Who is more likely to fix the nation’s finances, a second-term President Obama or a first-term President Romney?
This may be the most consequential question of the campaign, not because government exists to balance its budget, but because it won’t be able to do much of anything else — whether invest more in education or build a bigger Navy — if it fails to get a handle on the nation’s long-term fiscal condition.
The math is scary but not complicated. In fiscal 2011 the federal government spent $3.6 trillion, the equivalent of more than 24 percent of the gross national product (GDP), while collecting $2.3 trillion, or 15.4 percent. The difference, a deficit of $1.3 trillion, was piled onto the national debt, which exceeded $10 trillion at the end of 2011 (not counting another $4.6 trillion the government owed itself, mostly for Social Security). If that debt keeps growing, the government will have to keep raising taxes or cutting spending just to pay interest — the opposite of a virtuous circle, and a killer of economic growth.
To fund the services Americans expect, the government will have to spend at least 19 or 20 percent of GDP, probably more like 21 or 22 percent as society ages. It has to find a way — not this year or next but over the next decade — to raise as much as it spends.
Revenue will have to go up, and the rising arc of health care and pension spending will have to be bent down. Democrats hate the latter, Republicans hate the former, and voters don’t like either. Achieving a grand bargain will require a leader with the steel to stand up to his own party; the charm and muscle to assemble a legislative coalition; and the eloquence and passion to persuade voters.
Put that way, it’s hard to be optimistic. Obama has the eloquence, but neither Obama as president nor Romney as governor showed much patience for legislative jawboning or relationship-building.
The reason to doubt Obama can be summed up simply: He’s had his chance. When the Simpson-Bowles commission presented its plan to reduce the federal debt, with bipartisan support, the president ducked. “If it had been President Clinton, he would have said, ‘God, I created this, this is wonderful. It was all my idea,’ ” co-chair Erskine Bowles, a Democrat, later recalled. “So we were really surprised.”
When Obama was nearing a deal with House Speaker John A. Boehner (R-Ohio), the president upped the ante — from $800 billion to $1.2 trillion of tax hikes— dooming its prospects. The White House says Boehner never agreed to a genuine $800 billion and couldn’t have delivered anyhow; we’ll never know. This year, with the nation hurtling toward a series of potentially devastating fiscal deadlines, Obama is inert, apparently trusting that all can be put right in a lame-duck session.
But good luck finding evidence of spine in Romney’s political career. In moderate Massachusetts, he was a moderate. In conservative national primaries, he was a conservative. From big things (immigration) to less big (flak over his appointment of an openly gay spokesman), Romney’s default position has been to pander and cave.
Still, both men have occasionally bucked their bases. On education, for example: Obama has for the most part resisted pressure to give up on teacher evaluation, while Romney (unlike his rival Rick Santorum) has, at least to an extent, withstood states-rights pressure to abandon No Child Left Behind and the idea of accountability.
Both men surely understand what has to be done, and both would have an incentive to do it. You could argue that Obama, believing in a larger role for government, has a larger incentive; none of his “winning the future” agenda will be imaginable except on a foundation of stable long-term finances. But no more would Romney want to govern through four years of recurring debt-ceiling crises and rising interest costs.
Much will depend on the winner’s margin of victory, who controls Congress, the state of the economy and other unpredictable factors. But much also will depend on presidential leadership.
So where to place your bet?
It would be nice to think that the forthcoming campaigns will focus on this issue enough to give voters a basis on which to do more than guess. Judging by the debate so far, any optimism on that score seems even more naïve than refusing to give up on a grand bargain in 2013.