Minutes before 2 a.m. on Sept. 15, 2008, a 158-year-old investment bank obscure to most Americans — Lehman Brothers — became the biggest company ever to file for bankruptcy. In succeeding days, then weeks, then months, the panic-inducing phrase "global financial crisis" lunged out of mothballs to frighten, and eventually debilitate, millions of households.
Credit seized. Employers retrenched. Jobs vanished. Home values plummeted. Partisans scanned the horizon for culprits, but there was no one place to aim the blame gun; plenty of villains on the left (who advocated mortgage lending to unqualified buyers) and on the right (who tolerated light oversight on the securitization of those terrible loans) had lined up emergencies like dominoes.
There was little reason to think the rookie president elected that November would be more than a bystander as those dominoes toppled. But that rookie, Barack Obama, with quick study and sure gait, led an administration effort to stabilize the U.S. economy. Through that long passage, still incomplete, Obama often has exhibited pragmatism when conventional liberal responses — I blame Wall Street! — wouldn’t have surprised any among us.
That record of pragmatism and focus in a moment of crisis, not his moves in any one policy realm, should help voters decide whether Obama spends the next four years gazing from a window at the Washington Monument — or reading and writing at his red-brick manse in sweet home Chicago.
Four years ago, when we endorsed Obama’s run for the White House, we said he would act with decisiveness and intellectual rigor. Ironically he has shown those attributes most where Americans might have expected them least. That is, in his handling of an unfamiliar realm: world affairs. He set and stuck to a withdrawal schedule for U.S. troops in Iraq. He ordered a surge in Afghanistan — to the anguish of many of his political supporters — that gave that nation time to mature and, by the close of 2014, likely will conclude a war launched four weeks after the terrorist attacks of Sept. 11, 2001. He approved the perilous mission that killed Osama bin Laden.
Obama, in sum, has been careful about projecting military power overseas. At home he has initiated, or agreed to, tax cuts to promote growth: investment tax credits, payroll tax cuts and extension of all the Bush tax cuts of 2001 and 2003. He proposes to reduce a corporate tax rate that everyone this side of far left agrees is a globally unfair hindrance for U.S. businesses.
On questions of economics and limited government, the Chicago Tribune has forged principles that put us closer to the challenger in this race, Republican Mitt Romney. We write with those principles clearly in our minds. Romney advocates less spending, less borrowing — overall, a less costly and less intrusive role for government in the lives of the governed.
And Obama? The federal deficits Obama pledged to halve instead have doubled. Not all his fault, but note that under his proposals going forward, the federal budget never balances. The fiscal cliff of dramatic Jan. 1 tax hikes and defence cuts inexorably approaches. In four years of budget proposals, the president has not offered anything resembling an action agenda to salvage Medicare, Social Security and other entitlement programs that are headed to insolvency.
The president has campaigned on a familiar call to tax "millionaires and billionaires." Pretending that taxing the rich will achieve anything meaningful is a deceptive argument. Even if Obama’s entire tax plan was enacted, it would reduce our annual federal deficit by about... one-tenth.
We have hammered the White House repeatedly for its failure to forge some path to a less indebted American citizenry. Yes, Republicans were obstructionists in Obama’s second two years. But before that Obama had two years with a Democratic Congress and he chose to focus on Obamacare, a program whose wisdom we have questioned and whose cost estimates have swiftly grown.
And Mitt Romney? He projects himself as a sure-handed chief executive, a proven leader who solves problems. He has, though, been astonishingly willing to bend his views to the politics of the moment: on abortion, on immigration, on gun laws and, most famously, on health care.
As a governor, his signature issue was the deal he cut with Democrats to extend health care — and a health insurance mandate — to all citizens. Romneycare was the Massachusetts model on which key elements of Obamacare were modeled. Yet Romney won’t acknowledge that he is, in effect, the godfather of the national health care plan he vows to repeal.
His proposals to achieve a balanced budget, and to begin reducing taxpayers’ huge debts, rest on questionable math and rosy assumptions.
He promises tax cuts for all but tells the middle class, don’t worry, you’ll pay less and the rich won’t get a break. How would he achieve that and balance the budget? No one really knows because Romney will not offer a complete prescription for his proposed 20-per-cent reduction in federal income tax rates. The rate cut would cost $5 trillion. Romney says that revenue would be recovered by reducing deductions and loopholes and through economic growth. Many Americans would like to know now if their mortgage deduction or health insurance deduction would diminish. Romney won’t say.
Romney’s recent suggestions to cap deductions at perhaps $25,000 per household — you choose which ones you claim — could be a cornerstone to federal tax reform. But we’re dubious that a deduction cap would pay for the steep rate reductions Romney advocates.
This nation faces no existential threat greater than the enormous federal indebtedness that imperils today’s America and, far more important, our children’s America. That slow strangulation endangers every household in the land — when our debt payments skyrocket, our taxes rise to fill the fiscal voids, and entitlement programs go insolvent: Federal trustees now say our Social Security trust fund will run dry in 2033, not 2036 as they predicted just last year. Medicare’s hospital fund will pay out its last dollar in 2024, not 2029 as the trustees projected two years ago.
Which of these two candidates, then, is likelier to reach a Go Big debt deal with Congress? Obama came close with House Speaker John Boehner in 2011, before Obama’s demand for additional tax revenue piqued Boehner who, regrettably, severed their negotiations. Where Obama and Boehner were headed — loosely, where the president’s Simpson-Bowles debt commission was headed two years ago — is likely to be a template for a bipartisan debt deal, if one ever happens. The crucial missing ingredient from those incremental improvements: much more ambitious reform of entitlement programs that, as of now, cannot begin to keep America’s promises to today’s middle-aged adults, young adults, children and grandchildren.
Romney, by contrast, has too many campaign-attested priorities that would make a Go Big deal all but unaffordable with him in the White House. In recent days, more than 100 U.S. corporate executives under the auspices of the Campaign to Fix the Debt advocated that any deal include a mix of spending reductions and revenue hikes. The former alone, despite what Romney would have us believe, cannot negate the need for the latter.
Romney’s fix on tax cuts, plus his guarantee to protect defence spending that genuinely could constrict, leaves him precious little room to manoeuver. Remember, the next president needs to reach deals that slash debt by many trillions — without bankrupting Washington in the process.
The urgency for a bipartisan deficits-and-debt deal ought to be foremost on the tongues of both candidates this autumn. Each talks about it; neither even pretends it’s as important to him as winning this election. That maddening refusal of both candidates to level with voters is a tremendous disappointment — a failure of convenience for two men who don’t want to alienate any voters.
Would re-electing Obama bring to Washington, at last, the changed tone he promised four years ago? Barring a reversal that virtually no one expects, Obama again would face strident opposition to his tax priorities from a Republican House.
There is the prospect, though, that both parties would step back from the ugly rancor of national politics and put America — Americans — first. Republicans could no longer focus on the defeat of Barack Obama — he can’t run for a third term.
If a European debt meltdown doesn’t stoke another, pardon our repetition, global financial crisis, Obama’s next term would open to less economic tumult: Friday morning’s GDP reading confirms anew that U.S. economic growth has a fluttering heartbeat. Home prices are stabilizing, the stock market and consumer confidence have risen, and job growth has been steady if unspectacular.
Bolstered by his steadiness in office, cognizant of the vast unfinished business before him, we endorse the re-election of Barack Obama.
We do so with a plea to Obama and to Romney.
One of these decades, the children in which we now invest our hope, and our love, will speak with today’s adults about the America that we bequeathed to them. They will praise us for avoiding the financial ravages they watch other nations endure. Or they will condemn us for living ruinously beyond our means and forcing the enormous payback onto them — a criminal act no previous American generation has committed against those that came next.
Mr. Obama, Mr. Romney, whichever of you occupies the White House for the next four years, that praise or condemnation will be your legacy.
—McClatchy Tribune Services