Would President Romney Embrace Stimulus?

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Photo: Justin Sullivan/2012 Getty Images

Paul Krugman tells Ezra Klein that, although Mitt Romney's advisers are Keynesians, Republicans would never let them propose a Keynesian plan to end the recession:

If Mitt Romney is elected with the team we think he’ll have — guys like Greg Mankiw and Glenn Hubbard — will some of these economists become Keynesians again to move the needle on unemployment? Or will the positions taken in the last few years stick?

Mankiw and Hubbard have not actually abandoned their analytical positions as far as I can tell. They have left themselves an out. John Taylor, same thing. He’s got all kinds of arguments about why this particular stimulus didn’t do anything, but he’s still living in an essentially Keynesian world. But I don’t think they’re going to be calling the shots. I think if a president Romney tried to do stuff that’s more or less Keynesian, Paul Ryan would cut him off at the knees. And beyond that, I don’t think he’s got the conviction. Someone said his slogan should be “Vote Romney: He doesn’t mean any of it.” But his party means it.

I think Romney probably would favor a Keynesian plan. It's true that Romney has given himself over to Ryan-omics, and Ryan is a hard money advocate who staunchly insists that stimulus can't work. But that is not a core belief for Ryan, or really any of the Republicans. When a Republican president was in office, and their neck was on the economic line, Ryan and his fellow conservatives favored low interest rates and fiscal stimulus.

Why did they flip? I don't think it was a conscious attempt to sabotage the economy. But people are very good at persuading themselves on the abstract merits of ideas that advance their self interest. Low interest rates and fiscal stimulus are both responses to a recession that involve at least some long-term cost. When the benefits of economic recovery would come at the direct expense of your chances of regaining power, and the costs would be shared by all, it's easy to persuade yourself that the benefits are small and the costs huge.

But to whatever extent the Republicans oppose Keynesian theory right now, I don't see this as a core belief of theirs. Their true core belief is that tax rates on the rich should be low. George W. Bush and the GOP Congress were both willing to advocate stimulative Keynesian policies in 2001 and again in 2008. Romney's economic advisers share their party's obsession with cutting taxes for the rich. If the Republican Party finds itself no longer standing to benefit from economic calamity, and suddenly in a position to lose a great deal from it, I suspect they will find the advice of their Keynesian economists suddenly much more persuasive once again.