Political reality overtakes principles so winner won’t matter

You would reasonably conclude that Republican John McCain, the foreign policy hawk who proudly proclaimed his ignorance of economics, must have been elected.

That’s not to say that the outcome of the 2008 election was irrelevant. I doubt McCain would have pushed anything close to ObamaCare. He probably would have spent less than Obama did to fight the recession. But my point is that candidates often disappoint us. They respond less to what we perceive as their principles and more often to the political winds.

I suspect the same will be true for the election of 2012. We face an immediate problem of persistent unemployment and the looming demographic train wrecks of Social Security and Medicare. On those issues, there seems to be a big difference between the Democrats and Republicans. Start with the lingering unemployment and the potential for a double-dip. Which political party has the best chance of putting us back on the road to recovery?

That should be an easy question to answer. After all, we just spent $820 billion to stimulate the economy. Federal spending has increased dramatically. So if that worked, we need to do more of it, as Democrats generally prefer. If it didn’t work, we need to try a different approach, either cutting taxes or doing even spending less, as Republicans prefer.

So which is it? It’s shocking and a bit sobering to realize that economics can’t seem to answer that question. Economists who are sympathetic to government intervention tell us the stimulus worked fine, but that we just didn’t spend enough. Economists less inclined to intervention say the stimulus only increased our debt problems.