After President Obama’s reelection he was quick to claim his victory as a mandate on his “tax the rich” campaign platform. Meanwhile, there was much talk about the Republican party being in disarray after Romney’s defeat. Neither of those conclusions are correct.
Romney ran a competitive campaign despite lukewarm support among many Republicans, but it is very hard to unseat an incumbent, as I have argued previously. My money was on Obama long before the election (yes, I did win a small amount) only because he was the incumbent, and my conjecture is that if Romney had been the incumbent and Obama the challenger, Romney would have won.
After the very close election in 2000 and again in 2004 Democrats were said to be in disarray, but they won the White House, and majorities in both the House and Senate by 2008. I wouldn’t mind some Republican soul-searching after the election (especially on individual rights issues), but I also don’t view it as a bad sign for the party that they were unable to unseat an incumbent president.
All of this would be mostly academic were it not for the so-called “fiscal cliff” negotiations that are going on now. As I noted before, the economy is not in danger of falling off a fiscal cliff, but at the same time, both parties are negotiating to make significant changes in the federal budget. Having been reelected, the president is in a stronger position than prior to the election, because unlike the members of Congress, he is no longer accountable to the voters. Even if the election was not an Obama mandate, it was still a victory.
If the “Bush tax cuts” had not been designed with an expiration date, it would be very difficult for the president to get Congressional approval for tax increases now. Indeed, in 2010, with the 2012 election ahead of him, the president agreed to extend the “Bush tax cuts,” even though he consistently claimed to oppose them.
Now, because the tax cuts will automatically expire, and with the election behind him, the president is in a stronger bargaining position, and won’t extend them again — not because of an Obama mandate or Republican disarray, but because the president is the only one at the “fiscal cliff” bargaining table for whom electoral politics is irrelevant.
About the author: Randall G. Holcombe
Randall G. Holcombe is Research Fellow at The Independent Institute, DeVoe Moore Professor of Economics at Florida State University, past President of the Public Choice Society, and past President of the Society for the Development of Austrian Economics. He received his Ph.D. in economics from Virginia Tech, and has taught at Texas A&M University and Auburn University. Dr. Holcombe is also Senior Fellow at the James Madison Institute and was a member of the Florida Governor’s Council of Economic Advisors.