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Yet more dubious promises from the Republican fantasist brigade

Romney and Ryan don’t have a credible economic plan.

The past few weeks have been pretty interesting in the US. We have had two party conventions, speeches from some rising stars, including a potential President Castro (no relation to the Cuban variety – this is the Hispanic mayor of San Antonio, Texas, whose twin brother is also standing for Congress), one hurricane and a set of not great but not dire jobs numbers.

First, to the Republican convention in Tampa, Florida. The most memorable thing about that gathering was Clint Eastwood’s conversation with an empty chair. The Republicans tried desperately not to talk about their economic plans in case the US public found out what they were, so most of the time they just played the man – that is, Barack Obama, who they seem to hate viscerally – rather than the ball. If the Dow had doubled under a Republican president as it has under Obama, who also took out Osama Bin Laden, presumably they would have been yelling his praises from the rooftops. For the past couple of years, the Republicans in Congress have had just one goal: to defeat Obama, no matter what the consequences are on the US economy. One rule for you, one rule for me.

The cheek of it

Paul Ryan’s budget appears to be a classic example of a Keynesian stimulus, although of an unusual kind. The Republican vice-presidential candidate is in favour of huge public spending cuts on Medicare, Medicaid, food stamps and student grants, to name but a few. Plus, huge tax cuts for the rich so that Mitt Romney and his various billionaire supporters would get richer while the poor would get poorer. Ryan wants a $2trn increase in unspecified defence spending that the Pentagon has made clear it doesn’t want. Romney and Ryan would not raise any taxes, but they say they would close unspecified tax loopholes. These could include mortgage and retirement tax relief, which would be hugely unpopular. So Romney not only refuses to release his tax returns, but won’t say how he’ll fund his tax cuts. This was all made clear by Bill Clinton, whose Democratic convention speech was an economics masterclass.

On 7 September, the Bureau of Labor Statistics produced its jobs report for August, which showed that numbers on non-farm payrolls ­increased by 96,000. Romney greeted this with this astonishing response: “After 43 straight months of unemployment above 8 per cent, it is clear that President Obama just hasn’t lived up to his promises and his policies haven’t worked. They aren’t better off than they were four years ago. My plan for a stronger middle class will create 12 million jobs by the end of my first term.” This was pretty cheeky, given the Republicans in Congress voted down Obama’s jobs bill and offered nothing in its place.

Are Americans better off than they were four years ago? Employment as measured by non-farm payrolls obtained from employer surveys has risen in each of the past 30 months and by a total of 4.1 million (see first chart). Since January 2009, when Obama became president, employment is down by just over a million, but this is because of the economy he inherited from George W Bush that was bleeding jobs. Job losses in the first six months of 2009 averaged 566,000 a month. Since July 2009, employment is up nearly 2.8 million. So the starting point matters – it takes a long while for policies to have an impact.

For comparison, I have included the equivalent chart of employment change in thousands for the UK, which has about a fifth as many workers as the US (29.5 million and 142 million, respectively). Since May 2010, UK employment is up 545,000, but only up 355,000 if we count six months forward as I did for Obama. Employment has grown in the UK since December 2010 by an average of 20,000 per month, compared with an average of 146,000 per month in the US.

Out of balance

Now to the claim that Romney would create 12 million jobs. That is more than was created in the nine-year period from 1999 to 2007. The last time three million jobs were created in one year was under Clinton, in each year between 1997 and 1999 (the only other years when that occurred was in 1983, 1984, 1987 and 1988). Clinton created 12 million jobs from 1996 to 2000. The last four-year period it was done was 1976-79, largely under Jimmy Carter.

Romney’s claim looks pretty bold, given that he hasn’t told us what measures he intends to take to create this almost unprecedented number of jobs. He seems unaware that there are major headwinds hitting the US economy, including concerns about the eurozone and a slowing down of the world economy. In addition, public-sector employment continues to fall: it is down 675,000 since the start of 2009.

There is little more the Federal Reserve can do to help, not least because Romney has said he is opposed to more monetary stimulus in general and more quantitative easing in particular (his adviser Glenn Hubbard calls the latter unmandated fiscal policy). Romney has also said that he would remove Ben Bernanke as chairman of the Fed. If Romney were to become president, he would likely sing from a rather different hymn book, as David Cameron and George Osborne have in relation to the need to have even looser monetary policy; what you say in opposition is often quite different from what you do when you have to make the decisions.

Romney and Ryan don’t have a credible economic plan. There’s no chance in heck they can generate 12 million jobs based on their policies. They could create these jobs with an unfunded $5trn fiscal stimulus, but that would explode the debt, if they didn’t close any loopholes or raise any taxes. So much for balanced budgets.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

This article first appeared in the 17 September 2012 issue of the New Statesman, Who comes next?

Photo: Getty Images
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It's time for the government to think again about Hinkley Point

The government's new nuclear power station is a white elephant that we simply don't need.

Today I will welcome Denis Baupin, Vice President of the French Assembly, to Hinkley.

His own choice to come and visit the site of the proposed new nuclear power station reflects his strong desire to prevent the UK disappearing up a dangerous dark alley in terms of energy policy. It also takes place as France takes a totally different path, with the French government recently adopting a law which will reduce nuclear energy in the country.

Greens have opposed Hinkley ever since the government announced its nuclear strategy. Hinkley, with its state aid and an agreed strike price of £92.50 per megawatt, has always been financially and legally suspect but it is now reaching the level of farce. So much so that George Osborne is required to be economical with the truth in front of a House of Lords committee because he cannot find anything honest to say about why this is a good deal for the British people.

Mr Baupin and I will join hundreds of protestors – and a white elephant – to stand in solidarity against this terrible project. The demonstration is taking place under a banner of the triple risks of Hinkley. 

First, there are the safety and technological risks. It is clear that the Pressurised Water nuclear reactor (EPR) – the design proposed for Hinkley C – simply does not work. France’s nuclear safety watchdog has found multiple malfunctioning valves that could cause meltdown, in a similar scenario to the 1979 Three Mile Island nuclear accident in the US.  The steel reactor vessel, which houses the plant’s nuclear fuel and confines its radioactivity, was also found to have serious anomalies that increase the risk of it cracking. Apart from the obvious safety risks, the problems experienced by the EPR reactors being built at Flammanvile in France and Olkiluoto in Finland have pushed the projects years behind schedule.

Secondly, Hinkley poses risks to our energy security. Hinkley is supposed to produce 7% of the UK's energy. But we now know there will be no electricity from the new nuclear plant until at least 2023. This makes power blackouts over the next decade increasingly likely and the only way to avoid them is to rapidly invest in renewable energy, particularly onshore wind. Earlier this week Bloomberg produced a report showing that onshore wind is now the cheapest way to generate electricity in both the UK and Germany. But instead of supporting onshore wind this government is undermining it by attacking subsidies to renewables and destroying jobs in the sector. 

Thirdly, there is the risk of Chinese finance. In a globalised world we are expected to consider the option of allowing foreign companies and governments to control our essential infrastructure. But it is clear that in bequeathing our infrastructure we lose the political control that strengthens our security. The Chinese companies who will be part of the deal are part owned by the Chinese government and therefore controlled by the Chinese Communist Party. What a toppy-turvy world globalisation has created, where our Conservative British government is inviting the Chinese Communist party to control our energy infrastructure. It also seems that China National Nuclear Company is responsible for the manufacture of Chinese nuclear weapons.

Of course it is the Chinese people who suffer most, being at the hands of an oppressive government and uncontrolled companies which show little respect for employment rights or environmental standards. By offering money to such companies from British consumers through their energy bills our government is forcing us to collude in the low human rights and environmental standards seen in China.  

Research I commissioned earlier this year concluded we can transform the South West, not with nuclear, but with renewables. We can generate 100 per cent of our energy needs from renewables within the next 20-30 years and create 122,000 new quality jobs and boost the regional economy by over £4bn a year.

The white elephant of Hinkley looks increasingly shaky on its feet. Only the government’s deeply risky ideological crusade against renewables and in favour of nuclear keeps it standing. It’s time for it to fall and for communities in the South West to create in its place a renewable energy revolution, which will lead to our own Western Powerhouse. 

Molly Scott Cato is Green MEP for the southwest of England, elected in May 2014. She has published widely, particularly on issues related to green economics. Molly was formerly Professor of Strategy and Sustainability at the University of Roehampton.