanced budget.
- Freeze federal hiring until employment is down 10 percent. Lower wages and benefits for government workers, saving $47 billion.
- Cut non-security discretionary spending by 5 percent to balance the budget. Keep defense spending as is, but increase efficiencies to add 100,000 soldiers.
- Tie unemployment benefits to worker retraining. Improve job training by transferring Federal programs to the states. Require states to solve unfunded pension obligations.
- End Obamacare. Return authority to states. Vouchers for Medicare for those turning 65 in 2023 or later.
- Shift Medicaid, housing vouchers and food stamps to states. Will save $100 billion.
- Cut funding to Amtrak, PBS, National Endowment for Arts & National Endowment for Humanities. (Sources: Mitt Romney.com, "Believe in America: Mitt Romney's Plan to Restore Jobs", Romney's Five Point Plan, Speech in Las Vegas, CNBC, 8/3/12; CNN Money, "Romney's 5-Point Plan," 8/12/12; "Rich Taxpayers Will Pay Their Share, 8/15/12)
Obama uses tax cuts to focus on creating jobs at home, although his promotion of a tax "increase" on higher income families could hurt small businesses.
- Extend Bush tax cuts only for families making less than $250,000 a year.
- Extend payroll tax cut, costing $175 billion but creating 2.3 million jobs.
- Eliminate tax breaks for companies that move jobs overseas. Give 20 percent tax credit for expenses related to moving jobs back to the United States. Give 100 percent tax credit for investment in U.S. plant and equipment. Double tax deduction for advanced manufacturing technologies in U.S.
- Tax cut for businesses that hire long-term unemployed, veterans or students. Costs $65 billion to create 845,000 jobs.
- Give tax breaks to companies that build in distressed areas and train workers.
- Reduce tax credits for oil exploration. Give tax credits for alternative energy development.
- Extend the tuition tax credit. (Sources: Obama's 2102 State of the Union Address, American Jobs Act)
Romney focused on across-the-board tax cuts.
- Make Bush tax cuts permanent for all, reducing income by $320 billion in 2015.
- Lower corporate tax rate from 35 percent to 25 percent. Permit businesses to write off 2010 and 2011 capital investments.
- Eliminate dividend and capital gains taxes for those earning less than $250,000 a year.
- End estate tax.
- End the Alternative Minimum Tax.
- Lower all income tax rates by 20 percent by cutting deductions except for mortgage interest, charitable donations, and health care expenses for the middle class. (Sources: (Source: CNN Money," Romney's Other Tax Secret," 7/23/12; CNN Money," Romney's 5-Point Plan," 8/12/12; "Rich Taxpayers Will Pay Their Share; 8/15/12; Mitt Romney.com, "My Plan to Turn Around the Economy")
Obama reappointed Federal Reserve Chairman Ben Bernanke when his term expired in January 2014. He kept low interest rates until job creation improved. Bernanke doesn't believe expanded monetary policy will create inflation.
Romney promised to replace Bernanke in January 2014. He preferred someone who shared his economic views, possibly Glenn Hubbard or Greg Mankiw. He advocated contractionary monetary policy to support the value of the dollar and reduce the threat of inflation. He didn't believe low interest rates would stimulate the economy. He therefore opposed quantitative easing.
Regulations, Trade, Other
Obama signed free trade agreements with Colombia, South Korea, and Panama. Double exports by 2015, supporting 70,000 U.S. jobs. He set up a trade investigation unit to enforce trade agreements. He would also:
- Set up a program to help mortgage-holders refinance by giving them a $3,000 a year credit, funded by a fee on big banks.
- Ban insider trading among Congressmen.
Romney would repeal and replace the Dodd-Frank Wall Street Reform Act. He would only allow new regulations if enforcement costs were offset by eliminating old regulations. He promised to eliminate regulations that suppress small business growth. He also would streamline regulations that inhibit nuclear power, coal, oil and gas production. He would:
- Initiate all approved natural gas and oil leases. By the end of his second term, the United States would not import from the Middle East or Venezuela.
- "Reagan Economic Zone" to partner with countries committed to free trade. Prosecute trade infringements with China. More trade agreements with Latin America.
- Reverse Executive Order encouraging government contracts use labor unions. Improve schools by going after teachers' unions. (Source: CNN Money," Romney's 5-Point Plan," 8/12/12)