Giving the president his night in New York

The economic record warrants four more years

With just a few days remaining before the election, and with the presidential candidates locked in a dead heat, polls suggest that the outcome will depend on the last-minute decisions of a handful of voters who are still undecided, especially in critical swing states. Sampling in various polls also indicates that among likely voters, the economy will be the overriding issue.

What is troubling is that after the polls close, and after the dust settles, we may learn that these voters — and those who have already made up their minds — made their decisions based on misinformation, distortions, and misperceptions about the candidates’ economic records and philosophies.

The national dialogue in the run-up to the election has been dominated by misperceptions of both candidates. Those about Romney — that he’s an out of touch elitist, a greedy, corporate raider unconcerned about the plight of the poor — relate largely to his character. However, the misperceptions about President Obama — that he believes in unchecked government spending to create jobs — are more directly related to his handling of the economy, and run counter to the way most Americans try to balance their checkbooks.

These misperceptions lend credibility to the Republican axiom that theirs is the party of fiscal responsibility. They lend credibility to Romney’s mantra that he is the last bastion of hope for preventing the financial ruin that would be wrought by Obama’s re-election. They lend credibility to the idea that when it comes to the economy, conservative solutions are grounded in reality, while liberals have their heads in the clouds. Finally, they lend credibility to the claim that the president cannot run on his economic record.

He can.

The most significant moment of the second presidential debate wasn’t about “binders full of women” or the attack in Benghazi. It came during the president’s response to the very last question, when Barry Green, a town hall participant, asked the candidates, “What do you believe is the biggest misperception that the American people have about you as a man and a candidate?”

The president chose to focus on the perception that he is hostile to the private sector, that he believes government can create jobs better than the free market. “I believe that the free enterprise system is the greatest engine of prosperity the world has ever known,” he answered. “I believe in self-reliance and individual initiative and risk-takers being rewarded.”

Those words were long overdue. What’s more, had he been given the time to expand on them with concrete examples, he could have spoken long into the New York night.

The president’s economic policies not only staved off depression, but promoted growth in a fiscally responsible manner; for fiscal responsibility shouldn’t be measured only by costs averted and cuts in spending. Fiscal policies should be judged according to a more rigorous cost/benefit analysis, based on the good they’ve done for the economy as a whole, given the economic conditions in which they were implemented.

Take the example of the American Recovery and Reinvestment Act of 2009 — colloquially known as “the stimulus” — which conservatives attack as fiscally irresponsible. The roughly $800 billion combination of tax cuts and spending was designed to halt the economic free fall caused by the worldwide collapse of financial markets. Some of the spending — unemployment insurance benefits, food stamps, medicaid, and rent subsidies — kept people from falling below the poverty line. Other spending on infrastructure, and public workers like teachers and firefighters kept state budgets afloat. A variety of independent analyses have pegged the number of jobs saved or created by the stimulus to be between 1.6 and 2.4 million. Twelve months after the stimulus passed, the private sector began to create more jobs than it was losing, and has continued doing so.

Charges that the stimulus was wasteful are also largely exaggerated. Republicans relentlessly focus on a failed loan to Solyndra, but in reality, less than two percent of loans to green energy companies have gone bad.

Take the example of the president’s decision to help save the failing U.S. automobile industry. The administration had a difficult choice to make. Letting Chrysler and GM go bankrupt would have had disastrous consequences. On the other hand, an unconditional bailout would have set a dangerous precedent. Instead, the administration urged firms to undergo bankruptcy protection — a process by which debtors are insulated from punitive measures from creditors while they can reorganize their finances. The administration also imposed the condition that firms receiving bailout funds would have to strip away unneeded capacity. As is usually the case with legislation of this scale, a small portion of taxpayer dollars wasn’t efficiently allocated. And, claims that these loans have been paid in full warrant skepticism. But a substantial majority of tax dollars have been paid back, the trend is continuing, and the American auto industry is rebuilding.

These major Keynesian interventions, in tandem with the Troubled Asset Relief Program initiated by the Bush administration, cost U.S. taxpayers over $1.5 trillion. But even if one didn’t account for the loans being paid back by banks and automobile firms, these decisions were still fiscally responsible. If one accounts for what would have happened to our economy without these interventions, then it becomes clear that they were cost-effective.

With an economic crisis averted for the time being, the Obama administration set out to realize the cornerstone of its domestic agenda — reforming the American healthcare system. Opponents of the Affordable Care Act (“Obamacare”) immediately charged that it would explode the deficit and lead to soaring healthcare costs. They are still saying it today. So is Mitt Romney.

But the Congressional Budget Office has projected that the law will reduce the deficit by $100 billion over the next 10 years, and by more than $1 trillion between 2020 and 2030. The law will do so in several ways. By including a larger number of healthy individuals in the healthcare market, the individual mandate will lower prices for care, and reduce the number of people who rely on the emergency room as their only source of healthcare. Other reforms in the ACA will significantly reduce administrative costs, and require that a certain ratio of premiums will be spent on health coverage instead of other costs incurred by insurance companies.

After a brutal legislative battle over the ACA drained the administration of most of its political capital, the president and Congress had to decide whether or not to let the Bush tax cuts expire. The tax cuts, signed into law in 2001 and 2003, cut taxes for nearly all U.S. taxpayers. In December 2010, the president signed a bill that temporarily extended both the Bush tax cuts and the payment of unemployment benefits. The measure prevented an average tax increase of roughly $3,000 for every American household. Furthermore, the extension of unemployment benefits served to keep those who were struggling afloat. In December 2010, the economy was in a more fragile condition than it is today, and any increase in the tax burden for middle class families could have plunged the economy back into recession.

The misperception of Obama as a fiscally irresponsible “big government” spender has also been fueled by relentless attacks from conservatives saying that he has stifled economic growth by imposing burdensome regulations. The truth, however, bears no resemblance to the charges. On Jan. 18, 2011, the president signed executive order 13563. The order called on all federal agencies to begin a “regulatory look-back” — an analysis of existing regulations designed to modify, streamline, or repeal those which had proven to be ineffective or unduly burdensome to businesses. Through April of this year, the net monetary benefits of this process have exceeded $90 billion, and that number will only increase as more and more agencies strip away laws that breed inefficiency. In comparison, the corresponding figure for the George W. Bush administration is $3.4 billion, and for the Clinton administration, $14 billion. Not only has the president’s directive saved money, but it has encouraged growth in industries that were previously overburdened by federal regulation.

Based on his economic record , the president had a real chance in this campaign to define himself clearly as a new kind of Democrat — one who had resorted to Keynesian crisis management but had recognized the economic burden of overregulation, the merits of conservative solutions to important issues like healthcare, and the need to keep taxes low on the middle class and small business owners. He also had the chance to correct the misperception that he is fiscally irresponsible — certainly much earlier than he finally tried to do in the second debate — and to undermine the notion that conservatives are always fiscally responsible while liberals are reckless spenders.

His campaign may have failed to take full advantage of those chances, and it certainly failed to communicate his economic record effectively. But if the president is denied re-election, critics should point to a failure in communication — not performance.