On Oct. 3, at a university in Denver, a man famous for his luxurious hair and wooden personality destroyed one of the great orators of our time in a one-on-one debate. For 90 minutes, Mitt Romney made Barack Obama look tongue-tied and second best. He hammered the U.S. president on the economy. (“Middle income families are being crushed!”) He blasted him on regulation. (“This is the biggest kiss that’s being given to New York banks I have ever seen!”) He tore him limb from limb on health care. (“I want to take that $716 billion you’ve cut and put it back into Medicare!”)
That first debate was Romney’s best night in a campaign that had few of them. But it was also a tacit admission that on the economy at least, he had already lost. To win that night, Romney was forced to veer sharply to his left, to fight on the centrist Republican turf—mildly Keynesian, protective of entitlements, defensive of the middle class—that Obama had made his own. For Romney, the shift to the middle was a loser’s bet from the start, proof that Obama had won the economic war before the final battle was even fought.
It wasn’t supposed to be this way. The economy was supposed to have been Obama’s albatross. In the last full quarter before the election, real GDP in the U.S. grew at a molasses-slow 1.3%. Joblessness too remained stubbornly high. No sitting president had ever won re-election with unemployment above 7.4% in the months leading up to a vote, according to the forecasters at IHS Global Insight. It was at 7.9% in October.
But those stats hid the reality of what the president was up against four years ago. Yes, the U.S. has some four million fewer jobs today than it did when Obama took office. But many of those losses occurred in the first few months of his presidency, before his administration could do anything meaningful to stem them. Once in office, Obama put a floor on the financial crisis. His stimulus—modest and at least partially carried over from the Bush administration—pushed money into the economy when it needed it most. His auto bailout gave manufacturing a lifeline. His support for credit-starved banks, unpopular though it was, slowed the spread of sub-prime contagion.
So while it may be true that Obama did not make economic life better for most Americans, he certainly prevented it from getting much worse. And on election day, voters rewarded him for that. According to exit polls, more than half of voters still blamed George W. Bush for the sluggish economy. Only 38% blamed the president. Perhaps surprisingly, four in 10 even told pollsters they believed the economy was getting better. Among that cohort, 88% sided with Obama.
Overall, the economy was the top issue for 60% of voters, according to the exit polls. And by a substantial margin, they chose the incumbent to deal with it for the next four years. They did that despite the fact that, against all campaign orthodoxy, Obama was advocating for some taxes to go up.
During the campaign, Obama argued the only solution to America’s deficit problem was a mixture of increased revenues and lowered spending. In contrast, Romney consistently maintained that he could eliminate the deficit without raising taxes. He even promised to cut them below their current rates.
But the Romney-Ryan plan, which proposed extending Bush-era tax cuts set to expire in the new year, would actually have radically increased the deficit, rather than cutting it back, according to an analysis by Business Insider. Obama’s plan, in contrast, represents a far more realistic approach. By promising to increase marginal rates on the very wealthy—essentially by allowing some Bush tax cuts to expire—Obama offered a path that, while not perfect, at least heads in the direction of future deficit reduction.
On a larger scale, the election represented not just a victory for Obama but a victory for Silicon Valley in its ongoing power struggle with Wall Street. Employees at Microsoft, Google and the University of California were the top groups donating to the Obama campaign, according to the Centre for Responsive Politics. For Romney, it was Goldman Sachs, Bank of America and Morgan Stanley.
After veering toward the centre in the first debate, Romney, who built his fortune in management and private equity, had one great remaining argument for himself: his management experience. But on the national stage, it was Obama’s campaign, backed by its Silicon Valley tech team, that was by far the better managed. Little wonder, then, that voters soon made Obama one of the biggest winners of the year.