— Jobs and economic revival have topped the list of concerns for most Americans since President Barack Obama took office in 2009.
And after three years of
arguing over policy issues like health care, taxes and federal spending, both parties are preparing for a fierce election year fight over the best way to get the country moving again.
The Republican presidential contenders are offering a vision of a smaller federal government, a lighter tax and regulatory burden, and an invigorated national entrepreneurial spirit. But so far they have given few specifics as to how they'd reduce the fastest growing part of the budget:
spending on the entitlement programs such as Medicare.
In contrast, Obama makes it clear he still sees the federal government as the vital engine of job creation.
“The next election is 14 months away. And the people who sent us here … don’t have the luxury of waiting 14 months” for policies that would spur job creation, the Democratic president told Congress in his address Thursday night.
He also said Americans “don’t care about politics” since they have “real-life concerns” such as finding a job and paying their bills.
His 'every corner' of America campaign
But Obama also announced that he would campaign for his economic proposal and would “take that message to every corner of this country,” an effort that started with a Friday trip to Richmond, Va.
As he takes his plan on the road, Obama will be continuing the presidential campaign which really began on Election Night 2010 when it became clear that the majority of voters in most of the nation’s congressional districts had rejected his agenda.
House Majority Leader Eric Cantor indicated Friday that congressional Republicans will accept parts of Obama’s plan — the ideas they already have voted for, such as payroll tax cuts — but will reject the infrastructure and public education spending the president wants.
Cantor told CNBC Friday morning that GOP leaders would “take the things we can agree on … the things that provide incentives to the private-sector, small business people and entrepreneurs” and put them to a vote.
Much policy will be on hold
But apart from tax cuts, much economic policy appears to be on hold until voters make their choice in November of 2012.
It could be one of Obama’s Republican rivals in the White House, attempting to spur economic growth in 2013.
So where is the philosophical dividing line between Obama and the Republicans who want to take his job?
Despite some overlap between Obama and the Republican contenders on the need for tax cuts and on easing federal regulations on businesses, there's a significant difference in attitude and in allegiances between Obama and Republicans Rick Perry, Mitt Romney, Jon Huntsman and the rest of the 2012 GOP pack.
On Thursday night, Obama made emphatic once again his belief in — and political alliance with — public sector employees and with unionized private sector workers, urging more federal money for public schools and more money for public infrastructure projects.
Republicans argue that these infrastructure projects are done by labor which is inflated in cost by the Davis-Bacon law, which requires workers on federal projects be paid at least the local prevailing wage, which in some cases is the union wage.
Idealizing the entrepreneur
By contrast, Romney, Perry and other GOP contenders repeatedly voice their faith not in unionized workers, but in entrepreneurs, the people who start and run companies.
“You want to create jobs in America, you free the American entrepreneur to do what he or she does — which is risk their capital,” Perry said in Wednesday night’s GOP debate. “And I’ll guarantee you the entrepreneur in America — the small business man and woman — they’re looking for a president that will say ‘We’re going to lower the tax burden on you and we are going to lower the regulation impact on you’ and free them to do what they do best: create jobs.”
Who ought to pay higher taxes?
On tax policy, there’s more agreement between Obama and GOP contenders than one might initially think.
Yes, as the campaign continues, you can expect to hear much more of the rhetoric Obama used Thursday night about getting “the wealthiest Americans and biggest corporations to pay their fair share” of the tax burden. He is previewing the fight over the income tax rates which expire next year.
None of GOP contenders proposes to raise income tax rates for upper-income people, as Obama does. But Obama also wants to extend the 2001-2003 income tax rates for people making less than $200,000 a year.
“Obama does agree with the Republicans candidates that he would extend nearly all of the tax cuts. They would extend all of them,” said tax analyst Howard Gleckman at the nonpartisan Urban Institute/Brookings Tax Policy Center in Washington.
He added, “It is in the interest of both sides — both Obama and the Republicans — to make it sound as if they are farther apart than they really are on tax policy.”
Obama has proposed a zero capital gains tax rate on small businesses.
“There are going to be a lot of people under Obama’s zero capital gains rate who would overlap with people under Romney’s zero capital gains rate,” Gleckman said. “So on that issue at least they are not that far apart. Romney is clearly more aggressive about cutting capital gains than Obama is, but not that much more aggressive.”
A national sales tax?
In his book “Fed Up!,” Perry is harshly critical of the federal income tax and suggests that a national sales tax might replace it. Perry hasn’t said much about this idea so far on the campaign trail and it’s not clear how vigorously, if at all, he might pursue it if he’s the GOP nominee and if he wins the 2012 election.
And — although no GOP contender acknowledged this fact in their debate Wednesday night — about 40 percent of Obama’s $825 billion stimulus, which Republicans habitually denounce, came in the form of tax cuts. They do not give him credit for being the tax cutter he has been.
Gleckman points that Huntsman “is going in a very different direction” on tax policy, with no capital gains taxes, no taxes on dividends, and a much reduced corporate tax rate. “That’s a very different tax structure than Obama is talking about, or for that matter Romney is talking about.”
Huntsman is now at only 2 percent support among Republican in the NBC News/Wall Street Journal poll, so it remains to be seen if his ideas will have a lasting impact.
Biggest divide: 'Obamacare'
Perhaps the most significant divide between Obama and his GOP rivals is something he did not mention in his Thursday night address to Congress: the health care law which he signed in 2010 imposes large tax increases — more than $400 billion over the first eight years, with most of that falling on upper-income people — as well as new regulations on business owners.
The GOP contenders say they would work to curb and repeal the health care law.
Both Obama Thursday night and GOP contenders 24 hours earlier in their debate talked about easing federal regulations which hinder job creation, but exactly to what degree they’d do so is an open question.
A Republican president would almost surely not have a filibuster-proof Senate majority. So repeal of vast swathes of federal regulations seem highly unlikely, even in an administration headed by Perry or by libertarian Rep. Ron Paul of Texas.
Without mentioning any specific Republican, Obama used his speech Thursday to denounce an absolutist version of an anti-regulation stance.
“What we can’t do — what I will not do — is let this economic crisis be used as an excuse to wipe out the basic protections that Americans have counted on for decades,” he said. “I reject the idea that we need to ask people to choose between their jobs and their safety.”
He also warned against “this larger notion” — advocated by whom he didn’t say — that “the only thing we can do to restore prosperity is just dismantle government… and tell everyone they’re on their own — that’s not who we are.”
Perhaps the only Republican contender who might come close to such a “dismantle government” philosophy would be Ron Paul.
Unlike other GOP contenders Wednesday night, Paul was emphatic that even Medicare, upon which 47 million Americans depend, is an unconstitutional mandate.
“That’s what government does: mandate, mandate, mandate,” Paul complained. “And we talk so much about the Obama (health insurance) mandate, which is very important, but what about Medicare? Isn’t that a mandate?” Paul asked.
Certainly the taxes that pay for Medicare are a kind of mandate, and both those taxes and the benefits they pay for will likely be in place even if Paul is the next president.