A Referendum on Obama

The 2012 US presidential election will be a referendum on Barack Obama’s policies and performance. A Republican presidential victory, together with Republican control of Congress, would most likely lead to substantial reduction, repeal, and replacement of many Obama initiatives, attempts to reform taxes and entitlements, and greater fiscal discipline.

STANFORD – Successful political candidates try to implement the proposals on which they ran. In the United States, President Barack Obama and the Democrats, controlling the House of Representatives and (a filibuster-proof) Senate, had the power to do virtually anything they wanted in 2009 – and so they did.

Obama and his congressional allies enacted an $800 billion “stimulus” bill that was loaded with programs geared to key Democratic constituencies, such as environmentalists and public employees; adopted a sweeping and highly unpopular health-care reform (whose constitutionality will be determined by the Supreme Court this year); imposed vast new regulations on wide swaths of the economy; embraced an industrial policy that selects certain companies for special treatment; engaged in borrowing and spending at levels exceeded only in World War II; and centralized power in Washington, DC (and, within the federal government, in the executive branch and regulatory agencies).

The last election that was followed by such a sweeping change in policy direction occurred in 1980, when President Ronald Reagan overhauled taxes, spending, and regulation, and supported the Federal Reserve’s course of disinflation. While the 1988, 1992, and 2000 elections were also quite consequential, the policy shifts were not nearly as large as in 1980 and 2008.

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