Financial engineer turned Republican presidential candidate Mitt Romney has boasted for years that "I know how the economy works." Unfortunately for Mitt, global business leaders aren't buying what he's selling.
A recent survey of executives around the world found that by a 2 to 1 margin, they believe President Obama would be better for the global economy than Romney. That's because they know what we know—or more accurately—what we should know. That is, they see the carnage caused by austerity policies in Europe even as economists in the U.S. continue to credit the Obama stimulus program for boosting American employment and GDP growth. And looking ahead, the world's business leaders seem to understand that the draconian Romney-Ryan program could put the American recovery at risk.
As Reuters reported last week, a Financial Times survey of business executives worldwide showed a clear edge for Barack Obama when it comes to helping the global economy prosper:
Democrat Obama was chosen by 42.7 percent in the 1,700 respondent poll, compared with 20.5 percent for Romney. The rest said "neither".Outside the U.S., the respondents doubtless realized that the American economy is significantly outperforming its counterparts in Europe where, the New York Times recently warned, "a lost decade looms."
The result was different among respondents in the United States, where a slim majority thought Romney would be better for their businesses than Obama.
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That contrast is especially relevant for the U.K., where Prime Minister David Cameron's Troy government—to the cheers of American conservatives—implement a harsh austerity program two years ago. There, an economy that is once again shrinking has brought buyer's remorse among austerity's former backers. As Paul Krugman explained last week:
The New Statesman had a good idea -- it went to 20 British economists who signed a letter back in early 2010 calling for immediate austerity and asked them whether they still supported the Osborne policies now that Britain is in double-dip recession. Only one of those who replied said yes, while nine urged Osborne to reconsider his opposition to stimulus...Here in the United States, the overwhelming consensus of economists agree with Krugman on stimulus, even if American business leaders apparently do not. Former McCain economic adviser Mark Zandi concluded that the policies of the Obama administration prevented "Great Depression 2.0." The nonpartisan Congressional Budget Office has consisted validated the strong impact of the $787 billion American Recovery and Reinvestment Act (ARRA), concluding that at its peak in 2010 the ARRA added up to 3.3 million jobs, cut unemployment by as much as 1.8 percent and boosted GDP by up to 4.1 percent. After a panel of 40 economists surveyed by the University of Chicago business school largely concurred in that assessment, CBO Director Douglas Elmendorf in June shared their conclusion with Republican stimulus deniers in Congress:
Fiscal austerity while the economy is depressed, and in particular when conventional monetary policy has reached its limits, was an obviously bad idea from day one. Not to put too fine a point on it, what I was writing about austerity back in 2010 looks just fine a couple of years later.
Under questioning from skeptical Republicans, the director of the nonpartisan (and widely respected) Congressional Budget Office was emphatic about the value of the 2009 stimulus. And, he said, the vast majority of economists agree.
In a survey conducted by the University of Chicago Booth School of Business, 80 percent of economic experts agreed that, because of the stimulus, the U.S. unemployment rate was lower at the end of 2010 than it would have been otherwise.
"Only 4 percent disagreed or strongly disagreed," CBO Director Douglas Elmendorf told the House Budget Committee. "That," he added, "is a distinct minority."
Nonpartisan business leaders around the globe may not merely be looking at their returns from the U.S. stock market, where the Dow Jones has jumped by 45 percent since Barack Obama took the oath of office. They may also be aware of the historical record which shows that from economic growth and job creation to stock market performance and just about every other indicator of the health of American capitalism, the modern U.S. economy almost always does better under Democratic presidents.
The flipside is that the global business elite may also worry that what President Obama giveth, President Romney will taketh away. Their fears are well-founded.
Despite Republican mythmaking that "President Obama made the economy worse," the Ryan and Romney budget blueprints would actually bring economic growth to a screeching halt and with it cast hundreds of thousands of Americans into the ranks of the unemployed.
The Economic Policy Institute summed up the carnage the Ryan budget is forecast to produce:
Paul Ryan's latest budget doesn't just fail to address job creation, it aggressively slows job growth. Against a current policy baseline, the budget cuts discretionary programs by about $120 billion over the next two years and mandatory programs by $284 billion, sucking demand out of the economy when it most needs it and leading to job loss. Using a standard macroeconomic model that is consistent with that used by private- and public-sector forecasters, the shock to aggregate demand from near-term spending cuts would result in roughly 1.3 million jobs lost in 2013 and 2.8 million jobs lost in 2014, or 4.1 million jobs through 2014.Despite his promise to produce 12 million new jobs in his first term, Mitt Romney's vision isn't much better. Many leading economists predict that far from rescuing the middle class, Mitt Romney will only batter it further. Joel Prakken, chairman of economic forecasting firm Macroeconomic Advisers, rejected the notion that Mitt's 159-point plan would "reduce the unemployment rate from eight to five in two years." James Galbraith worried that" if applied, these fiscal measures would be utterly draconian" and "the attacks on Medicare and Social Security would throw large portions of the population into poverty." Mark Hopkins of Moody's Analytics stated that "on net, all of [Romney's] policies would do more harm in the short term," adding, "If we implemented all of his policies, it would push us deeper into recession and make the recovery slower." Nobel Prize-winning economist Joseph Stiglitz cautioned, "The Romney plan is going to slow down the economy, worsen the jobs deficit, and significantly increase the likelihood of a recession." And his fellow Nobel winner Paul Krugman was doubtless saying what those foreign business leaders were thinking when he lamented:
"Ireland is Romney economics in practice. I think Ireland is America's future if Romney is president."The Center for American Progress put a number what could result from Mitt Romney looking to the capitals of Europe for guidance:
By a conservative tally, Gov. Romney's 59-point plan would actually cost the economy about 360,000 jobs in 2013 alone.For his part, Mitt Romney is still repeating what's he's been saying for years. "Unlike career politicians who've never met a payroll," Romney brags, "I know why jobs come and go."
He's half right. That's probably why his fellow business leaders outside the United States worry that if Mitt Romney comes to the White House, American jobs will go.