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Obama Victory Shows Americans See Government as Solution

President Barack Obama
As president, Barack Obama rejected nationalization or the forced breakup of big banks in response to the financial crisis. Photographer: Daniel Acker/Bloomberg

Nov. 14 (Bloomberg) -- The long struggle over the size of the U.S. government has turned in favor of an enlarged federal role at a moment that may have far-reaching consequences.

The re-election of President Barack Obama and Republican losses in Congress rendered a verdict on the argument over the scale of government just as a fiscal crisis is pressing the nation’s leaders to resolve long-term budget issues.

Even some Republicans say voters endorsed the activism of a president who enacted a record fiscal stimulus, a bailout of the auto industry and an expanded federal reach into health care and financial regulation. The public rejected the small-government vision of a Republican Party energized by the Tea Party.

“A presidential re-election ratifies what the president has done,” said David Frum, a former speechwriter for President George W. Bush and author of “Why Romney Lost,” an electronic book analyzing the results. Republicans “stumbled into a position that was very radical,” including proposed cuts in the Medicare health-insurance program for the elderly that would “withdraw government benefits that have been a part of the fabric of American society for a long time.”

Onetime House Speaker Newt Gingrich, a candidate in the Republican presidential primaries this year, said conservatives were “profoundly wrong” in their reading of the public mood and must “rethink our assumptions.”

“Part of it is a greater willingness to have government activism than most conservatives thought,” he said, suggesting that repeal of Obama’s health-care law was now unlikely.

‘Being Cheap’

The election shows Americans didn’t consider Republican policies to be credible answers to pressing national problems, Gingrich said. Advocates of a smaller federal role must search for new limited-government approaches that they can demonstrate are effective ways to move the country forward, he said.

“You only replace big bureaucratic government when you have better solutions that people believe are better solutions,” he said. “You don’t replace it just by being cheap.”

Exit polls underlined the point: 64 percent of voters said Obama’s response to Hurricane Sandy was a consideration in their decision. That question was asked amid reports that Republican presidential candidate Mitt Romney once said he might shift the Federal Emergency Management Agency’s duties to the states or the private sector to save money.

New Flexibility

Republicans have shown new flexibility toward Democrats since the voters spoke.

House Speaker John Boehner told reporters the day after Obama’s re-election that his party would accept raising new tax revenue “under the right conditions” as part of a long-term deal to resolve the fiscal cliff, the $607 billion in mandated spending cuts and tax increases scheduled to start on Jan. 1.

Bill Kristol, editor of the conservative opinion magazine The Weekly Standard, said on Fox News that it would be a “mistake” for Republicans to force a showdown with Obama over eliminating expiring Bush-era tax cuts for the wealthy.

“It won’t kill the country if we raise taxes a little bit on millionaires,” Kristol said.

Investors remain concerned the budget talks will falter.

Yields on 10-year Treasury notes dropped the most in one day since May to 1.62 percent after Obama’s Nov. 6 re-election. A figure below 1.7 percent shows investors expect the economy to shrink by 0.3 percent next year as the fiscal cliff takes effect, according to JPMorgan Chase & Co. Rates continued to decline, with the yield on 10-year Treasuries at 1.59 percent at 4:59 p.m. New York time yesterday.

900,000 Votes

Any resolution of the negotiations is likely to have more of a Democratic stamp, with the party’s victories this year extending beyond Obama’s re-election.

Democrats expanded their majority in the Senate by two members in a year in which 23 of the 33 Senate seats up for election were held by the party, meaning it was vulnerable to significant losses.

While Republicans maintained a majority in the House, Democrats picked up seats. And as of yesterday, Associated Press tallies showed Democratic House candidates got about 900,000 more votes nationally than Republican contenders. Republicans are able to keep control of the chamber because the geography of House district boundaries favors the party.

Voters in California, where the 1978 passage of Proposition 13 capping property taxes triggered a national anti-tax revolt, passed a referendum last week raising sales and income levies.

Reagan Doctrine

Ronald Reagan, the reigning political hero of the Republican Party, began his presidency by declaring in his 1981 inaugural address that “government is not the solution to our problem, government is the problem.”

That idea has been Republican doctrine ever since. This year, the two political parties’ different concepts of the role of government were clearly articulated by the presidential candidates in nationally televised debates, cross-country stump speeches and hundreds of millions of dollars in advertisements, said George C. Edwards III, author of “Overreach: Leadership in the Obama Presidency,” a critical look at the administration.

“The president had a point of view -- government should invest in people, the government should invest in the economy -- and that point of view won,” said Edwards, a political science professor at Texas A&M University. “Romney made his basic views pretty clear. It wasn’t Tweedledum and Tweedledee.”

Even so, the election results don’t signal a radical shift in public views of government.

‘Messy Middle’

The vote only “moved the needle” in the balance between limited and expansive government that has been a theme dating back to debates between Thomas Jefferson and Alexander Hamilton and running through Franklin Roosevelt’s New Deal and its attempted retrenchment under Reagan, said former Indiana Democratic Representative Lee Hamilton, a 34-year veteran lawmaker who directs Indiana University’s Center on Congress.

Obama, who won re-election with just over 50 percent of the vote, couched his views, stressing the supremacy of private markets. As president, he rejected nationalization or the forced breakup of big banks in response to the financial crisis. He also has highlighted efforts to streamline government regulations and called for spending cuts as a part of deficit reduction even as he calls for tax increases on top earners.

“We’re still in the era of the messy middle,” said Julian Zelizer, a presidential historian at Princeton University. “I would hesitate to say it’s a mandate for activist government but it shows people are comfortable enough with particular activist policies to re-elect a president even in a bad economy.”

Voicing Skepticism

Voters continue to express skepticism about a larger role for government when the question is cast in philosophical terms. Asked their opinion of government in exit polls, 51 percent said it’s doing too much versus 43 percent who said too little.

The public rebuffed the Republican argument that the wealthy should be protected from tax increases. Still, voters didn’t show an appetite for bearing a greater burden to fund expanded government.

They backed tax increases only for those making at least $250,000 per year, exit polls showed. Just 13 percent supported higher taxes for all Americans. Thirty-five percent rejected any increases.

Frum said the George W. Bush administration provides evidence of the political danger in over-reading the public mandate a re-election provides. Bush told the country his 2004 victory provided political “capital” that he intended to use. His subsequent plan to partially privatize the Social Security system got nowhere with Congress.

A second term “doesn’t mean that the voters are signed up for everything that it will occur to the president to do,” Frum said.

Nothing’s Permanent

Lee Hamilton also cautioned against “over-interpreting” election results as support for government activism, even though he said Obama’s health law and banking rules were probably safe from Republican efforts to block them.

Hamilton, 81, was first elected to Congress with a wave of Democrats in Lyndon Johnson’s 1964 landslide victory only to see many fellow freshmen lose two years later in a backlash against the president’s “Great Society” expansion of social programs.

“The role of government is going to continue to be a battleground in the next election and every election thereafter,” Hamilton said. “You don’t ever decide anything permanently in our government. You debate the same issues over and over again.”

Grover Norquist, president of Americans for Tax Reform, an anti-tax group, is urging Republicans to give no ground. Most Republican members of Congress have signed a pledge Norquist wrote not to raise taxes.

He said the elections of Bill Clinton in 1992 and Obama in 2008 were seen by many as signs of public support for more activist government. Republicans won victories in the midterm elections that followed both times.

“By maintaining their principles of limited government, they came roaring back in 2010, an exact replay of what happened between 1992 and 1994,” Norquist said. “I’m predicting the same thing happens between 2012 and 2014.”

To contact the reporter on this story: Mike Dorning in Washington D.C. at

To contact the editor responsible for this story: Clark Hoyt at

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