In the battle for the U.S. presidency between President Barack Obama and his Republican challenger, Mitt Romney, crucial economic issues have come to light. During the first two presidential debates, the discussion focused on Obama’s and Romney’s positions on a number of economic and social issues, with many observers reminded of the famous quote associated with former president Bill Clinton: “It’s the economy, stupid.”
The charged atmosphere that has characterized the Obama-Romney debates has revealed major differences in their economic policies.
Obama has adopted the traditional Democratic Party stance. By embracing some aid and social welfare programs, he has painted his policies as conciliatory and favoring the middle- and lower-income classes. Romney and the Republican Party disagree, depicting such policies as promoting dependence on the state and discouraging hard work and productivity.
Another sharp disagreement is over Obama’s healthcare law, which Romney considers wasteful of financial resources and incapable of delivering support to those most in need.
Both candidates’ domestic economic philosophies affect their views of what the United States’ economic relations with the rest of the world should be.
While Obama has prioritized the maintenance of stability and sought compromises that suit current circumstances, Romney is stricter and more determined to set clear conditions regarding how to deal with economic partners, whether they be major powers such as China and Russia or Arab Gulf states and Asian nations. In his policy platform, Romney has based his views on a narrower definition of American interests than Obama—hence his call for an end to the outsourcing of jobs.
Romney sees no problem with troubled companies exiting the marketplace permanently and, as an alternative to rescue packages, he has proposed giving large corporations tax breaks that would enhance their competitiveness. In his opinion, this would be a less costly option than generous financial rescue packages, which lack proper oversight and hence may not reach their intended recipients.
The “rescue packages” debate is an important issue dividing American public opinion, given the difficulty in identifying those who actually stand to benefit from them. Do they only benefit the large corporations with political and financial clout? Or can they also affect small and midsize businesses through an increase in local demand stemming from added spending and stimulation of the production cycle?
Also brought to light were the views of the candidates on the global financial crisis, the economic slowdown, and what role each country, including emerging countries, should play. Obama believes that the United States should play a part in pulling the global economy out of its current crisis. Romney argues that all nations—especially China and Russia—must bear a partial but well-defined responsibility for the global economy.
Romney prefers giving precedence to local (American) needs and interests. For example, and irrespective of the world food crisis and the increase in prices, Romney is pushing for the adoption of locally grown biofuels—even if that means food price increases in poor and developing countries.
An important disagreement between the two candidates concerns aid programs and the management of development issues.
Obama has concentrated on the need to provide financial assistance during economic transitions and to help countries overcome their challenges, such as Egypt and Tunisia, or to help countries that are seeking alternatives to espoused policies, such as Morocco and Jordan. He seems to prefer limiting the number of stringent conditions that states must meet, while leaving these countries a margin of maneuverability to decide for themselves which economic policies to adopt, as long as they remain in line with the requirements of international institutions and abide by the contractual obligations of the states concerned. Aid can then be targeted to bolster the recipient countries’ budgets and develop their individual programs.
Romney, on the other hand, insists on tying aid programs to individual initiatives and on the need to develop small- and medium-sized enterprises in the private sector. He emphasizes the importance of linking spending to direct American interests through agreements and contracts that guarantee the flow of business between trading partners in countries receiving aid and American companies and institutions. Romney has also spoken of the need for some recipient countries to adopt tax policies that enhance their competitiveness.
The internal dispute concerning economic policies and the management of domestic issues will undoubtedly have repercussions for the United States’ relationship with the rest of the world. That dispute will be governed by the candidates’ differing views on the global economic crisis and the ways in which it should be addressed, as well as the distribution and management of foreign aid and the goals and conditions attached to it.
Now the task is to monitor the candidates’ actual levels of compliance with these stated policies—especially Romney’s. Obama’s policies have been tested over the past four years, and it is relatively easy to predict both his future domestic and foreign economic policy. In contrast, it is still difficult to distinguish between Romney’s economic slogans and his ability to translate them into actual policy goals.