Romney's 12 Million Jobs Pledge Based on Totally Bogus Math

A blog about business and economics.
Oct. 16 2012 9:13 AM

Romney's 12 Million Jobs Pledge Based on Totally Bogus Math

Mitt Romney boarding his campaign plane in Bedford, Mass. on Oct. 16, 2012

Photograph by Emmanuel Duanad/AFP/Getty Images.

Mitt Romney says he has a five-point plan to create 12 million new jobs, but Glenn Kessler at the Washington Post does a little digging and finds that the estimates the campaign is basing that on don't even remotely support that assertion. Here's Romney in a new advertisement:

Let me tell you how I will create 12 million jobs when President Obama couldn't. First, my energy independence policy means more than three million new jobs, many of them in manufacturing. My tax reform plan to lower rates for the middle class and for small business creates seven million more. And expanding trade, cracking down on China, and improving job training takes us to over 12 million new jobs

That's 3 million jobs from more drilling, 7 million jobs from tax reform, and 2 million jobs from trade-related measures. So Kessler asks where do these numbers come from:

We asked the Romney campaign and the answer turns out to be: totally different studies … with completely different timelines. 
For instance, the claim that 7 million jobs would be created from Romney tax plan is a ten-year number, derived from a study written by John W. Diamond, a professor at Rice University.
This study at least assesses the claimed effect of specific Romney policies. The rest of the numbers are even more squishy.
For instance, the 3-million-job claim for Romney’s energy policies appears largely based on a Citigroup Global Markets study that did not even evaluate Romney’s policies. Instead, the report predicted 2.7 million to 3.6 million jobs would be created over the next eight years, largely because of trends and policies already adopted – including tougher fuel efficiency standards that Romney has criticized and suggested he would reverse.

The trade-related claim is, if anything, more ridiculous. The study they point to is a 2011 U.S. International Trade Commission report claiming that Chinese IP violations cost the United States 2 million jobs. That's almost certainly false, for starters, but more to the point there's just no way a Romney administration is going to coerce the PRC to adopt the intellectual property rules American business interests want. China is going to adopt the intellectual property rules that Chinese business interest want. That's a fundamental dynamic that transcends partisan politics. Meanwhile, if anything we should be pressing the world to move to less reliance on patents not more.

Long story short here, however, of the 12 million jobs only 7 million are attributable to the policies Romney is talking about. The claim is that ambitious base-broadening tax reform would boost job creation by about 58,000 jobs per month. And maybe it would. But as has been discussed ad nauseam, the only way to implement such ambitious reform is through a large middle class tax hike that Romney claims not to favor. If I've said it once I've said it a millions times, but it's really true that the giant middle class tax hike version of the Romney plan should boost growth by pairing lower marginal tax rates with lower incomes. But "faster growth through lower incomes" isn't a great campaign slogan, so Romney keeps disavowing the policy plank that's actually the lynchpin of his jobs strategy.



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