But it is an interesting consideration for all of us. What are the "real issues" of the 2012 Election? I've spent the weekend thinking this over, and here are some of the important topics I've identified:
1. Austerity v. Deficit Spending: This is the one that stands out most starkly for me. Do we address the National Debt at a time of economic downturn, or do we attempt further stimulus "shocks" to the economy? I think a preliminary consideration should be that our debt has been greatly magnified by the recession itself. The trillion dollar bank bailouts didn't help, but the fuel for our ever-increasing debt is the dramatic decrease in tax revenues running against increased expenditures.
I want to say up front that since Paul Ryan entered this debate it is very hard to find information about Mitt Romney's budget, as opposed to that of his VP. What I do know is that Romney has said he would dramatically decrease spending, although the targeted programs have not been identified (one of the benefits of being a challenger). I also know that the Obama camp has recently been arguing that the accusations of high spending are inaccurate, seemingly suggesting that they will shy away from a future stimulus. I don't buy it. In fact, despite noting this as a contrast, I think it is a contrast in idea only. If elected, Romney will most likely attempt a stimulus via tax expenditure (possibly revenue negative depending on what expert you ask) while Obama would attempt another stimulus via government spending, most likely focusing on roads, education, and energy, with an extension of payroll tax cuts that have the country further paying on the margin.
The real question is whether deficit spending and Debt (big D) should be the focus of this Country during the Recession. Previous administrations and governments have attempted to address debt during economic downturns with disastrous results. Those countries in Europe that have successfully implemented austerity to get their books straight during the Euro crisis contrast with the United States in many ways, but most prominently the fact that they do not control their own currency and can indirectly benefit from the economic vitality of their trade partners. The National Debt must be addressed, but some may say to do so now would be like changing a flat tire while you're rolling downhill.
2. Taxes: This is another area that both sides have been elusive on. Mitt Romney would extend the Bush Tax cuts, repeal the alternative minimum tax, remove any tax increases under Obamacare, and cut individual tax rates by another 20 percent. That's the cool part. The not-so-cool part is that he plans to "expand the base" by closing tax "loopholes" and "preferences", the identity of which have yet to be disclosed. In this post on the Economix NYTimes blog, Romney is noted as saying he will only close these loopholes for those making over $200,000 and that one of the likely targets will be deduction for mortgage interest on vacation homes and state and local taxes. That sounds good too, but as noted in the piece, those loopholes account for only $40 billion in additional revenue, while Romney's overall tax scheme would be projected to cut revenues by $400 billion.
Personally, I think it is likely that Romney would cut the entire mortgage interest deduction for all taxpayers, which would bring in an additional $90 to $120 billion. Many economists hate this deduction and feel it distorts the housing market, so there is economic support behind this plan. You should also assume that the tax "preferences" that Romney is currently saying would be closed for high income earners would be extinguished across the board. Admittedly, this is a prediction and not based on anything the candidate has said, but in the absence of a position, we all get a shot at the magic ball.
President Obama would absolutely raise taxes on those making over $250,000, with a top marginal tax rate of 39.6%. He would also most likely increase the capital gains rate on short-term holdings, particularly for those making over the $250,000 mark. Under Obamacare (really hate that word, but both sides have embraced it), there is also a 3.8% surtax for investment income by those making over, you guessed it, $250,000 ($200,000 for individuals). Most importantly, this amount is not indexed for inflation.
We can leave the merit of a $250,000 cutoff point for another day, but if we've learned anything over the Mitt Romney tax return dispute, it is that the stated rates for high income earners are not always what is actually paid. Nevertheless, you should be concerned that increased taxes are in place that are not adjusted for inflation. You should also be aware of and concerned by the arguments presented by the right, which rather persuasively argue that tax increases during a Recession are just as bad, if not worse, than austerity policies during a Recession. I tend to agree.
3. Foreign Policy: Everything written above may very well be irrelevant come January 2013. It is very unlikely that the gridlock in Washington will be relieved by the election of either Presidential candidate. Many would argue that the most important function of the Executive Branch is as Commander in Chief and Chief Diplomat of the United States, yet foreign policy has been downplayed out of existence in this election. You all know we're still at war, right?
I don't know what Mitt Romney's approach to foreign affairs will be. He has stated that he would leave decisions regarding Afghanistan to our "top brass" in Country and that the expense of the war should not be a consideration when evaluating our commitment. He also supports the "2014 timetable for withdraw", which puts him in almost identical position with the President. As for his approach to diplomacy on the whole, Romney is a blank slate. I won't use his Summer Tour as an indication of what he would do as President, but he has argued for a stronger (and seemingly unconditional) defense of Israel, which can be contrasted against the Obama Administration's criticism of
There's certainly more, but I've run out of time (and most likely, audience). I've tried to be fair here, but my opinion is clearly interspersed throughout. Please feel free to bring additional issues to the table, such as the Wealth Gap, Supreme Court, or Religious Liberty, all issues that I would put as second tier concerns.
Have a great Monday doing what you love!
