It’s the demand, stupid

In the larger economic debate, Democrats and the left in general are largely focused on one goal: demand. Policymakers should, the progressive argument goes, do everything possible to boost demand, since this rests at the heart of the larger problems — more demand would mean more jobs, more growth, more production, more trade, etc.

The right disagrees. In fact, Republicans tend to believe the opposite — we don’t need to boost demand; we need to deal with the real problems like regulations, taxes, and some amorphous sense of uncertainty.

Demand, in the conservative model, is largely irrelevant. It’s why Republicans consider the very idea of generating economic activity through unemployment benefits and food stamps to be completely ridiculous.

Apparently, Mitt Romney forgot the larger debate and temporarily switched sides yesterday.

Yesterday morning one of the party’s front-running presidential candidates contradicted that orthodoxy. Asked to explain his critique of President Obama’s economic views on MSNBC yesterday, Mitt Romney alleged that “he doesn’t understand how the private sector works.” What in particular does the president not understand? Demand!

“The president thinks that if you have cash on your balance sheet that means you’re gonna go hire people. No, you hire people if you have customers. The president doesn’t understand what makes the American economy go. I do.”

Wait, Romney thinks the key businesses expanding their workforce is greater demand? To borrow a Josh Lyman line, “That’s the other guys.”

Do congressional Republicans know Romney is saying stuff like this? Because they certainly don’t agree with this approach. Businesses don’t need customers, GOP officials argue, they need fewer regulations, a smaller tax burden, and the comfort that comes with knowing that health care reform will go away forever. Then they’ll lower their prices and expand their worforce. Customers will come eventually.

In trying to disagree with President Obama, Romney accidentally endorsed President Obama’s economic argument. While hoping to make the case that the president “doesn’t understand” the economy, Romney inadvertently proved he “doesn’t understand” the economic argument underway in Washington.

Wait, it gets worse.

In the same paragraph, Romney mocked the idea that companies with cash on their balance sheets will necessarily hire more workers. On this, he’s correct. But also note that Romney’s economic plan includes big tax breaks for corporations … so they’ll have more cash on their balance sheets.

And this guy’s entire campaign is predicated on the notion that he’s a business whiz? No wonder Romney failed so miserably to create jobs in Massachusetts and the private sector.