With a grumpy electorate and an economy clawing back from the brink, the campaign of 2008 has faded to gauzy memories of plumbers and snow machines, birth certificates and Scrantonisms. But as the hope-and-change president plows into his second year, it’s tempting to search the rear-view mirror for a glimpse of alternative reality.
What if Barack Obama were not the one hunched over the historic 19th century desk by the Oval Office window? What if, say, John McCain propped his feet there, with his sidekick Sarah Palin just hollerin’ distance down the hall? What might be different if voters had turned the ’08 election map Red instead of Blue?
First off, said Kevin Hassett, McCain’s former campaign economic advisor, “We wouldn’t have spent the last year on health care and cap-and-trade.” McCain wouldn’t push costly policies while the economy was struggling, said Hassett, now an economist with the American Enterprise Institute, a conservative think tank. “Putting big things on the table during a bad economy is terrible.”
Indeed, McCain stood against the behemoth health package that was wrestled through Congress by Obama and the Democrats. It’s safe to say this historical upheaval would have been, well, history under a President McCain. An opponent of mandates, McCain wanted to toss out tax exemptions on employer-provided insurance and distribute tax credits so people could purchase their own coverage. The idea was for workers to take that largesse into the marketplace, spurring competition and lower costs.
But “it is doubtful whether he could have held the support even of his own party for a proposal as far-reaching as he proposed,” said Henry J. Aaron, a senior fellow at the Brookings Institution, a think tank based in Washington, D.C. In fact, some critics said McCain’s proposal would have killed employer health plans and barely made a dent in families’ ability to purchase their own insurance. A President McCain may have found himself in the same impossible situation as George W. Bush who tried and failed to privatize Social Security.
Even if McCain had chosen not to address health care reform, he would not have had that luxury with the financial meltdown. To a large degree, the economic picture wouldn’t have looked a lot different under McCain, because key steps were already in motion, said James K. Galbraith, professor at the Lyndon B. Johnson School of Public Affairs at University of Texas.
The major bailout programs, rescuing banks and automakers, were set in the waning days of the Bush presidency. Both McCain and then-Sen. Obama voted to throw life support to Wall Streeters as the financial moguls warned of a catastrophic meltdown.
Further, Galbraith said, economic policies such as government spending on unemployment benefits would have happened under both administrations. “Most of what has stabilized the economy was baked into the cake before the stimulus package” of last year, he said.
On the other hand, it’s unlikely anything like the stimulus package would have happened under McCain’s watch. He voted to keep a tight grip on the federal wallet when it came to Obama’s $787 billion bill, which cut taxes, sent government dollars flowing into construction, and pulled many state programs at least temporarily out of intensive care, allowing them to retain workers and provide services.
Instead, perhaps the country would have gotten a much pared-down proposal that emphasized cutting taxes for businesses and individuals and spent considerably less on infrastructure and public transportation. He also would have nixed the tax breaks Congress recently secured for companies that hire unemployed workers.
Indeed, McCain would be encouraging private markets rather than emphasizing special government programs for small business, said Douglas Holtz-Eakin, who was domestic and economic policy advisor in McCain’s presidential campaign and a former Congressional Budget Office director. “You would have seen a temporary effort to get the economy back on its feet, followed by a belief that the private sector would be able to conduct its business and provide growth and prosperity,” he said.
And that, perhaps, is where an Obama and McCain administration will ultimately meet at some future point. Once the federal government has done what it can do, the rest is up to the private sector. Stimulus packages, after all, ultimately can’t sustain a recovery. Hassett says deeper systemic fixes, such as McCain’s proposed slash in the corporate tax, are needed to foster sustained job creation and international competition and ward against a future financial debacle.