Category Politics

Romney Campaign Finds Its Message

Danny Vinik Leave a comment

Paul Ryan speaks at the RNC.

The second night of the Republican National Convention was yesterday and I was lucky enough to be there (as I will be tonight). It was a slow starting night, but finished strong with speeches from former Secretary of State Condoleezza Rice, New Mexico governor Susana Martinez and of course Paul Ryan.

Republicans continued pounding the President for “you didn’t build that,” with nearly every speaker mentioning the line. It’s clearly playing a much more prominent role in the election than any political pundit predicted. It’s become the Romney campaign’s main message.

Now, the line is incredibly deceptive, if not an out-and-out lie. In fact, the Washington Post’s fact checker Glen Kessler awarded it Four Pinocchios just yesterday morning. But it’s not going away, not matter how much liberal bloggers scream and yell about it. And even worse for those annoyed bloggers, it has finally given the Romney campaign something to run on.

A theme I’ve noticed over the course of this election is that the Obama campaign has had a clear plan of attack against Romney, but the Romney campaign has not had one against Obama.

Obama began with Bain Capital, attempting to refute Romney’s claim that his business background makes him the optimal choice for the Oval Office. The campaign (somewhat dishonestly) called Romney an outsourcer and then transitioned to sharp attacks against the former Governor for not releasing more of his taxes. Finally, the campaign turned to the Ryan Budget, trying to paint Romney as a man whose main goal is to help the rich and cut the safety net.

The story flows from one theme to the other, building up evidence along the way. What did the Romney campaign have? A few gaffes that no one really cared about and an economy that, while still bad, has been slowly improving.

More than anything, it needed a message. It needed something that both confirmed conservative fears that Obama is a big government socialist and convinced independents that Obama’s ultimate goal is wealth equality. In “you didn’t build that,” Romney found his message.

The Romney campaign wants to convince voters that Obama is a socialist intent on using the government to control outcomes; that Obama believes government is the root of all success, that individuals are cogs in the government machine and do not determine their own success (or lack thereof).

Yes, Obama does not believe any of these things. But that doesn’t matter. What matters is what voters believe. If Romney can convince voters of this message, he can win.

For a while now, I haven’t actually thought the election would be particularly close but I’m becoming less convinced. Before the Romney campaign discovered this message, I just didn’t see a way for it to win (outside a European meltdown, major government scandal, etc.). But now I do. If the Obama campaign cannot refute the “you didn’t build that” message, it opens the doors for a Romney victory.

A Referendum on Campaigning

Danny Vinik Leave a comment

I’ve been away from the blog for a bit the past week, enjoying the end of my summer and I wanted to stay away from the Paul Ryan show. The blogosphere has covered him and the Ryan Budget profusely so I don’t have much to add. More and more I believe that his election is not going to be that close. Obama won’t win by as much as he did in 2008, but I just don’t see it being all that tight and Romney’s selection of Paul Ryan as his running mate has only strengthened my view. Why? Because Ryan is controversial, his budget isn’t popular and he’s just not as wonky as people think. Real Clear Politics’s excellent conservative blogger Sean Trende said as much in his article evaluating Romney’s choice.

But let’s assume for a second that Obama does win by a decent margin. Such a victory is important not just because it allows the President and Democrats four more years to implement their policies. It is also important because it sends two positive messages for futures campaigns:

1. Money doesn’t buy elections. Obama will get outspent handily in this election. There’s no doubt about that. But what if all the tens of millions of dollars that Sheldon Adelson puts in to Romney’s campaign becomes worthless? What about all the other big money donors? If Obama wins relatively easily, maybe next time, they will be more hesitant in opening their wallets. This matters less for the presidential election than for down ticket races. In the end, those down ticket races are where money matters. If we can remove some of the money from those races – where Republicans have a huge advantage in cash – it will be a big victory for the country. Right now, too many candidates just don’t have a chance because they just don’t have the resources. How many moderate Republicans has the Club for Growth taken out with their vast swaths of money? Well, maybe an Obama win can help reverse this trend. It certainly can’t hurt.

2. Vagueness doesn’t work either.  I feel bad for Romney. He has so little to run on now because the Republican party has lurched so far to the right. And to make up for that, Romney has been incredibly vague in all of his policies. In fact, they can barely be called policies. This cannot be the standard for presidential campaigns. Candidates need to lay out their platforms and allow the media and public to judge them. Right now, Romney isn’t allowing this happen. Ultimately, I don’t believe Romney really had much of a choice, but an Obama win would certainly ensure that future candidates cannot just skirt the issues. (More on this to come).

Many pundits have declared that Romney’s selection of Ryan will make this election “about the issues.” Yes and no. Yes, voters around the country will be able to read countless articles on Obama’s policies and the Ryan Budget. They will get a chance to vote on the issues. But for those of us who follow Washington closely, there isn’t really anything new. Both Obama’s policies and the Ryan Budget have been thoroughly dissected. Ultimately, there’s just not that much more policy-wise to add to the discussion. Now, the election is all about messaging those plans to the voters.

But this election is also a referendum on what works in campaigns. Does a huge money advantage ensure victory? What about vague policies? What about both of those in the midst of a weak economic recovery? The framework for future campaigns lies with the answers to these questions and it’s important that future campaigns aren’t run to maximize money and minimize serious policy proposals. For those reasons, an Obama victory offers more than just a victory on the issues (as would a Romney victory). It offers a victory on how to campaign. And since I believe Romney’s selection of Ryan will only increase the chances of the President winning a second term, I’m certainly happy with Romney’s choice.

Yglesias’s Faulty Economics

Danny Vinik Leave a comment

Matt Yglesias just penned a post in defense of Mitt Romney’s tax plan but I think he mixes up the economics quite a bit. He writes:

The good thing about taxes is they raise revenue, which can be used to do useful things. The bad thing about taxes is they may be a drag on economic growth. But here there are two considerations. One is the “incentive effect” of taxes—higher taxes mean less incentive to do economically valuable things. The other is the “income effect”—less money in your pocket means more incentive to do economically valuable things. The genius of Romney’s plan is that by eliminating deductions it leaves middle class families with less money in their pockets (so a pro-growth income effect) while also lowering the tax rate they pay on a marginal dollar of additional earnings (so a pro-growth incentive effect). Basically it’s a huge win. You get a bunch of revenue in a way that bolsters the country’s growth prospects.

Let’st start at the beginning. The first part about taxes raising revenue and hurting growth is correct. But then it gets murky. Yglesias writes “higher taxes mean less incentive to do economically valuable things” and just a line later says, “less money in your pocket means more incentive to do economically valuable things.” But higher taxes means less money in your pocket. They are different ways of saying the same thing. Yet, Yglesias comes to different conclusions for their effects on economic growth.

I understand his train of thought here. A lower marginal tax rate allows people to keep a larger amount of their income. However, fewer deductions allows them to keep a smaller amount of their income. And if the middle class pays more taxes overall (as Romney’s plan does), that means they are keeping a lower share of their income overall and paying a higher effective tax rate. However, this says nothing about whether people will work more or less (which is what I assume Yglesias means by “do economically valuable things”).

Here, there are two different effects: the “income effect” and “substitution effect.” The income effect says that because  the middle class has less after-tax income, people will work more to make-up for their lost earnings. The substitution effect, on the other hand, says that because the middle class will keep a smaller percent of each dollar they earn (remember, overall they are paying more in taxes), they will work less. The question is, which effect dominates the other? If the income effect is a larger, people will work more (or do more economically valuable things). If the opposite is true though, people will work less (or do less economically valuable things).

But we don’t necessarily know which one  would dominate; it depends on a number of different things. So it is wrong to say that it bolsters the country’s growth prospects.

Nevertheless, I agree with the rest of Yglesias’s post that using the extra revenue to pay for a lower effective tax rate on high-income earners is a bad idea. In fact, Romney’s tax plan has a number of major flaws, not to mention that it is mathematically impossible. And given that it doesn’t necessarily improve the country’s growth prospects (which are also more complicated than just the middle-class), it’s tough to defend any aspect of Romney’s plan.