Obama vs Romney – Faceoff
The first black President runs for re-election against a poster boy of American capitalism – a rich, white, Republican male, appropriately the Governor of snobbish Massachusetts. Harvard once again acts as a connecting link between the Presidential hopefuls. While I have been a staunch supporter of Obama for the past 4 years, my recent study on liberal economics has led me to believe that Romney’s policies bear merit too. Here’s a 360 degree comparison:
The philosophy of the liberal free market capitalists differs greatly from that of legendary economist JM Keynes. When Obama found the economy stuttering in 2008 he acted swiftly and injected close to $800 billion into a variety of sectors from banking to automobiles to renewable energy. While this bailout has been widely acclaimed for preventing a depression, critics have argued that it has increased the size of the government yet again.
Taxation: Obama wants to introduce the Buffet Rule, whereby any individual earning more than a million dollars must pay a tax rate of 30% regardless of the source of income. Presently dividend income is taxed at a significantly lower rate than salary income allowing billionaires and millionaires like Buffet and Romney to pay tax rates of 16% and 13% respectively while Buffet’s secretary pays a tax rate of 30%. Obama moreover wishes to give tax credits to manufacturing firms and eliminate tax breaks for outsourcing firms. Romney wishes to reduce the corporate tax rate to 25%, make the R&D tax break permanent and move to a territorial system whereby firms will be charged tax only on income earned in the United States. Moreover he wishes to eliminate the inheritance tax (something I am absolutely against, the 50% inheritance tax rate of the United States has always been one of the driving forces of its massive philanthropic base) and eliminate tax on interest, dividend and capital gains for individuals earning less than $200,000.
When it comes to taxation, in my opinion, Mitt Romney wins hands down. As a strong proponent of liberal economics I have always believed in a simple taxation system with a lower tax rate. It is important to realise that in this era of globalisation, even taxation has become competitive. Countries with lower tax rates such as Singapore, UAE, Cayman Islands and Lichtenstein have been able to attract corporations from across the world looking to escape oppressive taxation. It is important for the United States to remain competitive in taxation unless it wants to see its major corporations being incorporated in off-shore banking centres. Global liberalisation has once again proved the power of free markets by pushing down the tax rates globally. London is fighting hard to retain its place as the financial centre of the world by fighting with the European Union to continue being de-regulated. It has refused to accept any plans of imposing the Tobin tax (a transaction tax) on operations and has steadfastly continued to de-regulate. Dynamic centres like Hong Kong and Singapore have forced established cities like London and New York to fight to maintain their place as a centre for services such finance, law, accounting, publishing, maritime service, insurance and more. Similarly Romney’s policies will allow United States to maintain is pre-eminent position by keeping corporate tax rates at a reasonable 25% and by not touching corporation’s foreign income it will encourage them to remain incorporated in the United States. Moreover by making capital, divided and interest gains for those earning below $200,000 tax exempt, he is encouraging more participation in the investment markets which will make more capital available to firms and also lead to more efficient allocation of resources.
Overall Romney is an economic liberal and so am I.
Round 1 – Taxation: Mitt Romney – 5 points.
Outsourcing: Obama is a protectionist. He has frequently given fiery speeches against outsourcing that has included rhetoric such as ‘Jobs are moving from Buffalo to Banglore’. His wants to stop tax breaks for companies that engages in outsourcing. Moreover he set in place a set of regulations that disallowed outsourcing companies from getting the benefit of stimulus plan. Romney on the other hand has always been in favour of de-regulation and in his time at Bain Capital has been responsible for the move of thousands of jobs off shore with the intention of increasing profits and efficiency.
Round 2: Outsourcing – Mitt Romney: 5 points. (Outsourcing gets a larger weightage because of the Indian angle)
Fiscal Deficit: While Mitt Romney has proposed tax cut after tax cut, he has also suggested an increase in military spending, thus leading to the crucial question, is anyone at all concerned about the fiscal deficit? There is no clear answer to this question. President Obama has been justifying the high deficits during his term by explaining that he inherited a messy economy. He has stated that he will raise taxes on the rich, introduce the Buffet rule of minimum 30% part, increase taxes on the rich overall and reduce military spending (which I agree with). On the other hand, Obamacare is an expensive addition to an already entitled American populace. The entitlements constituted 58% of Obama’s budget in 2012 and analysts have warned that entitlements will consume the entire tax revenues by 2052. President Obama has shown no stops to reduce the size of the welfare economy and has instead added another layer through Obamacare. Some of his tax increases however are justified and make definite sense. While Romney himself was not able to lay out a clear budget reduction plan, his running partner Paul Ryan has tabled a fiscal reduction plan that has attracted wide attention. It is full of projections and impressive sounding figures but lacks any real substance. The one thing that I did like was that he wants to introduce the voucher system for medical care, a move that I believe will lead to more efficiency in the health care sector. Obama on the other hand has always shown more maturity and has not gone around proclaiming he will drastically cut deficits without actually specifying which sectors will be affected.
To conclude this section, when it comes to fiscal deficit, Obama will increase taxes and reduce military spending but on the flipside will also add to the entitlement economy though Obamacare. Romney will reduce taxes and increase military spending but also promises to reduce the size of government and introduce the voucher system for Medicaid. Overall, neither candidate has a credible plan to reduce the fiscal deficit.
Round 3 – Tie (zero points to each)
Deregulation: Romney has generally been pro-deregulation of all sectors. As one of the founders of Bain Capital Romney has always been among the chief proponents of the power of free markets. There is definite reason believe that if Romney ascends to power he will further de-regulate the economy and reduce the size of the government. He does not wish to intervene in the mortgage markets or the financial markets. He believes that markets are healthiest when left alone. Personally I tend to agree with him.
Round 4 – Deregulation and Size of Government: Mitt Romney – 5 points.
In very aspect of social policy Obama wins hands down. The Republicans are economic libertarians but social conservatives. I am Pro – Choice, its essential to give a woman the right to decide whether or not she wants a baby. Empirical research has shown a clear link between lower education, lower income and higher crime among babies that were not wanted but could not be aborted against those that were planned and wanted. Pro-Life goes against the principles of personal liberty that I subscribe to. The debate is endless so I will move on to the next important point.
Gun Control. Random shootings occur in the United States on an almost weekly basis now and its astonishing that the Republican party hand in glove with the National Rifle Association keeps calling for further relaxation of gun laws. Obama has shown the strength to crack down on the free availability of fire arms and I hope he continues to do so. It is the opinion of many that Romney is personally similar to Obama in his personal beliefs – liberal and progressive- but sadly must pander to the regressive ideals of the Republican party.
Homosexuality: Again I am a supporter of personal liberty and subscribe to the philosophy of ‘live and let live’. Obama’s progressive thinking wins hands – down. Romney on the other hand wishes to outlaw gay marriage.
Immigration: I believe that the United States has become a great society by allowing all faiths and cultures to live and prosper together and it must continue doing so. Romney’s party is of the opinion that immigrants are stealing jobs from so called American citizens, not realising that America has always been an immigrant society, be it the first wave of immigrants that brought in the English, the Irish, the Jews and the Africans followed by the multiple waves that brought in the Italian, Spanish and Hispanic cultures. Following this was the Indian wave of immigrants, a particularly profitable community for the Americans with contributions in fields as far ranging as highway hotels to the driving force behind Silicon Valley. Therefore discouraging immigration is a policy that is going to be detrimental to the United States in the long run.
Round 5: Social Policy – Barack Obama – 10 points.
It is here that the real difference in leadership and maturity between the 2 Presidential hopefuls become glaring. While Obama has been widely acknowledged for starting the process of healing of wounds that the aggressive Republican party have inflicted across the world under the leadership of George Bush, Romney continues to display the same thoughtless and immature aggression that has been the bane of the Republican party and has led the United States to acquire a miserable public relations score in every part of the globe. Obama has reached out to ignored allies and shifted the focus away from the geo-politically sensitive Middle East to the far East – China, Japan and the South China Sea. Moreover Obama has maintained decent relations with China without igniting tension and aggression. Romney on the other hand has threatened to tackle China’s currency manipulation aggressively from day 1 of his presidency. Considering that China is America’s largest trade partner and the largest holder of its Treasury bonds, such a move is likely to have serious retaliatory consequences. Moreover Obama’s shift to clinical warfare also needs to be appreciated. From Libya’s air war, to Osama’s assassination to the drone strikes in Afghanistan and Pakistan, Obama has completed changed the face of modern warfare by favouring surgical airborne strikes to specific targets farther than a messy ground war involving a lengthy and messy occupation. Moreover Obama’s positive actions on troop withdrawal in Iraq and a structured timeline for troop withdrawal from Afghanistan are also causes for optimism. On the other hand Romney’s international tour was reminiscent of the days when a goofy Republican used to rule the most powerful nation in the world – full of gaffes, foot in mouth moments and considerable lack of depth in research and knowledge. Take for instance the fact that he criticised the flawlessly organised London Olympics for lack of preparation on his tour of the United Kingdom. Compare that to suave Obama, winner of the Noble Peace Prize and a masterful speaker. Moreover Obama’s mixed heritage – Black (Africa), Muslim middle name and childhood in Indonsia (Asia) means that he is able to connect to larger parts of the globe than the guy with the weird religion and privileged childhood (Romney).
Obama’s depth and experience with foreign policy means that he would definitely be a better flag bearer for American interest than the somewhat arrogant Mitt Romney.
Round 6: Foreign Policy – Barack Obama – 5 points.
Conclusion: As a President, Obama has displayed a considerable level of maturity in his actions. He can be credited for swift action with regard to the stimulus plan at home, while in terms of foreign policy I am in support of his policies on Iraq, Iran (avoid confrontation), Afghanistan and Pakistan. I would hold against Obama his protectionist policies and his role in increasing the size of government. When it comes to Mitt Romney, I would hold against him his entire foreign policy (its a miserable disaster) but in his favour are his economic policies on de-regulation, decreasing the role of the government and decreasing taxes. Moreover Romney favours economic freedom, outsourcing and free trade.
In the final analysis I would favour Mitt Romney mainly because I believe the United States has always been an opinion leader and a progressive and forward thinking economy and Romney’s policies of de-regulation will give a kick to businesses to invest and innovate further, not only in the United States but across the world. Personally I like Obama as an individual but in my final analysis I will support the candidate that proposes economic liberalisation.