What If John McCain Won? (Guest Voice)

So what would things be like if Arizona Sen. John McCain had won and then-Sen. Barack Obama had been defeated in the 2008 Presidential race? How you answer that depends on who you supported and, in the case of McCain, how the sometimes complex Arizona Senator is perceived by the given partisan or independent voter. Here’s one view from frequent Guest Voice writer Marc Pascal. And we’re sure some TMV readers may have their own ideas:

What If McCain Won?

by Marc Pascal

What if McCain won?

Besides the vastly greater comedic potential of having Senator McCain and Governor Palin on the national stage, would anything be different? President Obama has been in office for less than 2 months, and he has until November 2012 before Americans can re-elect or replace him. Already many Zombie Republicans and Zombie Pundits on the Right have all but stated his administration is a complete failure.

On the left, right, and middle, mountains of words are being produced providing gratuitous advice on what should be done and what might happen if particular policies are enacted. I shall happily add to that mountain but I recommend a very good 3/3/09 posting on TMV concerning the same subject written by Mikkel Fishman.

While I may not personally agree on several Obama policies, overall the marked shift towards progressive programs and issues that have been neglected for 2 decades is refreshing. Having seen the rise and fall over 30 years of the opposite policies, I would welcome many significant changes. Objectively and in the aggregate, the new spending proposals are modestly bold and not the end to the world as we know it.

While I do not favor massive deficit spending, what is the alternative? The Republicans left such a massive mess in their wake that in order to solve it, the prior mess may have to be temporarily ignored, or contemporaneously addressing it will be an additional burden on any current President. Most people and even Presidents have little control over many things in our lives and in our world. Instead we will be judged on how well we respond to changing challenges and crises.

All the downward movement in the markets, banks, employment, bailouts and related economic disasters are merely the fallout and debris from the prior 7 years. Everything transpiring to date, and for the remainder of 2009, is solely the result of our prior economic and fiscal policies. Not until Obama’s budget actually starts to kick in with new spending priorities and new taxes, will anything really be his fault, and even then it may take up to 2 years to begin measuring any changes. This would equally apply to a McCain administration. The American electorate should give any President some benefit of the doubt until it gets much closer to his time for re-election.

Whatever the Federal Government puts in motion often takes decades to finally come to fruition or to roost, depending whether the policies were wise or foolish. We certainly cannot second-guess any President and his Administration at such an early stage. The first 100 days of any Presidency are great fodder for impatient 24/7 news junkies and political pundits, but even 1000 days are insufficient to really get anything accomplished in American politics or with our huge U.S. economy.

When Reagan turned the U.S. Ship of State to the right in 1981, the Federal government was viewed as unresponsive to public needs and the private sector was unnecessarily constricted. Some of those policies encouraged the rapid expansion of many technological advancements and new financial products, and thereby produced several boom periods from 1983 to 2007. But many negative policies put in place at the same time were simultaneously ignored.

Human creativity and business drive are determined by the decisions and talents of many individuals working together. They are not created by any President. However, a government can take credit for creating the overall public environment, the laws and regulations, and the infrastructures in which private enterprises can safely thrive.

By setting an overall tone against taxes and regulations in 1981, the country eventually moved too far to the right in believing all taxes and regulations were “bad.” That ultimately led to our narcissistic and greedy boom from 1997 to 2007, several investment bubbles, and massive federal deficits. Unfortunately and inevitably everything collapsed during 2008. The public’s realization that we went too far “right” politically and economically started in 2008 and it has become self-evident in 2009. A McCain Presidency would not have been exactly a third Bush term, but more of a continuation of the now discredited national trajectory started in 1981

Now President Obama and a Democratic Congress are turning the U.S. Ship of State to the left. The process will be painful, embarrassing to those who have been discredited by the past several years, and it will be slow. Taxes are eventually going to go up on everyone in the country; emphases in many programs are going to change; and certain businesses will disappear and others will be created by new Federal policies. However, the proposed adjustments are not “radical” and they do not anywhere fit the extreme and outlandish charges of conservatives. Republicans had their years in power; they completely screwed up; and now they must shut up and let others take control.

Returning to the McCain alternative, he would still be facing the same economic winds of busted bubbles; essentially bankrupt banks, automakers, and insurance companies; and growing unemployment in every sector of the economy. The stock market would be in denial of reality because a Republican would be in the White House but it still would have fallen significantly on the miserable economic data that comes out weekly.

Under a President McCain, any stimulus bill would have been very different from the one recently passed. It would have been more of a compromise or actually a standoff between two rather divergent world views. Probably it would have consisted of predominantly tax cuts for the wealthy, middle class and some poor people. It would have had very little new spending, except for some minor increases in unemployment benefits. Increased infrastructure spending would have been limited to roads, highways and bridges. Any funding for bailing out state governments, new energy development, education, environmental protection, mass transit and high speed rail would have been killed. McCain might have even vetoed a Democratically-authored stimulus bill.

The financial mess would be the same. Credit would still be frozen and most banks and AIG would still be floundering and asking for more money. By now, GM and Chrysler would be preparing to file for bankruptcy because a McCain Administration would not have extended any further loans or assistance. More than 75% of the related businesses of parts suppliers and auto dealerships would be in the process of following them into bankruptcy. The unemployment rate might be even higher in 2009 as a result of the death of the American Auto Industry.

The first McCain budget would still show a deficit but only about $1.1 Trillion. He would have also wisely accounted for all the existing and prior bailouts and the full costs of managing the Iraqi and Afghanistan wars. Instead of raising any taxes, federal discretionary programs would have been significantly cut. The defense budget would have remained the same.

Under a McCain Administration, Medicare/Medicaid reimbursements would be cut and premiums increased. There would be no talk of expanding coverage to the tens of millions of uninsured. The Social Security retirement age would be raised to 70 in order to get full benefits, and those benefits would be frozen for the next 4 years as cost of living allowances would be eliminated.
No new initiatives would be included in a McCain budget as it would be completely constrained by even lower taxes as a result of depressed tax receipts from an economy further in recession, and because business and personal taxes would have been lowered in any McCain budget. Essentially a McCain Budget would greatly reduce federal spending in the middle of a deep recession – exactly the opposite of what most economists recommend but he would be true to his “maverick” mantle.

The longer-term effects are harder to predict. The recession would likely be longer and deeper due to the lack of Federal Spending in a McCain administration. Without any financial assistance for states, even more state and local employees would join the army of unemployed in 2009 and 2010. The McCain administration would not be creating any jobs, neither in government nor thru any significant spending that would require private companies to hire people in order to meet government contracts. We would not be discussing new jobs in energy, transportation, education or environment.

Instead, under a McCain Administration, we would be left to hoping that somehow, someday, the private sector would pull itself out of this recession – eventually by its own “bootstraps” without any governmental incentives or financial support. If and when private companies might make some future profits, they would be taxed at a lower rate than during the boom times of the 1990’s.

What would McCain do about further bank bailouts? Without a viable and trustworthy financial sector, no economy can operate. Even the Obama Administration is seemingly baffled by what it should do. However, we should give any administration some leeway in this area before we voice such harsh criticism after just 2 months on the job.

The Obama Administration currently thinks that throwing more money at and waiting for the banking sector to turn around is the correct approach. The McCain administration would probably say no more money in a fit of populism and fiscal prudence, but also without much of a coherent plan on how that would work either. Most economic experts do suggest that letting more banks fail would further exacerbate the recession but they do not agree upon any fair, coherent and workable approach to solving the crisis either.

Both Administrations (real and fictitious) would have to come to grips with the difficult task of getting to where we should be from where we are right now. The chasm between those 2 points is huge. U.S. needs to create, possibly from scratch or from the remnants of the old system, a financial sector that is trustworthy, flexible, ethically managed and operated, unencumbered by debts and bad assets, and flush with cash to start making loans to businesses, households and individuals on terms and conditions that are fair and reasonable.

Can the major zombie banks and their discredited executives ever resume such roles in our economy after they played key roles in dismantling our entire economy? Can we find smaller regional entities that have not been so infected by so many bad loans so they could lead us out of our financial quagmire? Do we need to set up some new public-private national banks to become the principle players in a new financial sector while we reorganize the rest of the bad financial institutions out of existence during the next 12 months?
Emotional and extensive discussions of federal spending, deficits, taxes, and particular programs are secondary in the immediate short term. Even if fully enacted, progressive programs will take several years to actually show results, and they will likely be modified as time passes and new facts come to light. Democrats and the Obama Administration should be given the benefit of the doubt in order to effectuate distinctly different public policies and spending priorities. For almost 30 years we essentially deferred to Republicans and conservatives to set such national policies and priorities, and those decisions have led us to the multiple messes we now face.

Ultimately the most urgent challenges and decisions for both liberals and conservatives, Democrats and Republicans, are with respect to our financial system. All sides must promptly come together in a non-partisan, sane, transparent, and yet highly creative approach to reorganize and properly regulate our entire financial sector. A viable American financial sector will play a key role in any economic recovery, not only for our country but for the entire world. The sooner we start working on it, the sooner we will start crawling our way out of this deep recession.

Marc Pascal obtained his undergraduate and graduate degrees in music, business and law (B.A., J.D. & M.B.A) over 15 years ago from a respected university in Ohio. Between 1986 and 1998, he served for several years as the in-house counsel for 2 large public corporations, and he also periodically practiced law in Cleveland, OH. Between 1991 and 2006, he started and managed 4 different new business ventures in the Midwest with various friends, all of which were a lot more fun. Since 2006, he has been an independent management and business consultant serving various private enterprises in the Phoenix area. He resides there with his spouse of 11 years and their young son. He regularly guest posts, comments and blogs on TMV in order to exorcise his demons since his consulting business has shrunk considerably during the past 3 months.