On economic policy, Mitt Romney makes his own decisions.
The former Massachusetts governor and private equity executive considers the advice from his cadre of economics PhDs but ultimately charts his own course, according to the Romney campaign. President Obama has knocked the resulting policies as vague. But two of his leading advisers who both served as chairman of George W. Bush’s Council of Economic Advisers have some novel ideas that haven’t gotten much airtime from Romney—and even contradict some of his proposals.
Since those ideas could easily become part of the conversation in a Romney White House, The Fiscal Times dug through the work of Columbia University’s Glenn Hubbard and Harvard University’s Greg Mankiw for the six big ideas not being discussed by the GOP nominee on the campaign trail.
No More Cheap Oil – Here’s the core of the Romney energy policy: Strip away federal restrictions; drill more for oil and natural gas; ink a partnership with Canada and Mexico, and, voila, energy independence for all of North America and three million new U.S. jobs.
“If the president's energy policies are working, you're going to see the cost of energy come down,” Romney stipulated at the Oct. 16 presidential debate. But it will take higher prices to break our addiction to petroleum, according to the 2010 book, Seeds of Destruction, co-written by Hubbard and Peter Navarro, an economics professor at the University of California, Irvine.
The book recommends charging a “flexible” tax whenever oil prices fall below a minimum target. Guaranteed higher prices would cause Americans to fuel up less often—cutting down our petroleum imports, reducing our trade deficit, and increasing our gross domestic product.
“For example, if the world price of oil is $80 a barrel and the target $100, the initial fee is $20 a barrel. However, if the world price moves up toward the target rate—say, to $90—the fee falls to $10. Moreover, whenever the world price moves above the target, there is no fee! ... We also believe that any revenues raised from such a fee should be given back to the American people in the form of tax cuts.”
That plan has a trade-off. If the White and Congress agreed to the $100 level used in the book, the $3.54 a gallon average that Americans currently pay for gasoline could become the lowest possible price at the pump.
Tax Carbon Emissions – Many scientists argue that the consequences of climate change can be witnessed in extreme weather patterns—droughts, intense hurricanes, and a level of volatility that defies seasonal norms. Mankiw argued in a 2009 paper that taxing carbon emissions would help stem climate change.
Taxing things that cause high social costs—like cigarettes because of lung cancer—comes from the English economist Arthur Pigou. In his paper, Mankiw accepts the scientific conclusions about global warming at face value and discusses how charging taxes can occasionally produce benefits for society, even noting that a congestion tax would reduce traffic.
“Discussing the size of a carbon tax, rather than alternatives to it, would be a big step forward compared to where the public discussion is right now,” Hubbard wrote. “As judged on purely political terms, higher Pigovian taxes are a wacky idea. I have yet to see a major candidate for President endorse the concept….We can hope that in future elections the gap between the advice of the economic advisers and the advice of the political consultants will become a lot smaller.”
Romney, like some scientists, is uncertain whether climate change is manmade. “The idea of spending trillions and trillions of dollars to try and reduce CO2 emissions is not the right course for us," he said at a campaign fundraiser, according to NPR. But Romney would actually go a step further, proposing in his 59-point economic plan, “Believe in America,” to amend the Clean Air Act and stop the government from regulating carbon dioxide.