By “distributionalist,” I mean that Obama sees government as an instrument to promote economic and social justice by redistributing the bounty of a wealthy society. Economic growth is not ignored but tends to be taken for granted or treated as a less important priority. How else, for example, to explain Obama’s decision to push the Affordable Care Act (the ACA or “Obamacare”) — a huge new social program — in the midst of the deepest economic downturn since the Great Depression?
To Obama, government is the means to protect the weak and police the strong. It makes the system more responsible by regulating undesirable behavior (say, pollution or false advertising) and encouraging socially useful sectors (say, “green” energy). Government becomes the ultimate economic arbiter and an agent of the broad middle class against the narrow interests of the rich or corporations.
As an “expansionist,” Romney sees higher economic growth as the solution to many of our pressing problems. It reduces poverty, raises Americans’ sense of self-worth and soothes social conflicts. Overactive government weakens the economy by creating uncertainties and obstacles to investment and risk-taking. The emphasis on redistributing economic gain for the greater good sounds enlightened but becomes self-defeating by lowering economic growth.
Nor is it just the rich against the rest, in Romney’s view. The losers in a slow-growing economy include the unemployed — especially the young — along with stressed state and local governments, and families whose savings have been depleted. Big budget deficits, one consequence of slow growth, squeeze many government programs. Only by lowering tax rates and reducing regulation can we revive economic growth.
Let it be said that, in practice, these views are not mutually exclusive. Of course, Democrats prefer higher economic growth; Republicans won’t eliminate all taxes or regulations. Campaign rhetoric exaggerates differences. Still, the contrasts are genuine.
What they have in common, I think, is nostalgia.
Obama practices a cheap populism. He seems to presume that the complexities of the ACA and his repeated attacks on business (on oil companies, insurance companies, banks, hedge funds, private-equity funds and “the rich” in general) have no effect on the climate for investment or job creation. This is dubious. His distributionalism has consequences. True, Obama inherited a dismal economy and massive job loss; but the fact that the recovery has weakened while unemployment remains high cannot be divorced from the mistrust he’s engendered in the business community.
As for Romney, his emphasis on higher economic growth, though desirable, is no panacea. Even were he to succeed, growth rates almost certainly won’t regain previous levels for a simple reason: an aging society. There will be more retirees, fewer new workers. Romney can’t change that. And even faster economic growth will leave massive budget deficits, which reflect a vast gap — also driven by aging and high health costs — between future spending commitments and taxes. Tax rates can be cut, but any revenue loss would need to be offset by ending tax breaks.
The media campaigns that Obama and Romney are waging against each other are politically unsurprising. Victory awaits the side that can convince the most uncommitted voters that the other guy is a louse. The nostalgic lapse of Democrats into social protectors and Republicans into tax cutters is equally understandable. The roles are familiar and satisfying. The trouble is that they’ve been overtaken by reality. Yesterday’s stereotypes won’t solve today’s problems.
A central issue for November’s winner will be to bridge the gap between government’s spending commitments and its tax resources — without so jolting the economy that its feeble performance deteriorates further or, alternatively, so shocking public opinion that it creates a backlash and collapses. This is the real but ignored challenge: to redefine government in a way that is economically viable and politically acceptable. To the extent that the presidential campaign might clarify choices or encourage a consensus, it is (so far) being squandered. Character assassination is a diversion, not a policy.