Presidential Comparison
Bashir Safi
PLCY704: Economics and Public Policy
June 2022
Table of Contents
Abstract..........................................................................................................................................1
Economic Ideas; Romney vs Obama.............................................................................................1
The 3 economic issues that distinguish Romney and Obama........................................................4
1) The national debt:............................................................................................................4
2) Full faith and credit:........................................................................................................5
3) Public goods:...................................................................................................................6
How Obama’s economic policies contributed to the crony capitalism..........................................7
a) The auto industry and green energy:................................................................................8
b) The corporate tax plan:....................................................................................................9
c) National zoning:............................................................................................................10
Romney-Obama economic policies in light of biblical model of statesmanship.........................11
Conclusion...................................................................................................................................12
Bibliography.................................................................................................................................13
ii
1
Abstract: This paper evaluates key economic ideas of President Barack Obama and his
political opponent Mitt Romney in 2012 U.S. presidential election. The key issue of the 2012
presidential election, according to most polls, was still fading post-recession situation in the
United States. On the economic policies, among others, moderating housing crisis on Main Steet,
financial bubbles, tax cut and other fiscal policies were main discussions between Obama and
Romney campaigns.
This paper emphasis on three economic issues that distinguish both campaigns in terms
of their financial outline: the national deficit, public goods and full faith and credit of the U.S.
government. Although both candidates were asking for controlled federal spending, and balanced
budget, however, they had different approach for their goals. This paper also examines how
President Obama’s economic policies contributed to the crony capitalism and speculative
financing and economic statism. Finally, his policies are evaluated in light of biblical model of
statesmanship.
Economic Ideas; Romney vs Obama
In 2012 Democratic National Convention in Charlotte, N.C., President Obama announced
a cut in corporate tax from 35 to 28 percent. He reiterated his promise of raising tax on
wealthiest and those manufacturing companies who send jobs to foreign countries. For domestic
manufacturers, he announced more tax cut and 1 million new jobs by 2016. During his numerous
campaign speeches, he was committed to trim deficit by $4 trillion in next 10 years. 1
On contrast, Mitt Romney outlined his 59-point plan for his economic policy with more
cut in corporate tax. Romney’s plan was to reduce corporate tax from 35 percent to 25 percent.
This was 3 percent lower than President Obama’s proposal. Romney also disagreed with
1 Diana Ransom, “Obama vs. Romney: A Tale of Two Economic Plans,” The Entrepreneur, September 12,
2012, https://www.entrepreneur.com/article/224394.
2
Obama’s regulation that according to him hampered the free market. Romney’s 59-point
economic plan suggested a cut in government spending from 24.3 percent to 20 percent.
President Obama also criticized Romney’s plan for increasing “unnecessary” defense spending.
Obama, in a campaign debate, said the U.S. military did not ask for adding to the current
spending. In addition to the new proposal, Romney also promised to repeal two legislative pieces
that were enacted in President Obama’s term; the financial reform law and health care law.2
Mitt Romney and his running mate Paul Ryan agreed to balancing the budget and cut to
entitlement programs. On tax break to the wealthiest, Romney said to keep existing rate, and,
unlike President Obama’s plan, he did not suggest a raise.
On financial regulation, President Obama believed that the 2008 crisis erupted as a result
of excessive deregulation in banking industry. Obama defended that he would not loose
regulation in banking industry. He called existing regulation very needed when markets fail.
Although Romney agreed with President Obama that absence of dynamic regulation led to the
2008 financial crises, but excessive regulation slows the economic growth and expansion of
businesses.3
Mitt Romney favored deregulation, which he says, fosters free market and business
friendly environment. Romney disputed Obama’s claim that deregulation contributed to the
economic crisis of 2008. According to Romney, it was federal government failure that it did not
replace outdated laws with modern replacement. He said the ever-aggressive private sector
benefited the outdated regulation and they were allowed the risks which ultimately led to the
economic downfall.4
2 Ransom, “Obama vs. Romney,”
3 Mitt Romney, No Apology: The Case for American Greatness (New York: St. Martin’s Press, 2010), 138.
4 Romney, No Apology, 138.
3
On the housing market, Mitt Romney sided with home foreclosures. He said in order for
the market to reboot, let the foreclosure happen. On the contrast, President Obama was
protecting homeowners blamed the creditors for the irregularities. He also signed STOP FRAUD
Act and asked for more clear process and an accountability in the subprime mortgage industry.
Obama accused Mitt Romney of following the failed policies of the 1920s, which led to
the Great Recession. Obama was pointing at the less regulatory approach to the banking industry
and low tax policy. Mitt Romney has favored light regulation and low taxes on the big
businesses. This policy was adopted under President Herbert Hoover when he was inaugurated in
1929.
According to the Obama campaign, those policies led to the economic downfall of 1930s
and staged the Great Recession. However, many economists blame harmful monetary conditions
and poor fiscal response to the downturn as base for the Great Recession. 5 When Harding was
elected president in 1920, the federal spending had plunged, prices were shrunk, unemployment
was very high. He announced tax cut and loosened regulation for the financial sector. When
Harding died in office, Coolidge took over and introduced his philosophy of minimal regulation
and more states’ rights in the business sector. 6
To summarize the contrast, Mitt Romney and Obama were drastically different on the tax
cuts and spending policy. However, both had common view on financial security, controlled
government spending ad balanced budget to lead the economy toward prerecession growth.
5 Mark Trumbull, “Presidential debate 101: Does Romney have 'economic policies of the 1920s'?” The
Christian Science Monitor, October 23, 2012, https://www.csmonitor.com/USA/Politics/DC-
Decoder/2012/1023/Presidential-debate-101-Does-Romney-have-economic-policies-of-the-1920s.
6 Ibid.
4
The 3 economic issues that distinguish Romney and Obama
There are many areas in the economy where President Obama and Mitt Romney were
agreed in principles. However, these are five issues where both candidates had different ideas.
1) The national debt: the national debt began to raise since 1981. There was a political
pattern behind the deficit. Republican presidents historically tended to expand deficit while the
Democratic one stabilized it. Ronald Reagan and Bush I exploded the deficit, which was later
stabilized and lowered under Clinton. In 2000s, Bush II again raised the deficit again. However,
during President Obama’s term debt has risen more rapidly than Bush II, but many economists
believe because Obama’s deficit raised during a time of recession, and it was effective way of
fight the recession. In contrast to the Reagan and Bush deficits, Obama’s deficit policy was a
temporary one. Mitt Romney’s deficit policy was not different than most Republican presidents,
to borrow and spend when the economy is growing. Despite Obama’s large deficits, he reversed
the deficits once the economy recovered.
Obama intended to reduce deficit by $4 trillion in over 10 years. He planned to put $1.5
trillion of that amount coming from tax raise on the wealthier taxpayers. He also promised a cut
in defense spending and farm subsidies. On the contrary, Mitt Romney proposed a more radical
policy for his deficit plan. Romney wanted a 20 percent cut in federal spending by 2016, and
unlike Obama, he promised a tax cut as well. Romney believed tax cut would help grow the
economy and return the prosperity to the country.
The size of government has grown substantially over the past 85 years. Total government
spending rose from 10 percent in 1930, to around 30 percent in 1980 which reached to nearly 40
percent after the 2008 recession. There are four main areas in the federal government that
contribute most to the government spending, 1) transfer programs, 2) healthcare, 3) social
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security and income security pogroms, and 4) national defense.7 Mitt Romney wanted a cut in
two main areas of the public good spending: the transfer and social security pragmas. Obama,
however wanted a cut in military spending.
Historically, Republican’s presidents have been in favor of tax cuts on individual with big
income. 8 Democrats, including President Obama spent money on the federal projects for
boosting the economy. Generally, Democratic presidents are better at reign in deficit spending
because they are less opted to fund the military expenditures,9 which makes one of the big
contributors to the federal spending.
2) Full faith and credit: In 2011, Congress was almost done to raise the debt ceiling
which would precipitate default, but a last-minute deal postponed the issue and created the fiscal
cliff. Although both, Republican and Democratic parties, are equally inclined to obstructionism,
but Republicans are responsible for the debt ceiling debacle during President Obama’s first
tenure. There is no written limit to the national debt, and not a fixed amount of how much a
country can safely borrow, however if a government functions well and no sight of default, it can
borrow 250% of GDP.10
Until 2011, U.S. government debt was safest place for financial assets and other models
around the word were considered as risky. Mitt Romney wanted a political trouble for President
Obama and convinced the Republican members of the Congress to reject compromise with the
administration.
7 James Gwartney. Economics, Private and Public Choice. (New York: Academic Press, 2018), 579.
8 Nancy Cook. ‘How Big a Government Should We Have?" National Journal, 24 May 2012, http://
gale.com/apps/doc/A295679157/BIC?u=vic_liberty&sid=summon&xid=41a44b35
9 Fischer Kahlib, “Crony Capitalism: From George W. Bush to Obama” (video lecture in PLCY704,
Liberty University, Lynchburg, VA, June 17, 2022)
10 Smith, “The Atlantic”
6
Romney’s running mate Paul Ryan was interested in a temporary default. He claimed a
temporary default would not trouble financial market. Republican congressmen pushed the idea
of a temporary default a better way to a debt ceiling deal. Mitt Roney and majority of the
Congressional republican were in favor of a temporary default, but Obama’s view on the
budgetary policy was not in favor of reducing the value of the full faith and credit of the U.S.
government. He claimed sovereign default would not produce a best outcome.
3) Public goods: Government spending in entailments was also one of the hot topics in
Mitt Romney and President Obama debates during the presidential race in 2012. Mitt Romney
and Obama was deeply divided on the social security, Medicare, and unemployment assistance
program. However, spending on public good was also a very debatable issue between the two
candidates.
Romney wanted to block federal grants to states. This program funds local initiatives for
schooling, construction projects, health, and other vital public programs. This cut among others,
such as federal workforce downsize, was part of the Romney’s sharp slowdown of federal
spending. Mitt Romney’s plan for the public good such as education, research, and infrastructure
was not very generous. He introduced a big cut on these programs. America’s infrastructure was
crumbing before 2009. Obama already plugged more funding for the infrastructure in his 2009
stimulus funding. On the research, Mitt Romney was favoring to fund research through the
military and boosting federal R&D spending. However, Obama wanted to fund research toward
developing new energy sources. Historically, Democrats had much interest in fiscal
responsibility and infrastructure spending.
Although education was not a direct economic issue, but Obama was planning to invest
more money into public education system. Obama in his economic blueprint stated to recruit
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100,000 STEM teacher to out-compete Germany and China. He wanted to lower collage fee and
increase tuition credit. Obama’s American Jobs Act was also designed to prevent layoffs for
teachers. Obama accused Romney of undercutting education funding. In contrast, Romney was
favoring to invest more money into federal research and claimed that Obama is not serous in
reforming U.S. education system.
How Obama’s economic policies contributed to the crony capitalism
Mitt Romney could not win presidential election; economists do not know for sure if his
economic policy would have been favorable to the crony businesses. On the contrast, Obama
economic policy in his both terms can be judged by their outcome. Mitt Romney accused Obama
of favoring crony deals. He claimed his policy contributed to the crony capitalism, he referenced
giving General Motors to the UAW. “He takes $500 million and sticks it into Solyndra,”11
Romney claimed. In response to Romney’s allegation, President Obama clarified by
defending his “promise of clean energy” and bailout to automakers. He said his bailout and
restricting plan saved the auto industry. These are few areas, according to scholars, contributed
to the crony capitalism in President Obama’s both terms. Obama claimed to have wrestled with
untrammeled corporations and wealthiest Americans to pay their fair share in taxes.
Nevertheless, Obama presided over large bailouts to the many big corporations.12
a) The auto industry and green energy: The auto industry bailouts helped President
Obama to secure vote bank in four Great Lakes states. These four states are highly dependent on
auto industry and manufacturing jobs. President Obama’s bailouts for the auto industry resulted
in production growth since 2010. Although most of these bailouts were in favor of green energy
11 Romney during debate in Charleston, S.C., Jan. 21, 2012.
12 James W. Antle III. “Main Street Libertarians." American Conservative, no 12 (2013): 20-22.
8
but the Ohio River valley industry has revived as well. Industrial revival, pumped by the bailouts
in the Ohio River valley helped increasing steel output, and oil and gas production.
In addition to the politically motived bailouts, Obama’s reelection helped people in the
beleaguered “green energy” industry. The green energy capitalists have been losing the market
prior to these bailouts. President Obama also pledged $530 million loan to Fisker Automotive,
$465 to Tesla and $270 million in stimulus to an electric battery manufacture, A123. According
to David Stockman, Obama put US treasury in harm’s way in all these three cases.13 According
to the November 2010 report published by the Organization for Economic Co-operation and
Development (OECD), it found that “corporate taxes are the most harmful type of tax for
economic growth.”14
The Chinese competition, rivalry of natural gas industry and lack of political support were few
reasons for the green energy downfall in the Silicon Valley. 15 Obama’s second term heled the
Silicon Valley and the green energy capitalists a new life. Obama promised to create 5 million
new green jobs and $150 billion investment in green energy industry in the next ten years.
Obama also pledged new regulation on the coal industry which favors green energy sector
against coal industry in the competition. This draconian regulation for the gas industry was also a
crony deal to favor Silicon Valley, according to the observers.16
b) The corporate tax plan: In February 2012, President Obama released a plan to lower
corporate tax from 35 percent to 28 percent, with some elimination of loopholes in the tax code.
13 David Stockman, The great deformation: the corruption of capitalism in America. (New York: Public Affairs,
2013): 602.
14 Organization for Economic Co-operation and Development. The emerging middle class in developing
countries” no 285 (Paris: Secretary-General of the OECD, 2010), 17-53.
15 Joel Kotkin, “The Biggest Winners from President Obama's Re-Election: Crony Capitalists” New
Geography, November 7, 2012, https://www.newgeography.com/content/003209-the-biggest-winners-from-
president-obamas-re-election-crony-capitalists.
16 Kotkin, “The Biggest Winners from President Obama's Re-Election: Crony Capitalists”
9
U.S. corporate tax at 34.6 percent was nearly 50 percent higher than any OECD member
countries. This tax cut was a campaign item in response to the Romney’s tax to 23 percent.
However, there was some hidden favors in the plan that contributed to the crony deals.17 This
plan was proposed to cut tax on advanced manufacturing while proposed an increase on the oil
and gas industry, aircraft manufactures and insurance industry. This tax increase was in fact
helping crony deals to kill competition in the auto industry against green vehicles and support the
entire green energy extravaganza.18
Despite some benefit to some industries, many came out in opposition to President
Obama’s plan for the tax cut. Thomas Donahue, leading the US Chamber of Commerce at that
time argued that Obama’s plan pit one industry to punish another and undermines the
competitiveness of the U.S. companies. Donahue maintained that the Obama administration
punishes some companies because they simply don’t support its policies,19 pointing to the green
energy revolution. Gas and oil industry at that time was paying nearly highest federal tax in any
industry but still President Obama’s proposal wanted an increase in the existing tax rate. It was
noted by the non-partisan economic observer that President Obama punished gas and oil
industry, increased tax on them to support his supporters in green energy industry.20
The government can not determine who is winner and who is loser in the free market. this
was a known allocation of resources to support one industry “green energy” and punish the
competitors “the gas and oil sector”. Obama admiration sunk billions of dollars in loan in the
renewable energy sector, the promise of jobs and outcome was not sustainable. Most of the
17 PJ Austin, “President Obama’s Corporate Tax Plan Invites Crony Capitalism” Citizens Against
Government Waste, March 12, 2012, https://www.cagw.org/thewastewatcher/president-obama%E2%80%99s-
corporate-tax-plan-invites-crony-capitalism
18 Stockman, The great deformation, 598.
19 Thomas Donahue, “Obama's Tax Reform Muddle” The Wall Street Journal, February 24, 2012,
https://www.wsj.com/articles/SB10001424052970203918304577239590921861800.
20 Ibid.
10
regulation “tax increase on oil and gas”, and favorable resource allocation to the renewable
energy “bailouts and government loans” was made as result of crony deals. These deals did not
fulfil the promised economic growth but hurt the competitiveness in the U.S. market as well.
c) National zoning: National zoning regulation also benefitted some crony capitalists in
President Obama’s term. New zoning regulations were backed by Housing and Urban
Development (HUD) and Environmental Protection Agency (EPA) to favor the urban land
speculators against suburban competitors. New regulation would compel the suburban regions to
build expansive transit system. Ultimately the biggest winner of these regulation was firms who
finance municipal and state debt. Goldman Sachs and other Crony capitalist sweepstakes largely
benefited from the new zoning regulation. Goldman Sachs historically made more money from
financing government operations. Goldman Sachs was one of the top donors for Obama
campaign during the 2008 election cycle. Obama raised $745 million in campaign contribution,
most of these funds collected from renewable energy industry in the Silicon Valley including
Microsoft, Google, General Electric, Goldman Sachs and WilmerHale.21
Romney-Obama economic policies in light of biblical model of statesmanship
President Obama and Mitt Romney’s economic policies could be very well judged in
transfer programs and taxations. President Obama in a 2012 National Prayer Breakfast
announced that his economic policies were “not only sound but deeply rooted in his Christian
values”. He justified his tax-the-rich and healthcare policies on Christian faith. Obama quoted
the Gospel of Luke “To whom much is given, much will be required”22 to justify his tax policy.
Healthcare sector is very expansive for the middle-class families in America. Its biblically and
21 Brian Koenig, "Obama's Crony Capitalism and His Top 2008 Donors." The New American, no 28
(2012), 17.
22 Luke 12:48.
11
morally wrong, if government does not spend more money into public health and other public
good programs such as food, income security for senior citizens.
On the other hand, Mitt Romney also claimed that his economic policy is a “Christian”
political economy. He was referring to the “prosperity gospel” claim.23 Romney’s running mate,
Paul Ryan said, he used his Catholic faith to develop their economic policy. These claims were
later disputed by the United States Council of Catholic Bishops (USCCB).24 On the public goods
and social programs, its very usual for the government officials to mask their private with public
goods. The Obama tax-the-rich policy may not be against biblical teachings, but what suspects
the observers was his discrimination between the industries, such as bailouts to green energy
industry and tightening regulation on the gas and oil industry.
Reinhold Niebuhr warned that the self-interest of the political powers would bend
policies to their own interest. As discussed how Mitt Romney and President Obama economic
policy would benefit crony capitalists. it was clear that motivation for the most regulation was to
hurt free market and favor one industry over another as a result of crony deals. in Niebuhr’s
account, the free market is not moved by motivations of justice, but by motives of profit.25 The
actors do not seek to do right, but to serve their own interests.26
Conclusion
There were few notable differences between the Romney and Obama economic policies.
Obama wanted to raise tax on individual with high income, but Romney advisors proposed a tax
23 R. Ward Holder and Peter B. Josephson “Obama, Romney, and Christian Realism,” Symposium: The
2012 Presidential Election, no 49 (2012): 439–443.
24 Dana Milbank, “A Faith-based Budget Lesson for Paul Ryan,” Chicago Tribune, May 1, 2012.
http://articles.chicagotribune.com/2012-05-01/news/ct-oped-0501-bishops-20120501_1_ryan-s-budget-paul-ryan-
house-republican-budget.
25 Josephson, “Obama, Romney, and Christian Realism.”, 439.
26 Reinhold, Niebuhr, The Irony of American History, With a new Introduction by Andrew J. Bacevich
(Chicago: University of Chicago Press, 2008), 96
12
cut on wealthier people. On the government spending, both wanted a cut, however Romney
wanted to decrease entitlement, public goods and transfer programs. On other side, Obama
wanted cut in military spending but adding more to the transfer programs and public good.
On the crony capitalism, Obama’s bailouts to the renewable energy sectors and
discriminatory corporate tax plan are top two policies that have contributed to the crony
capitalism. His regulations largely favored green energy industry and helped them win against
traditional energy sector. Obama helped Silicon Valley firms, who was leading the green energy
industry, with loans and other allocation of resources while hit the gas and oil industry with
heavy tax and tougher regulations.
From the biblical model of government, Obama’s economic policy in public good was
more consistent than of Mitt Romney’s social programs. However, Obama was not able to
control the size of government. Historically, Democratic presidents are good in controlling the
deficit, however the 2008 economic crisis contributed to change that trend. Romney could not
win 2012 presidential election.
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14
