Last week I argued that New Jersey Gov. Chris Christie’s revenue-raising deal with Amazon.com might complicate Team Romney’s search for a vice-presidential candidate (in addition to other Christie liabilities noted by Daniel Larison)
Now it’s Virginia Gov. Bob McDonnell’s turn to make Team Romney think twice.
Appearing on CNN’s State of the Union Sunday morning, McDonnell said the Obama administration’s stimulus helped his state, if only in the short term.
“Did it help us in the short run with health care and education and spending to balance the budget? Sure,” he said. “Does it help us in the long term to really cut the unemployment rate? I’d say no.”
Of course, one would be hard-pressed to find anyone in the Obama administration who would claim stimulus is a long-term solution to any problem. The efficacy of monetary and fiscal stimulus policies is much disputed. But those in favor of such policies readily acknowledge that, by their very nature, they’re short-term solutions to a downturn in the business cycle.
Romney economic adviser Glenn Hubbard made a more nuanced version of McDonnell’s argument last September:
The president’s announced jobs plan centers on the need for additional short-term stimulus designed to boost aggregate demand and jump-start economic growth. In some recession scenarios, such action, if timely, can indeed raise output and employment.
In our current state, however, calling for additional spending and temporary tax relief without addressing longer-term economic challenges may exacerbate the likelihood of another recession in the coming year.
But things on the ground inevitably look different to a sitting governor of a state. According to one estimate, the Obama stimulus made up for 37 percent of Virginia’s budget shortfall in 2009. And this doesn’t account for the massive benefits to Virginia of being parked next to the federal capital.
Directly and indirectly, McDonnell’s success as governor owes much to the size of the public sector. He knows this. And on Sunday, he accidentally admitted it.