Aftermath: Reflections on Obama's Re-election

Barack Obama has been re-elected President of the United States.

For starters, Gary Johnson was not a spoiler. While the results are still coming in, as of 11:30pm Pacific, there was not a single state won by Obama where Romney would have won even if every Johnson voter had voted for Romney instead.

Second, there is no mandate. While Obama won, he won with a far narrower lead in both the popular vote and the electoral college than he had in 2008. While Democrats increased their lead in the Senate, Republicans increased their lead in governorships, and the House is on track to be more or less the same as it was. This was very much a status quo election.

On the whole, will we be better or worse with Obama as president?

First of all, expect the fiscal cliff to stay in place. After all, we just re-elected most of the people who put it there to begin with. While I haven't spent too much time learning about the fiscal cliff, Wikipedia claims a 19.63% increase in revenue and a 0.25% decrease in spending, or a nearly 80-to-1 ratio of tax hikes to spending cuts. This will not end well-- and even if our new old government leaders manage to avoid the cliff, the re-elected Obama is in a prime position to extract concessions he was unable to before the election. Any compromise will include more tax hikes than spending cuts, if spending is actually cut at all.

Second, Obamacare will be implemented fully over the next few years. Expect the nation's health, freedom and balance sheet to all suffer. Although to be honest, I don't believe Romney would have done any better.

The national debt will continue to grow. If the fiscal cliff causes a second recession, expect more stimulus and bailouts, probably for Europe too. We may look back at $1.5 trillion deficits and laugh about how small they were. On the other hand, the same probably would've happened under Romney, considering his plan to index military spending to 4% of GDP.

On other long-term important issues, I don't expect Obama to do much of anything. He'll keep ignoring space (mercifully), Social Security will continue to stumble forward without reform, trade deals will be forgotten, immigration won't change. We'll mostly withdraw from Afghanistan on schedule, although the lack of attention the war gets these days means we'll probably keep troops there for the long haul, same as we've still got troops in Germany, Japan and Korea. On trade and Afghanistan, at least, Romney would have been even worse. While Romney may have avoided the fiscal cliff, his insistence to go after China on trade might have been just as bad for the economy.

The main difference between the two candidates in terms of our long-term welfare is this: With Obama's victory, 2016 will see another wide-open primary for Republicans, where we'll have another shot at nominating a true spokesperson for liberty. Had Romney won, we wouldn't get that chance until 2020. So hold onto your hats. It's gonna be a rough four years for liberty, but we made it through the last four. We'll make it this time, too.

Romney, Obama and the Big Diversion

Apparently, Romney's latest talking point is that Obama "knowingly" slowed the economic recovery by focusing on passing health care reform rather than improving the economy. Sigh. Never mind whether this is true or not. If you believe half the rhetoric that comes out of the Romney camp on what should be done about the economy, you should be happy that Obama set his sights on health care instead!

Look at what Obama did when he actually was focused on the economy. There were the auto and bank bailouts, then the $800 billion "stimulus" that ended up as mostly just a bailout for state and local governments. Then there was Cash for Clunkers. Once health care reform was done, there was Dodd-Frank, plus talk of a second stimulus that never got anywhere. And since 2010, Obama's economic plan has primarily consisted of taxing the rich and insisting the stimulus worked.

To be fair, part of that stimulus included tax cuts, and there is the payroll tax cut. I suppose it's possible that, if Obama had focused on the economy instead of health care, he would have passed more tax cuts instead of more spending, more bailouts, pushing Dodd-Frank through a few months earlier or even raising taxes. It's possible, sure, if you believe it. But the reality is, if Obama actually had focused on the economy more, we just would have seen more of the same policies that conservatives never wanted in the first place. If you believe conservative ideas are what the economy really needs to recover, you should be happy Obama got distracted by health care!

Is this a sign that Romney doesn't really believe conservative ideas are what the economy needs? Perhaps, but that's probably reading too much into it. More likely, Romney is just appealing to the old idea that government should just do something, no matter what it is, and that being seen to be doing something is more important than what you're actually doing. Romney sees an opportunity to attack Obama for looking like he didn't do enough, even though what he would have done would have made things worse. Hopefully Romney loses that old idea before he moves into the White House and starts to actually govern.

Timing Issues

According to Kevin Drum (h/t Coyote Blog), the states are the reason why the 2009 stimulus didn't work.

[A]t the same time the feds were spending more money, state governments were cutting back… [The Center on Budget and Policy Priorities has] data for all but six states, and on average for 2012, "those 44 states plan to spend 9.4 percent less than their states spent before the recession, adjusted for inflation." That's not just less than last year, it's less than 2008. That wiped out nearly the entire effect of the federal stimulus pacakge.

Kevin Drum seems to have an interesting definition of the phrase "at the same time." The stimulus bill was passed in February 2009, and most of the money was spent in 2009 and 2010. States' initial budget proposals for 2012, three years after the stimulus' passage, hardly seem relevant for the stimulus' failure. Even though some 5-10% of the stimulus will still be unspent by 2012, most of it has already been spent. If Drum wants to talk about what states were doing "at the same time" as the feds, why not use data on actual state spending for 2009 and 2010?

According to data from the BEA, expenditures by state and local governments did fall shortly before the stimulus was passed, from a peak of $2,218.5 billion in the third quarter of 2008 to just $2,171.5 in the first quarter of 2009. That's a whopping $47 billion drop, or just 6% of the $787 billion stimulus. Even assuming that state and local expenditures continued to grow past the peak in 2008-III at the same rate as population (inflation was -0.4% from July 2008 to December 2010), and summing across the two-and-a-half years since that peak, the difference between actual expenditures and "expected" expenditures is less than $200 billion. That's about a quarter of the size of the stimulus. And this is supposed to be the reason why the stimulus failed?

Sorry Kevin, the story just doesn't add up.