Obama, Romney, Same Difference

America Inc: Please read my column in this week's Financial Review

As US businesses close out what looks to be a fairly good fiscal year, there’s plenty of uncertainty about what comes next.

The euro crisis still threatens to slow down the global economy. China’s economy has cooled as dramatically, making it difficult to predict growth coming from Asia. And recent signs of life in the US economy look suspiciously like a mirage that could disappear at any moment. Until there’s real movement in wages and employment it’s hard to believe consumers will be back en masse.

On top of all that, there’s a pretty vigorous competition to challenge for the presidency next year. With so much in play, companies struggle to figure out what they can count on.

On the political front at least, they may have less to worry about. When Americans vote next year, there may not be all that much at stake for business.

Start with the Republican primaries. As the contest unfolds, a parade of potential challengers has captured headlines then faded away. Former Alaska governor and “grizzly mom” Sarah Palin came and went. Self-described business success and reality TV host Donald Trump had his moment in the sun. For a brief time the right was enthralled with former Texas governor Rick Perry, until he couldn’t remember exactly which parts of the government he was desperate to shut down.

Now it’s Newt Gingrich, former House speaker, grabbing the spotlight. Gingrich is an interesting character. A former history professor at a small college who has described himself as a “world historical figure”, he has floated some pretty newsworthy ideas. Recently he made headlines by suggesting poor schoolchildren should be forced to work as janitors in their schools.

Despite the outlandish proposals, though, Gingrich has real leadership experience. He was the prime force behind a Republican takeover of Congress during the Clinton presidency.

But his political success is long gone. He never regained his power or popularity after he shut down the government under Bill Clinton. Since then sordid details of his personal life have come to light. He can count on a segment of the right wing for support, but if he is nominated to challenge Barack Obama it could be a disaster for Republicans.

Gingrich’s momentary popularity has surprised even him. He is only now trying to put together an organisation that could seriously campaign for the presidency, and it’s somewhat late in the game for that.

So that leaves Mitt Romney. Smart, disciplined and well financed, he has the organisation, the résumé and the staying power to earn the nomination. He doesn’t have personal popularity, true, but he can raise money and avoid mistakes.

The smart money is on Romney to get the nomination. If he does, a lot of the political uncertainty facing corporate America goes away. Obama and Romney are more alike than different on most issues affecting business.

Three years into his presidency, Obama is pretty much a known quantity. He’s pragmatic and incremental. And conservative, not in the ideological sense but in his basic character.

The Iraq war was his signature campaign issue and he’s only now winding that down. His biggest policy achievement, health care reform, wasn’t a radical departure from the status quo. And any president who squelches new clean air rules and allows oil drilling over the objections of environmentalists can’t be viewed as rabidly anti-business.

Conservatives label Obama “liberal” but when it comes to corporate America, he’s careful not to rock the boat. Witness the Occupy Wall Street movement. If Obama was really on the side of the “99 per cent”, the movement would not exist; its activists would be out campaigning for him.

While Obama is less of a liberal than he is often labelled, Romney is more of a centrist than he lets on. That’s why the right wing of the Republican party is so loath to elect him. In addition, his record as governor of Massachusetts isn’t exactly pro-business. One of his signature policies was to go after corporate tax loopholes to narrow the state budget deficit.

And then there’s the practical matter of a divided government. Even if Obama or Romney turn out to be more activist than they appear, it’s unlikely they’ll find the legislative support to make big changes. If Romney is elected, the Republicans could also take control of Congress. But experts consider that unlikely at this point, and they give Obama virtually no chance of getting a Democratic Congress. As president, either one would be forced to take a centrist approach.

As the presidential race gets into full swing, the candidates will be forced to promise lots of changes. The reality, though, looks to be more of the same.


Anna Bernasek writes on financial markets, the economy, Wall Street and public policy from New York. Her book The Economics of Integrity  was published in 2010. Her column America Inc. appears each week in the Weekend Financial Review.