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Obama Vs Romney: Bitter Politics Over The Economy – Analysis

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By Monish Tourangbam

By now, even reluctant observers of American politics would have easily discerned that economy will largely decide who will win the November presidential elections. Economy takes more prominence during election campaigns and determines election outcomes especially when a country is going through economic distress. There is absolutely no doubt that the US is facing the worst recession since the Great Depression. Usually, when the economy does not do well, negatively affecting the rate of employment, the country turns against the government in Washington, thus hampering the chances of re-election of any incumbent President. But the Democratic incumbent President Barack Obama has been trying to convince voters that the economy has actually improved since the financial meltdown started in 2008. He wants to convince the voter that the country is in a recovery phase though full recovery will take time. Debate on the economy during election campaigns largely takes on a partisan nature, pitting the two parties against each other with their competing economic plans. But, the moot point for majority of Americans at this juncture is: “Do they have concrete and specific plans?”

Obama Versus Romney
Obama Versus Romney

Most of the debates over the economy from both the parties, till now, have largely revolved around digging the past record of the two candidates, President Obama and the presumptive Republican candidate Mitt Romney, former governor of Massachusetts and a successful businessman. Lots of money has been poured on largely negative advertisements attacking each other. If the Obama campaign tells Romney to come clean and declare more than two years of tax returns, accuses him of making big money at Bain Capital and outsourcing jobs abroad, the Romney campaign accuses Obama of double standards, asking him where the stimulus plan money meant to create jobs for Americans had gone. The Republican campaign has accused Obama of “crony capitalism”, blaming the President of using government resources to reward donors at the expense of the middle class.

As the campaign season heats up, and candidates increase the frequency of fundraisers and campaign speeches, they are going to more frequently and more bitterly attack each other. And that is to be expected since campaigns are meant to exaggerate, they are meant to show one in the best light and the opponent in the poorest light. But, in the midst of this usual electoral grind, Americans seem to be feeling that the Democratic and the Republic campaigns are largely beating around the bush, avoiding specifics as to how to get the country out of the economic mess. A Gallup poll taken in June showed that just 40 per cent of Americans feel Obama has a clear plan for solving the country’s problems. While 38 per cent felt the same about Romney. Definitely people have a better idea of Obama’s priorities and plans since he has been in office for more than three and a half years.

Obama extended the Bush era bank bail-out plans, passed stimulus plans to create new jobs and tackle the unhealthy unemployment rate in the US. He got an ambitious and a sweeping healthcare plan passed by the Congress, the constitutionality of which has been upheld by the Supreme Court. He wants better regulation over the private sector and emphasizes the necessity of reviving manufacturing in the United States, while high pitching the rhetoric against outsourcing. Moreover, President Obama has sought to allay concerns regarding the weak job growth highlighting a steady ongoing recovery and emphasizing that over 2 years businesses have created 4.4 million new jobs including 500,000 new manufacturing jobs. But since the Republicans took control of the House of Representatives in late 2010, a policy paralysis seems to have struck Washington owing to the tussle between the White House and the Congress. And as 2012 is also a year of the crucial Congressional elections, Republicans are looking to retain their control of the House and take the Senate back from the Democrats. If they manage to do that, then the second term, if it comes, will be even more difficult for the President.

The President is reported to have put off some key policy decisions until a possible second term. He said, “Once the election is over, things have calmed down a little bit, based on what the American people have said and how they’ve spoken during that election, we’ll be in a good position to decide how to reform our entire tax code in a simple way that lowers rates and helps our economy grow, and brings down our deficit.” President Obama had formed an independent panel of business leaders, the Jobs Council charged with creating jobs for Americans. It first met on 24 February 2011 and since then; they have met just 3 more times, last in January 2012. Critics say that Obama had time for attending a number of fundraisers but no time to meet the Council when the country is suffering from high unemployment. Carpers have also attacked the Jobs Council as just a sham to show Americans that Obama cares, while the only thing he cares about is increasing the clout of the federal government.

Romney, on his part, released a fifty-nine point economic plan that included cutting corporate tax rates, reducing government spending, eliminating market regulations, and curbing the power of labor unions. But, no specific details have been given as to how he actually intends to do all that. William Galston, an expert on government and politics at the Brookings Institution and a former Clinton official contended that both Obama and Romney have each “said and written enough to be able to argue that he has been specific…” “But when it comes down to what really matters-what are the top three or four things that I will do if I am elected or re-elected-I scratch my head,” he added. Many conservative analysts have also criticized the Romney campaign of being too soft and stressed that he should go forward from the oft-repeated phrases — ’the economy is in a mess’, ’Obama isn’t working’, etc. They want Romney, the challenger, to tell the Americans just why Obama is not working and how Romney’s policies will do better if he is elected. People know that the economy is in a very bad condition, that Obama’s policies have not been very effective, but there is no assurance that Romney’s policies will do better.

Questions regarding the role of the federal government vis-à-vis the American states and the American people have also divided the electorate this season. Obama’s comments on the role of the American government in aiding individual enterprises have been criticized as embodying a view that threatens to increase the power of the federal government trumping America’s storied rugged individualism and self-reliance. The President’s recent comment that “if you’ve got a business, you didn’t build that; somebody else made that happen.” has ignited a series of partisan comments on how both the candidates view the role of the government in the American society and economy. David Axelrod, a senior adviser to Mr. Obama, justifying Obama’s remark said in an interview that the President considers individual initiative “the principal driver in one’s success” but “it’s also true there are things we do as a country that contribute to that.”

This election also raises important questions on what kind of capitalism Americans want in the 21st century: a more regulated and a more restrained capitalism that Obama desires, or a more robust capitalism that Romney believes will bring growth back to the American economy. President Obama wants to increase taxes on the rich; the ones more privileged, to bridge some of the huge gaps created by rising income inequality in the United States. The Occupy Wall Street movement that later spread to many cities in the country significantly energized the debate on changing socio-economic condition as a result of huge income inequality, reflected by slogans like ’1% vs. the 99%’. A general belief pervades that President Obama is losing support in corporate America as a result of his policy projection to raise taxes applicable to the rich. He reiterated his support for letting the Bush era tax cuts for household incomes of more than $250,000 expire, while keeping the lower rates in place for everyone else. On the other hand, Romney chose to describe those who make more than $250,000 a year as “job creators” and warned that the President’s proposal to raise taxes at the top was not only bad for the rich but for the entire country as well. Blaming President Obama for failing to understand how the American economy works, Romney asserted that the President was going to make it harder for jobs to be created, amidst a terribly weak jobs market. Obama apparently has nothing against “folks getting rich” but wants to ensure “that everybody else gets that chance as well.” President Obama, according to a campaign advertisement wants “’the wealthy to pay a little more so that the middle class pays less’” Reflecting the tone of present politics over the economy and its ramifications for the election season, a known liberal economist Paul Krugman, commented in the New York Times on 15 July. “..this election is, in substantive terms, about the rich versus the rest, and it would be doing voters a disservice to pretend otherwise.”

Both the incumbent and the challenger seem to be struggling in trying to convince the American voters that they have the right economic plan to take the country forward. Analysts see a deeply polarized electorate with a few undecided voters who remain entirely unconvinced by either candidate. Both candidates are running neck to neck in all the major polls in recent times, and by all counts, the election in November is going to be a close call and it would be premature to come to any sort of guess as to who will finally triumph. Many of the voters would have usually made up their minds and hence, the battle will be for those undecided voters in key battleground swing states like Ohio, Pennsylvania and Florida. Each candidate would try and emphasize that he is more recognizable with the American people than the other one. If the state of the economy, even though grim, and the rate of unemployment maintains the status quo, then Obama’s reelection bid has a fair chance but then a worsening economic picture and rising uncertainty has the ability to trump all other issues, including the advantage that Obama has in terms of being the incumbent and the more likeable person.

As the role of the federal government has increased in policymaking over the years, the American public holds the incumbent President accountable if the economy does not do well. The economy added only 80,000 jobs in June, just 3,000 more than in May, according to figures from the Labor Department. Though the 8.2 % unemployment rate is lower than it has been in the last thee Junes, the slow job growth is not good news for Obama. Thomas Mann, a political expert at the Brookings Institution, thinks public perceptions of the economy will be a determining factor in November. “I would say the most important factor is whether economy is picking up some steam and moving forward or is it falling back again? If it’s falling back again Obama’s re-election is at serious risk,” said Mann. President Obama seeks to project himself as the man who understands the concerns of the America people, wants to stop inequality from rising further in the country, wants more regulation of the private sector, create more jobs for American as opposed to outsourcing and offshoring. Romney, on the other hand, is not an egalitarian entrepreneur; he is someone who is good at making money. As such, he seeks to project himself as an embodiment of robust capitalism that, he believes, defines America and will take the country out of the present economic mess.

Looking at Romney’s business experience, and given the fact that he is good at making money, he might seem to be the man of the moment for an economically struggling American economy. But, is being a good businessman an adequate enough qualification to be given a chance to lead the country out its economic difficulties? American people are largely dissatisfied with how President Obama has handled the economy but they are equally unsure if Romney can steer the economy to growth. And there are apparent inconsistencies in Romney’s business career and his income accounting. The Democratic campaign is accusing him of stacking money in tax-havens like Bermuda and the Cayman Islands and of refusing to release more than two years of tax returns. Even some prominent Republicans want Romney to release more tax returns to stem the attacks from the Obama campaign. But Romney seems to be in no mood to show his pre 2010 tax history. In turn, he has charged that the President was trying to distract voters’ attention from more serious economic issues. “Those are the two years people are going to have, and that’s all that’s necessary for people to understand something about my finances,” Mr. Romney said in an interview on CNN.

The month-by-month job figures from now on till November will definitely impact how voters see the candidates. The general assessment is that a positive job figure just before the election could be beneficial to Obama and the opposite will increase Romney’s chances. But some political experts also say more than the monthly figures, it is important to see who, between the two candidates, offers a better long-term plan for recovery. Ken Rogoff, an economics and public policy professor at Harvard University and former International Monetary Fund chief economist commented, “Frankly, I think no matter who had been president, the last four years we would have seen very sluggish recovery. It’s normal after a financial crisis, but there is a question of where things are going from here.” In Charlie Rose’s Conversation with the President and the First Lady on 16 July 2012, First Lady Michelle Obama commented that she wanted to take good care of the White House before handing it over to the new administration in four more years, (four more years!), a very confident message from the First Lady. But, poll after poll continues to indicate that November 2012 will see one of the closest presidential races in recent times. Even President Obama reportedly warned his Democratic supporters to expect a much closer contest this year than the case four years ago. In the final analysis, if there is one issue that makes Obama’s re-election shaky and Romney’s election a clearer possibility, it is none other than the economy. Hence, some harsh jostling over the economy can be expected in the days to come.

Associate Fellow, US Studies, ORF

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Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

One thought on “Obama Vs Romney: Bitter Politics Over The Economy – Analysis

  • August 2, 2012 at 9:34 am
    Permalink

    Hard to understand why Americans can believe for one moment that an economy brought to it’s knees by a Republican President over eight years could be made right by any President in just four years.

    And so instead, give it back to the perpertrators! Amazing!

    Captiism in the US is on it’s kneees as it was left unregulated, especially banks. Fundamentally, business is just too too greedy and will stop at nothing to increase short term profit, distributing it over generously to it’s owners and executives while outsourcing jobs and stashing away money in tax havens.

    Elect Romney and the US will continue it’s rapid decline.

    Elect Obama with a mandate over congress and you have a chance!

    Reply

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