A Comparison of Barack Obama and Mitt Romney, for my Daughter

So, you asked me to give you links to sites where Obama's and Romney's plans can be seen, so you can decide who to vote for. I am reluctant to do so, because their official statements have little to do with the actual results if one of them is elected. Both Obama and Romney give lip service to some goals they know are popular among folk they'd like to see vote for them, but they do not take their own statements seriously. Furthermore, the split of congress in which neither side has a 60% majority in the Senate guarantees that they will have to abandon many goals they actually believe in, in addition to the goals they don't take seriously.

So I'll go through a number of the topics I think you care about, and topics you should care about even if you don't. For each, I'll make a quick comment on the official positions, then look at the amusing controversies and the actual consequences of one winning versus the other.

The biggest and toughest topic is the economic sustainability of our government, which is currently running huge deficits every year which make the total debt of our nation grow apace. I will hold this most difficult topic till last.


Obama's position favors woman's choice on abortion; Romney's position favors allowing abortion only in cases of rape and incest. In fact, when Mitt Romney was governor of Massachusetts, to my knowledge he never acted on this position: it is an opinion to which he gives lip service. In fact, nothing will change in national law regardless of which candidate wins. If Obama wins, the Republican House will prevent him from making abortion a government-subsidized procedure. If Romney wins, even if Romney violated his history of leaving this topic alone, the Democrats in the Senate would stop him.


Obama favors passing the Dream Act, which would allow people who grew up in the US to become citizens even though they weren't born here. The Dream Act has proven impossible to pass in congress: during a serious economic downturn, blaming people who are "not like me" becomes popular, so a democracy cannot act rationally on non-citizens unless the economy is robust. Which is ironic, since legal immigrants bring economic vigor and more taxpayers onto the scene, which is rather important in a downturn.

Unable to pass the Dream Act, Obama has signed an executive order protecting non-citizen Americans from government attack.

Romney has criticized Obama's executive order for not being a comprehensive solution, which of course is true. Romney's decision not to promise to repeal this executive order indicates he will leave it in place.

So on immigration, nothing will change regardless of who is elected.


Obama believes that new jobs can be created by government action. Romney believes that real, enduring jobs can only be created by private enterprise. Obama has demonstrated his belief that the government can spend money and create jobs by spending taxpayer money on companies like Solyndra solar power ($500M of taxpayer money gone in bankruptcy), A123 Batteries ($250M of taxpayer money gone in bankruptcy) and Tesla electric cars ($500M given to a company that has never turned a profit, to manufacture a $60K sedan that goes 100 miles before recharging for 4 hours; how many years do you think it will take before that money is acknowledged to be lost as well?).

In fact, creating new industries, new companies, and new jobs is a job for professionals (like venture capitalists) and college students (like Mark Zuckerberg). The only role for government bureaucrats is to stay out of the way. Staying out of the way was the policy followed by Bill Clinton during the takeoff of the web, with excellent results. Most economists came to realize that a centralized command and control government cannot effectively create jobs after the Soviet Union fell, though some of the most popular economists still believe in government action. I hypothesize that these economists are most popular among people who believe in government action as a basic philosophical tenet, regardless of actual merit.

Obama has acted repeatedly to prevent private enterprise from creating jobs. Examples include:

Obama has recently come out talking about how great fracking for both natural gas and oil are. This is an example of lip service. He has never tried to make it easier to frack gas and oil. This is ironic because the use of natural gas to replace coal has reduced carbon emissions and fought global warming more effectively than all his subsidies of wind turbines and solar power panels, and all of Europe's subsidies of wind turbines and solar power panels, combined.

In fact, fracking is the most important technological breakthrough of the decade. It is creating new jobs, not just to get the gas and oil, but throughout the society: companies are building new manufacturing plants here in the US to take advantage of the now-suddenly-very-cheap natural gas. Without the fracking industry, our economic recession would be deeper and go longer. It serves as another reminder that private enterprise is the engine that creates new industries, new jobs, and new opportunities -- not government.

Romney would, as a minimum, pass no more laws inhibiting economic recovery. A major criticism of Romney is that he would not have bailed out GM, thus causing the loss of thousands of jobs in the car industry. My personal assessment is that Obama handled GM correctly: he pushed the company through bankruptcy, evicting all the executives and breaking all the union contracts and wiping out the holders of GM bonds. This bankruptcy process transformed GM into a new company with so few liabilities that it could be successful again. The $25B the government loaned to GM was the least important part of the deal, and probably would not have been needed had the entire financial system not been broken because of the financial system collapse.

But note that saving GM is not the same as creating new businesses and new jobs: it just prevented the loss of some jobs (though not as many as you might expect: without GM, more cars would be sold by Ford and the American Toyota factory and the American Honda factory, etcetera).

2 years ago, preventing the loss of existing jobs as Obama did at GM, was probably as important as supporting the creation of new jobs (though remember, while Obama was saving GM he was also shutting down all oil drilling in the Gulf, which destroyed existing jobs. So even then he was not trying to save jobs, he was pursuing more narrow political goals. This is a reminder that in an economy run by government bureaucrats, the people with the strongest lobbies get the special privileges and the taxpayer largesse. While the Gulf oil drilling industry is larger than GM, it is composed of lots of small companies. They no had politically powerful union like the UAW with GM to protect them. Had the UAW been running the oil wells, they would not have been shut down, and had GM been a bunch of small companies without political leverage, they would not have been saved).

Regardless of what should have happened 2 years ago, at today's point in the recovery, encouraging the creation of new jobs with the reduction of regulations, as Romney would attempt to do, is probably more important than saving the GMs of the world. All of America's GMs have been saved, we need to think about future industries, not past industries, at this point.

Your mother will also explain that another aspect to jobs is retraining people and getting them ready for jobs. Romney would cut the funds given to the states for retraining workers. Obama would continue to fund these programs. Which is more important, creating new jobs or training workers to fill those jobs? I could make a complex argument that shutting down national government spending on retraining would not shut down retraining, but the argument is too subtle for this discussion. Instead I will make the following observation: while retraining and job creation are both important, the jobs must be created before any worker -- retrained or otherwise -- can fill them.

The practical consequence of Obama versus Romney on job creation: at the end of the day, in the short term presidents have very little control over job creation. The US economy is a huge thing, all the effects of all the actions by the president described above are small in comparison. Presidents do have a huge effect over the long term. Of all the actions described above, the one with the most long term consequences was Obama's lawsuit against Boeing to shut down their new plant. This will cause companies to think harder and take longer to decide to open new plants. Even more ironically, it will encourage them to open new plants in other countries rather than risk retaliation from the National Labor Relation Board. It will never be possible to measure the harm done to the economy by this action, because the harm will be measured in factories not built, which we do not know how to count.

Global Warming

Obama believes that global warming is a civilization-threatening danger. Romney claims not to believe it. One would think that believing it is a danger would make Obama a better protector from the risk. But as noted earlier, the biggest improvement made in the last decade in the global warming outlook did not come from solar and wind power. Nor did it come from a grand agreement between the US, India, Europe, and China to cut the use of coal (anyone with any sense immediately understands that such an agreement could never be made, unless the participants planned to immediately violate it, as the Europeans have done in the face of economic stress).

Government played no role in the big improvement in global warming outlook. Rather, the big improvement came from replacing coal with natural gas extracted with fracking. This is another reminder that unplanned, unexpected new innovations generated by private enterprise, that reduce costs both economically and ecologically, offer the only serious hope of solving problems when the only plan the government has is to impose hardship upon the people. The ironic consequence is that Romney the unbeliever, in encouraging private enterprise to do the unplanned and unexpected, will protect the environment somewhat better than Obama.

An ideal candidate could do even better ... but no ideal candidate is running so this is the choice. As a more philosophical point, the reason so many people refuse to acknowledge a risk from global warming is that the leaders of the global warming community never just say that it is a risk: they immediately follow up by explaining that we must immediately spend trillions of dollars and accept diverse hardships to prevent a catastrophe 50 years from now. Upon hearing that, many people turn off. If instead of demanding trillions of dollars in costs right away, people concerned with global warming explained that we could probably postpone the problem for an additional 50 years (enough to ensure good technological solutions) with a couple billion dollars a year in geo-engineering costs, it would be an easy sell. Global warming would not even be a topic of conversation any more, it would be taken care of in its own time by the people of the future who have much better tools to combat it.

Medical Care

Obama is pleased with his new health care law, whose true consequences will not be felt until the full law goes into effect in 2014. Is ObamaCare good? In fact, ObamaCare is so complex that the unintended consequences will be larger and more important than the intended ones. So it is technically impossible to tell if it is good or not. However, if you look at the history of laws this complex, we see that, if it is technically impossible to tell the consequences, we do in fact know something. The unintended consequences will do more harm than good. Complex laws lead to gaming of the law by the participants, and the gaming leads to high costs and low quality.

Romney wants to repeal Obamacare, replacing it with something with no specifics whatsoever.

In fact, both ObamaCare and the system it replaced are so badly broken it hardly makes a difference. The current argument over which-poor-sucker-pays-the-outrageous-costs is misplaced. The important question is, why has the cost of health care grown so much faster than any other cost in the history of the nation? (uh, the cost of fighter planes may be growing just as fast, and there are interesting lessons in that fact, too lengthy to explain here). If costs went down in health care the way they go down in computers, there would be no issue. If quality went up while costs held constant, as in the car industry, and as in almost every other major industry in the nation, it would be a minor issue.

To really fix the health care system, one must start by wreaking havoc on the privileged elites that extract large profits from the current system. Such privileged elites include the American Medical Association, which has been the most successful union in American history, using the regulatory powers of the US government to coerce rich revenue increases for its members for about a century. The privileged elites also include the lawyers, who extract a rich tax on health care through current liability law (and impose a vastly larger tax through the hidden costs that are incurred to minimize the lawyer tax; examples of hidden costs I personally understand suggest the hidden costs of liability law are at least a factor of 10 greater than the visible costs).

More generally, throughout the health care industry, the incentives imposed on the participants by current law and regulation ensure that each player will push (often for perfectly honorable reasons) for higher prices with negligible improvement in quality. Neither Obama nor Romney will address the real questions.

In practice, the health care law will stay about the same regardless of which candidate wins: Romney cannot repeal the law because of the Democratic Senate. No action can be taken until 2015, when the full consequences of the new law will come to be understood since they will have been in effect for a year. Since 2015 is only a year away from the next presidential election, and nothing happens in an election year, nothing effective will be possible until 2016. Since no one talks about the serious questions at all, the chance of effective action in 2016 or 2017 is negligible as well.

Military and Foreign Affairs

Obama has demonstrated a level of aggressive defense of American interests that has surprised many people, notably with his determined use of drone attacks on terrorists hiding in Pakistan despite fierce international protests. Romney promises to be tougher. His big promise is to investigate China for currency manipulation. This is probably a poor policy decision; it is certainly unimportant even if it is poor. I find it hard to identify a way to specify one or the other as noticeably better on foreign policy.

As for maintaining a strong military, Romney has promised to increase spending on defense. Various hints suggest that Obama would reduce spending on defense if he could. Obama's attitude is more sensible on this matter. Currently we spend more on the military than all of the countries we could have a war with combined. The US fleet of 11 supercarriers (the smallest of which is larger than the largest of the 9 non-American carriers in the world) could easily defeat the fleets of Russia, China, North Korea, India, France, Great Britain, and Japan all combined. A sensible plan would cut the defense budget by 30%.

In practice, nothing will change. Obama cannot cut the budget because of the Republican House, Romney cannot increase the budget because of the Democratic Senate.

Economic Recovery in the short term

Obama is no longer promising to increase the rate at which the government is spending money. He would continue to spend at the current (unsustainable) rate. Romney promises to immediately start reducing the rate at which the government spends money, to protect us from long term financial disaster. Obama's short term strategy is probably better. The austerity measures being taken in Europe, cutting government spending in Greece and Spain and other nations hovering on bankruptcy, have reduced economic activity so much that even more austerity measures are needed because the tax revenues are smaller, and the cycle is vicious. Our problems are not yet that severe, and the consequences of austerity would likewise be less severe, but there is risk here. Romney could lead us into a "double dip", in which we have a second recession, analogous to the way, during the Great Depression, we had a second depression when the government started reducing its spending when the economy started to recover.

Economic Sustainability in the medium term

This election is interesting because there are 3 significant risks we face, in the short term, the medium term, and the long term. In the short 2-5 year term there is the sluggish, fragile recovery from the Great Recession that must not be harmed (one might want to strengthen the fragile recovery, but there is little the government can do: government spending and the running of the presses to print more money are no longer helping, even if they were helping earlier in the recession).

In the medium 15-25 year term there is the looming financial disaster when the government's spending plans wreck the nation.

And in the long 50-100 year term there is global warming and its consequences.

I am often amazed by people who fiercely believe we must achieve an ecologically sustainable society yet do not believe that we must as achieve an economically sustainable society. If the society is not economically sound, leaders will arise that promote ravaging the earth's resources to quell the economic hardship. You can see that in Europe today, as economic hardship trumps ecological policy.

In any event, the US is now on an economically unsustainable trip to catastrophe. The costs of Social Security, Medicare, and Medicaid (which I henceforth refer to as, the "Entitlements") are each individually growing faster than the economic output of any advanced nation in history. The growth of these programs is automated in the laws defining them: in the absence of new law, each is guaranteed to grow until the nation collapses, in a shattering blow that will make the Great Recession look like an enchanted period of growth. To learn about our future, read what is happening in Greece today.

This year, the debt has grown so large that it is larger than the Gross Domestic Product (GDP) of the entire nation, i.e., all the wealth created by the US in one year is not enough to pay off the debt. This has complicated consequences. To put it so briefly that it may not be understandable:

Currently, trying to get the economy working again, interest rates are being held lower than is sustainable. As the economy strengthens, interest rates have to rise, which means that the government must pay more interest on the debt. When the debt gets as high as it is now, over 100% GDP, then when interest rates go up, we must suck so much money out of the economy to pay the extra interest that it impedes the nation's economy, forcing the economy back into sluggishness.

Historically, when the US had high debt loads (after WWII), we grew out of it: if the debt went up 2% a year, but the GDP went up 4% a year, the debt would shrink as a percent of GDP. But now the debt is so large that it will prevent us from growing the economy as fast as the debt grows. So we are now already trapped in a vicious cycle: to grow the economy fast enough to shrink the debt, we must first shrink the debt enough so the economy can grow fast enough.

In his 4 years of office, Obama has given only lip service to the idea that we must make the government economically sustainable. His big proposal is to tax the rich. Alas, even rich people do not have wealth growing fast enough to cover the costs. Obama's closest approximation to sincerity was starting the Erskine-Bowles Commission to develop a deficit-reduction plan. The moment they delivered their plan, which had everything Obama wanted (such as higher taxes on the rich), Obama rejected it (presumably because it had the things that are necessary, like reductions in the Entitlements).

Romney made significant fixes to the budget in Massachusetts when he was governor, suggesting he is both sincere and capable in addressing this problem. He also worked with a Democrat controlled legislature in Massachusetts, suggesting he might even be able to work with the Democratic Senate (though this is not certain: he could be as stymied by the Senate as Obama has been stymied by the House).

There are several sideshows in the budget debate. Do not be confused by them.


In summary, I believe that the most important issues are the economic ones. We have learned from the Great Recession that when the economy runs off the rails, people become crazy. If the economy is sound, we have the luxury to debate serious and important non-economic matters like global warming and immigration and even drug policy. If unsound, we have no luxury to debate or do anything sensible. Obama reduces the risk of a double-dip in the economy in the short term. Romney reduces the risk of a society-crushing economic failure in the medium term. Which is more important? Ah, girl, this is a question I leave to you :-)