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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Report Card



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It’s too soon to do this, I realize, and I know many smart, dedicated people who poured their guts out for the Romney campaign. But I want to walk through a few broad policy domains to cursorily assess the Romney domestic policy agenda. We’ll start with the five-point plan:

(1) North American energy independence: Though I wouldn’t necessarily embrace the “independence” framing, the notion that the U.S. should encourage the development of domestic hydrocarbon resources and deepen energy partnerships with Canada and Mexico struck me as very sound. While most Democrats are keen to do the same, there are a number of promising ideas, like the use of carbon capture technology for enhanced oil recovery (EOR), that Republicans are more likely to embrace. 

One of the main virtues of increasing U.S. reliance on North American energy sources is that doing so would tend to mitigate geopolitical risk. Relying more heavily on domestic production, meanwhile, has the potential to redress the balance of trade, as energy imports represent a large share of the U.S. trade deficit. This in turn would help address the global imbalances that have contributed to the instability of the U.S. financial system.

Politically, I think the Romney campaign didn’t do enough to explain how the expensing of intangible drilling costs and other tax provisions that the president has criticized contribute to the energy-driven economic revitalization of the Marcellus and Utica shale formation regions. There was a good deal of discussion of coal later on in the campaign, but one wonders if a greater emphasis on the energy business as a technology-driven business might have made a difference.

Substantively, I wish that the campaign had made an affirmative case on climate policy, along the lines Oren Cass had outlined: climate change is real, but our best defense is investing in promising upstream technologies that others can commercialize downstream, increasing our national wealth builds our capacity for adaptation and should be our highest environmental priority, and so embracing “two-fers,” i.e., policies that would be growth-enhancing while also tending to have positive environmental effects, is the wisest course of action. I would add a number of other policy initiatives that would make most voters balk, e.g., a low carbon price that would be focused on creating public health benefits rather than reducing global emissions as such, encouraging the use of congestion pricing, and reforming FEMA to encourage lawmakers at the state and local level to internalize the costs of development in flood-prone regions.

Grade: B+

(2) Education reform: As Rick Hess has explained, there were broad similarities between the Romney campaign’s approach to federal education policy and the Obama administration’s approach. Both candidates placed a heavy emphasis on standards-oriented reform and human capital reform, but Romney placed a somewhat greater emphasis on choice-oriented reform. The biggest weakness of Romney’s education agenda is the fact that some of its core elements, e.g., the call for revamping Title I funding and IDEA funds to create federal vouchers, left many questions unanswered. 

There is much to criticize in the president’s approach to education, particularly his emphasis on teacher buy-in, yet I wish, on substantive and political grounds, that the former Massachusetts governor had framed his education reform agenda around Hess’s critique of “achievement-gap mania.” That is, rather than focus on choice as a vehicle to improve educational outcomes for low-performing children, he might have explained how a more innovative and decentralized educational system, in which a diverse array of specialized instructional providers didn’t just compete against but also complemented existing schools, would benefit children from stable middle-income households as well as poor children from disrupted families.

Conservatives need to realize that education reform isn’t a niche issue, and that school choice can only work if we have complementary markets in teacher recruitment and certification, specialized instructional models, and much else. The development of this richer marketplace has been stymied by the structure of existing school districts, yet we can’t move beyond the current system without building these capacities. Granted, this is not a set of issues that will be addressed in a campaign manifesto, but the Romney campaign could have done a better job of emphasizing the relevance of its plans and proposals to the majority of parents who are not sending their children to low-performing urban public schools.

Grade: B-

(3) Trade: I have no idea how Mitt Romney’s trade message played politically, but I imagine we’ll be poring over the details. Given the central importance of Ohio, and Romney’s inability to make a more convincing case to blue-collar voters on non-trade issues, I can’t be too surprised Republicans chose to run a China-centric campaign. This is one of the situations in which I appreciate the challenge faced by Romney’s team, but I have a hard time getting over the fact that the GOP trade message was not substantially more edifying than that of the Democrats.

Grade: F

(4) Deficits and debt: This is a really difficult one to parse, as it is a catch-all that touches on entitlement reform, rigid global spending caps, and vague but encouraging calls for ambitious public sector reform. I’m strongly opposed to rigid global spending caps because I’m convinced that they lead directly to destructive off-balance-sheet activities, as we see at the state and local level and indeed in federal support for mortgage finance, higher education lending, and much else.

The Romney campaign does deserve great credit for having embraced Yuval Levin’s “confident market solution” for Medicare, which was in my view the high point of this election cycle. As we’ve discussed at length in this space, the Romney campaign’s opposition to the Affordable Care Act’s planned reductions to the growth in Medicare spending put them in a substantive bind. There is no question, however, that it proved a helpful political shield. On Medicare reform for Americans under the age of 55 alone, I’d give Romney an A. And I was encouraged by Romney’s insistence that deficit reduction reduction would proceed in a deliberate manner that was mindful of the larger macroeconomic consequences of a sharp shift to fiscal consolidation.

But the deeper problem is that the Romney campaign didn’t leave voters with a distinctive and attractive vision of what the federal government should look like. The Levin framework, in which entitlement reform is embraced as a means of preserving what is best America’s postwar mixed economy settlement, was the right message. Romney did not convey much of a domestic policy message at all, beyond a Perot-like conviction about the immorality of high debt levels. It’s somewhat sobering that this message was designed, as I understand it, to appeal to voters in states like New Hampshire and Iowa, both of which Republicans lost.

Grade: B-

(5) Small business: This was another grab-bag, which included tax reform, regulatory reform, and ACA repeal. The idea of framing these policies around small business formation was a good one, the individual pieces missed the mark. 

(a) Romney’s approach to regulation was, in my view, exceptionally strong. On its own, this would deserve an unambiguous A. 

(b) The failure to offer an explicit, detailed replacement for ACA might have seemed politically shrewd, as it denied critics a target, but my sense is that it undermined the credibility of the campaign, despite the fact that Romney had a strong health policy team. Part of the issue is that the campaign had to balance the concerns of small-government conservatives, who would have resisted a replacement agenda that involved spending a considerable amount of money, and the need to address the loss-aversion of the broader electorate. This was a tremendous challenge and it is easy to see why the campaign struggled with it. 

(c) The second Romney tax proposal, issued in the near-panic surrounding Rick Santorum’s success in a number of Republican primaries leading up to Michigan, was in my view an unmitigated disaster that may have represented the difference between victory and defeat. I realize that this sounds over-the-top. But imagine if Romney had backed something like the Stein plan — freeze the top rate, keep capital gains taxes relatively low, expand the child tax credit and make it refundable against payroll taxes, curb virtually all other tax expenditures. Republicans would be offering middle-income families with children enormous tax relief, the plan could easily be made revenue-neutral, and there would be no bonanza for high-earners. Can you picture the Obama campaign effectively attacking this proposal, particularly in the Midwest and Virginia and Florida?

Grade: F

There is much else to say, obviously. It is possible that I’m grading too harshly. My basic view is that I had high hopes for a Romney presidency, as I believe the former Massachusetts governor to be an honorable, pragmatic, and highly intelligent man. But I think the campaign’s domestic policy agenda was too cautious, and this blunted its ability to make substantial inroads in states like Ohio, Pennsylvania, Iowa, and Minnesota, among others. 



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