James Capretta explores for National Review Online readers the political challenges Republican presidential contenders will face if the American economy recovers over the next two years, despite President Obama’s anti-growth policies.
[E]ven with strong growth in 2015 and 2016, there will be plenty of room for the GOP to criticize the performance of the national economy during the years of the Obama administration. The Republican critique of the Obama economy should start by highlighting where the administration policies have deviated from the proven recipe for long-term growth. The key principles are: low marginal tax rates; spending restraint and minimal deficit spending; an affordable and pro-work safety net; cost-benefit screens for regulatory interventions; free trade; and monetary predictability and stability. The evidence in support of these principles is overwhelming. Countries that adhere to them perform far better over the long run than countries with more activist governments, expansive welfare states, and heavily regulated economies. The implicit and explicit tax increases on work contained in the Affordable Care Act (ACA) should be highlighted by the GOP as a prime example of the anti-growth effects of the Obama agenda. The Congressional Budget Office (CBO) has estimated that the ACA will reduce the size of the nation’s workforce by 2.5 million people over the coming decade.
More challenging for the GOP will be persuading voters of the party’s competence in short-term economic management. The Democratic nominee for president in 2016 will undoubtedly make the argument (again) that the financial crash of 2007 to 2009 was the result of misguided GOP economic policy and that the Obama stimulus saved the country from another Great Depression.
The GOP presidential candidates will be tempted to ignore this argument altogether and focus on the future and not the past. That will work, but only to a degree. The crash was such a traumatic national event that it will probably still resonate with some voters in 2016.
The GOP candidates will be better off making a stronger argument than they did in 2012 about what happened, and what they would have done in its aftermath. There is ample evidence that the Obama-Biden contention that the crash was caused by Bush-era policies is absurd. Among other things, this was a worldwide event. Bush-era fiscal and tax policies did not cause asset bubbles in Europe or Asia. What did cause the bubble in the U.S. was a combination of misguided housing policy going back two decades, excessively easy money in the years 2004 to 2006, and the implicit federal guarantee of banks that are “too big to fail.”
