'Our Best Hope Is That Romney Has A Secret Plan'

Tuesday’s GOP debate was a parade of one-trick ponies. Herman Cain took every question as an opportunity to pitch his “9-9-9” tax plan (pdf) as a jobs engine. Rick Perry kept coming back to increasing oil and gas exploration – hey, it’s worked for Texas. Rick Santorum hopes to revive the Rust Belt’s struggling manufacturing base – with targeted tax breaks, of course.

Cain even attacked Mitt Romney for not being a one-trick pony. Cain complained that Romney’s economic plan, at 59 points and 160 pages, is too long and complicated. Romney – who turned in by far the strongest performance of the night – handled that objection ably, noting that big problems often require complex solutions. Romney then called out the one-trick ponies, saying that while tax policy (Cain) and energy policy (Perry) are important, they’re only some of the many things we must fix to keep the economy moving again.

Unfortunately, while Romney’s plan has an admirable quantity of detail, it does not contain all the right details. Many of the ideas in Romney’s plan, from tax reform to free trade to revamping job training, are good. But they would also have been good ideas in 2007. What Romney’s plan lacks are ideas that relate to the housing bubble and the prolonged economic crisis that it sparked. Amazingly, none of Romney’s 59 economic proposals addresses housing policy or monetary policy.

We’ve been in a three-year rut of high unemployment, low demand and unmanageable mortgage debt, and these candidates are arguing about tax cuts. This entire field has lost the plot.

Unfortunately for America, the Obama administration has lost the plot, too. President Obama has only one idea for job creation: fiscal stimulus. But when stimulus turned out to be dubious policy and disastrous politics, he was left with nothing else to propose.

While Republicans push in the wrong direction on monetary policy (that is, for tightening), Obama has failed to talk about monetary policy at all, or to advocate for his nominees to the Federal Reserve. He also failed to push for truly bold housing reforms – such as mortgage modifications along the lines of Eric Posner’s and Luigi Zingales’ proposal – that would help Americans climb out from under mortgage overhangs and start consuming again.

With an incumbent administration out of ideas, now more than ever we need bold Republican ideas about getting the economy moving again. Our best hope – and not an entirely implausible one – is that presumptive-nominee Romney has a secret plan for the economy. If he doesn’t, we may be in for years’ more stagnation.