President Obama and Governor Romney are preparing for their next big showdown in New York tonight. This debate will feature audience questions in a “town hall” format. Many Americans, including myself, will want to know who will do more over the next four years for the middle class and who will support the strongest job creation. This is the key challenge facing American and is the political territory that could be most decisive in next month’s election.
Romney will win this debate if he is able to convince the American public that President Obama’s economic policies have been a failure and that his economic plan will generate job gains. Romney claims that his economic plan will create 12 million jobs and that 7 million of them will come about as a result of his tax cuts.
But US economists, including myself, question whether Romney’s job creation claim can be believed. If anything, Romney’s 59-point economic plan will most likely push the US back into a recession. Economists estimate that, at best, it will create around 87,000 jobs in next year, or, at worse, could actually lead to the loss of anywhere between 300,000 to 600,000 jobs.
Romney’s economic plan is a “jobs fail” because it is based on the same economic logic that supply-siders have been pushing on the US economy for some time now. The supply-side story is that if the government gives the wealthy back their taxes, they will invest those added funds, thus growing the economy, creating jobs, and improving middle-class incomes. In the 1980s and 2000s, policymakers did exactly that, but it didn’t work. Both eras experienced significant tax cuts aimed at higher-income households that were supposed to spur investment.
President Obama will win the debate if he runs on his record and exposes the Romney economic plan. Over the past year, the US economy has added 1.8 million jobs, which is a strong track record of solid job gains, month after month. The private sector has added jobs every month for 31 months and the unemployment rate is now where it was when Obama took office.
Jobs have come back because policymakers acted decisively. In February 2009, before he had even been in office a month, President Obama signed the American Recovery and Reinvestment Act, which pumped nearly $800bn into the U.S. economy and stopped the haemorrhaging of jobs. Later that year, the administration helped stabilize the auto industry, which has helped that sector turn itself around into a job-generating industry for 27 of the past 36 months.
If Obama can articulate his record and expose Romney’s plan, tonight’s debate will be a home run. If Romney can avoid scrutiny and run down the President’s record it, could be game on for the third and final debate.