Hurricane Sandy may reshape the presidential race as surely as it just reshaped the eastern shoreline.  It reminds us that a central debate in this year’s election boils down to what we think is the appropriate size and role of government.  Big challenges require the right size of government in the mix and the response to Sandy dramatically illustrates the point.  

It’s hard to imagine adequately dealing with the disaster from Sandy without a well functioning federal response.  The Republican governor of New Jersey pleaded for help from FEMA and congratulated President Obama for facilitating it. 

But in the larger political debate this year the side backing Governor Romney makes it sounds like President Obama only wants to replace the market economy with more Big Government.  In fact, as President Obama made clear in his second debate closing, he and his adversaries agree that the private sector is the main source of growth in the economy.  The choice in reality is different but still important.  Do you want enough of the right kind of government or do you want nearly none?   In other words, a choice between President Obama’s sensible view that the federal government has a vital but not boundless role in meeting big challenges, or that the government is the problem and makes everything worse so the market should be left entirely alone, as Romney’s backers claim. 

No doubt the first presidential debate reshaped the public’s perception of the candidates on their view of the role of government, blurring the significant difference between them.  This was more a matter of style than substance, as Governor Romney purposely projected a more moderate manner than he had when appealing to the Republican base.  That’s why it was so surprising not to hear three key phrases during the debate, which President Obama should now bring home in his closing argument. 

Etch a Sketch 

Like an etch a sketch pad – that’s how the Romney campaign had promised that it would change his positions in the general election.  He supported health care reform before he opposed it.  He backed a woman’s right to choose before he didn’t.  He often seems to lack core convictions more than he’s hiding them.  In figuring out what he’s likely to do it’s probably best to consider whom he will owe if he wins.

That’s why his debate answer to a question on the role of regulation was so notable.  Of course we need regulations, he said, just not too many while the economy is recovering.  In fact he gave an extensive defense of how regulations were good even for business.  This apparent reversal was astonishing for a candidate who had placated conservatives by taking the view that regulations were the cause of our economic woes and who had endorsed a House bill that would grind most regulation to a halt.  This was President’s Obama’s chance to make clear this was one of those etch a sketch moments.  One in which Governor Romney was being misleading, not just changeable. 

Clean energy and environmental policy serves as another prime example of this etch-a -sketching.  Romney believed in climate change before he didn’t.  He thought coal plants were a health hazard before they weren’t.  He supported renewable energy before he didn’t, but then he did in the debate again (but not really as proven by his opposition to extending the production tax credit for wind power). 

What President Obama needs to do is bring home the point about whom do you trust.  Do you think Governor Romney, the guy who the fossil fuel industry bankrolled, will correct the health-threatening practices of that sector?  Do you think Governor Romney, the guy who proposes increasing taxes on renewable energy, supports ushering in a new, renewable energy future?  Not really. 

47 Percent

Meeting America’s challenges will require contributions by everyone.  Take addressing the budget deficit.  The question is not whether we should all contribute, but how those contributions will be distributed.  It’s about what’s fair. 

There is little fair about the Romney tax plan.  It gives the greatest tax reductions to the people who already have the most.  This is in addition to the math not adding up.  Quite simply, if you care about the budget deficit, you don’t start with extending temporary tax cuts that were adopted when we had a budget surplus.  That’s why it’s strange that the phrase “47 percent” never came up.  That’s the number of people Romney believes deserve no financial relief because they contribute nothing economically to society. 

Clean energy policy provides an example of what’s at stake in tax policy. The oil industry alone receives $4 billion a year in taxpayer support to help cover production expenses when oil companies are some of the most profitable companies in the world.  Yet Governor Romney has not called for repeal of these write-offs that were protected in the Ryan budget.  Instead, he’s called for raising taxes on the renewable industry by allowing the highly successful production tax credit for wind power to expire at the end of this year.  How is that fair?  It’s not. 

Obama needs to drive the point home that his energy tax plan would redirect investment resources from those who need them least to those who would use them the most.  Extending the production tax credit specifically would permit the wind industry to keep creating the jobs today and into the future.  That’s not only fair, it’s smart. 

Climate Change

Yes, climate change.  OK, maybe the phrase from President Obama should have been “economic accomplishments including more clean energy to fight climate change.”  President Obama later said he was surprised that a question about climate wasn’t asked during the debates.  Maybe he should have brought it up.  But at least he has brought up clean energy solutions for climate change on the campaign trail unlike Governor Romney who now mocks it.

One of the Obama’s administrations unheralded accomplishments is the stimulus bill, or the American Recovery and Reinvestment Act.  As the Michael Grunwald documents in his new book about the effects of the stimulus bill, The New New Deal, the government investments did help create or save millions of jobs, perhaps preventing the Great Recession from becoming a depression. 

The premise of the stimulus bill was that the economic crisis was being worsened by a lack of sufficient overall demand.  A short-term stimulus in the Keynesian tradition — the basis for FDR’s New Deal — was needed to reverse the situation.  Notably a third of the stimulus bill went to tax cuts though to hear opponents tell it, it was full of nothing but wasteful government spending (for them a redundant phrase).  This raises the question as to why for these critics Democratic tax cuts only create deficits but Republican tax cuts only create growth.

Assessing the impact of the stimulus requires selecting the correct starting point.  Romney measures the success of the Obama’s policies from the day he took office even though the effects of Bush’s policies were still being felt.  The better comparison would start a year later after the stimulus had a chance to take effect.  Since then and through September the S&P 500 has advanced 27 percent (308 points) and the unemployment rate has declined 20 percent (1.9 percentage points).  

More needs to be done.  As Grunwald and others have noted, the stimulus bill was too small.  It made a 2.5 million contribution to an 8 million job problem.  Still its $90 billion in clean energy investments of the Obama administration has helped fueled the recovery that has taken place.  And it has done this by making progress in advanced biofuels, more efficient electricity distribution, improved battery powered cars, and domestic manufacturing of these energy system parts.   

President Obama has a great record in other ways on creating a clean energy economy that helps address climate change.  He brokered a deal that will cut the cost of driving cars in half by doubling fuel mileage.  He saved thousands of lives a year by modernizing coal plants and reducing mercury emissions. 

The basic choice comes down to this – will we have enough government to help do the correct things or will we have nearly no government and just trust the market system alone to sort everything out?  The latter approach is what got us into this economic situation to begin with. Obama’s record using the former approach offers an advantage he should press. 

And Hurricane Sandy should remind us of exactly what’s at stake in this choice.