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Tags: sandy | obama | boost | federal

Sandy’s Wrath Gives Obama Boost in Debate Over Federal Role

Monday, 05 November 2012 01:43 PM EST

The big issue underlying this year’s presidential campaign has been a struggle between the two political parties over the role of government.

The superstorm that struck the East Coast last week brought a new context to that argument just days before the election: a crisis that demanded a robust role for a federal government whose power President Barack Obama has touted in efforts to shore up the economy and regulate crucial markets.

A disaster of such magnitude activates a “sixth sense” the public has about the vital role of the national government, said Chicago Mayor Rahm Emanuel, Obama’s first White House chief of staff.

“You can’t respond to 9/11, you can’t respond to Hurricane Sandy and you can’t respond to the auto industry without the kind of capacity of the federal government to step in and right the ship,” Emanuel said in an interview.

Republicans dismissed the idea that the storm underscored the need for an expansive central government.

Grover Norquist, president of Americans for Tax Reform, an anti-tax group in Washington, said the possibility of using hurricane damage to justify maintaining or expanding government spending levels is “fairly sickening.”

“Any bureaucrat in Washington who thinks they can go in and say, ‘there was another storm, give me more’” will be met with “a steely-eyed glare,” Norquist said.

Blaming Government

Republican presidential candidate Mitt Romney has spent much of the campaign blaming what he says are Obama’s big- government policies for the weakness of the economic recovery and the over-regulation of the health-care and financial markets.

The campaign-trail rhetoric of Obama and Romney has been overshadowed in the final week before the election by the images of Sandy’s devastation that filled the nation’s television screens: neighborhoods engulfed by the sea, subway tunnels under water, city blocks leveled by fire and motorists lining up for gasoline.

New Jersey Governor Chris Christie, a hero to small- government Republicans for his budget-cutting zeal and a keynote speaker for Romney’s nominating convention, stood beside Obama last week, praising him for an outpouring of federal money to aid recovery efforts.

Sandy caused as much as $50 billion in economic damage, according to Eqecat Inc., a provider of catastrophic risk models. The U.S. death toll now stands at more than 100.

Infrastructure Woes

The storm also exposed the shakiness of infrastructure systems often taken for granted. The Metropolitan Transportation Authority, which runs New York’s subway system, reported seven tunnels under the East River inundated with water. The New York Stock Exchange closed for two days. Just getting to work in the nation’s financial capital and largest city remained a daunting challenge days later.

“It’s a big deal because it’s being presented in the most vivid way possible,” said Democratic strategist Tad Devine, a senior adviser of John Kerry’s 2004 presidential campaign. “When that happens, it really cuts through everything.”

Conflict over the size and role of government has been at the core of partisan battles in recent years, including the fight over Obama’s 2009 economic stimulus, the rise of the Tea Party movement and the confrontation over raising the national debt limit that brought the U.S. to the brink of default in 2011. After the election, the divide will surface again in negotiations to avert a “fiscal cliff” of automatic tax increases and spending cuts at the end of year.

‘Specious’ Connection

Steve Schmidt, chief strategist for Republican presidential candidate John McCain’s 2008 campaign, said it is “impossible to predict” what impact the hurricane will have on the presidential race or on the broader political debate over government spending. He called any connection between the disaster response and broader Republican criticism of the size of government “specious.”

“Republicans aren’t arguing to dismantle the federal government and get rid of it,” Schmidt said. “Republicans are arguing we can’t continue to have trillion-dollar deficits and we need to have smaller, smarter government.”

Still, Obama’s handling of the superstorm may have helped him move ahead of Romney, according to the Pew Research Center. In Pew’s final pre-election survey, Obama held a 48 percent to 45 percent lead over Romney among likely voters. A week ago the race was deadlocked, with each candidate drawing support from 47 percent, Pew said. Sixty-nine percent of likely voters said they approved of the way Obama is handling the storm’s impact.

The poll, conducted Oct. 31-Nov. 3 among 2,709 likely voters, has a margin of error of 2.2 percentage points.

Privatizing FEMA?

After Sandy, Romney aides had to rush to explain a statement the candidate made in a June 2011 Republican primary debate that he might shift the Federal Emergency Management Agency’s duties to the states or the private sector. With regard to disaster relief, Romney said, “We cannot afford to do those things without jeopardizing the future for our kids.”

Romney spokesman Kevin Madden said Romney wouldn’t abolish FEMA if elected.

“Governor Romney believes in a very efficient and effective disaster-relief response, and he believes one of the ways to do that is put a premium on states and their efforts to respond to these disasters,” Madden told reporters on the campaign plane on Oct. 31. “But he does believe FEMA has a really important role there and that being a partner for these states is the best approach.”

Romney repeatedly declined to answer questions about the statement that reporters shouted out at campaign events.

Cutting Spending

The House Republican budget sponsored by vice presidential candidate Paul Ryan, a Wisconsin lawmaker, would cut non- defense discretionary spending, a category that includes disaster relief, by 22 percent in 2014, according to the Center on Budget and Policy Priorities. The budget doesn’t provide a specific spending level for disaster relief.

House Republicans dropped demands for offsetting savings before funding disaster relief for the 2011 Joplin, Missouri, tornado in the face of public opposition. Later in the year, they made the same demand only to relent again on disaster funding for an earthquake in Virginia and for Hurricane Irene.

“It’s difficult to play the role of bean-counter when people are truly suffering,” said Robert Stevenson, a former Republican Senate budget aide now a government affairs consultant for OBC Group in Washington.

Earliest Stages

Assistant Senate Majority Leader Dick Durbin of Illinois, the second-ranking Democrat in that body, said the destruction caused by Sandy may provide a political impetus to protect funding for roads, bridges and other infrastructure as Congress and the White House negotiate over long-term debt reduction in the months ahead.

“Sadly, we are just seeing the earliest stages of Hurricane Sandy damage,” Durbin said. “We’re going to be dealing with the challenges of Sandy for weeks and months to come.”

Federal spending in fiscal year 2012 amounted to 22.7 percent of gross domestic product, which is down slightly from recent years, though still at a level seldom seen since Harry Truman was in the White House.

At the same time, tax receipts have plummeted. In 2012, they amounted to 15.7 percent of GDP, the lowest level since 1950 -- except for 2011, 2010 and 2009.

Mounting Debt

The government has filled the gap between taxes and spending with an enormous amount of borrowing. The annual deficits, which have topped $1 trillion for four consecutive years, are tacked on the debt, which is set to reach 70 percent of GDP this year, according to the nonpartisan Congressional Budget Office. The debt was 40 percent of GDP in 2008.

Some of the deterioration is attributable to the loss of tax revenue during the economic slump and rising demand for jobless benefits, food stamps and Medicaid.

The government also has spent more than $1 trillion stimulating the economy, bailing out mortgage financiers Fannie Mae and Freddie Mac, insurance giant American International Group Inc. and automakers General Motors Co. and Chrysler Group LLC.

The budget outlook is projected to darken in coming years as the retirement of the baby boom generation swells the number of government beneficiaries.

In response, Republicans want a smaller government that provides fewer services and takes in less in taxes.

They would convert Medicare into a defined-contribution program in which the government’s funding for elderly care would be capped. They’d slash Medicaid, the health-insurance program for the poor, as well as other types of aid.

Democrats want to keep the traditional structure of Medicare and instead rely on health-care experts to devise ways to wring savings out of the government program. They also want to raise taxes, though only on the wealthy.

© Copyright 2024 Bloomberg News. All rights reserved.

The big issue underlying this year s presidential campaign has been a struggle between the two political parties over the role of government.
Monday, 05 November 2012 01:43 PM
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