Past is Prologue

An evaluation of whether Barack Obama deserves a second term should entail a careful scrutiny of his record and his proposals. However, such an evaluation would be incomplete if it did not take into account the circumstances in which he took office, his promises during his previous campaign, and our own expectations (or fears, depending on our individual perspective) of what he would accomplish.

My own expectations of the 2008 presidential election are recorded in a post on my wife’s blog. Below is an excerpt that pertains to the economy:

1. On the Economy – Most economists and politicians agree that a sustained deregulation of financial institutions is largely responsible for the current economic woes. Addressing these problems has required direct intervention of the government, with new programs and measures being announced on almost a daily basis to stimulate the flow of credit and to restore confidence in the financial markets. These prevailing conditions suggest that under the next administration, ensuring economic growth will require a more influential role for the government, not less. Of course, financial institutions must be subject to appropriate regulation and government spending must be carefully monitored. More importantly, however, it would require the government to take initiatives to resuscitate ailing industries and services as well as to identify and harness (by providing incentives) new technologies and sectors to create jobs and jumpstart the economy. Will all this increase government spending? Of course, it will. But responsible spending now is a necessary investment to achieve economic prosperity in the long run.
From the perspective of the presidential candidates, Mr. Obama seems more likely than Mr. McCain in providing leadership to achieve these objectives. During the presidential debates, Mr. McCain’s solutions to the economic crisis were limited to his support for lower taxes and an unsubstantiated assurance of a “spending freeze”. However, Mr. McCain’ s tax cuts already exist under the Bush administration and they have not resulted in the desired economic growth. In fact, the economic situation worsened because these tax cuts were coupled to deficit financing by the Bush administration of the wars in Iraq and Afghanistan. Since Mr. McCain has no plans to end the war in Iraq, decreasing government revenue with tax cuts would be quite irresponsible. Moreover, if Mr. McCain advocates a “spending freeze” how will he deliver those 40 new nuclear plants (costing about $400 billion) that he proposed as key to achieving energy independence? How will he improve education standards and promote scientific research that will directly impact economic growth? In contrast to these, by utilizing a tax policy that will increase government revenue without increasing the tax burden on the middle class, by ending the war in Iraq, and in supporting investment in education and scientific research, Mr. Obama’s policies are more likely to provide the economic direction we need.

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