Hunt Cautions Against Premature Spending Cuts—Or Counting Out President Obama

By Randy Myers

Congressional Republicans won big in the recent midterm election, often running on an anti-spending platform. But cutting federal spending too soon could be a mistake, warns Al Hunt, Washington managing editor for Bloomberg News. It also could be a mistake, he says, to assume that the GOP’s big showing in 2010 will lead to its recapturing of the White House in 2012.

Speaking at the 2010 SVIA Fall Forum, Hunt said that “anyone who looks carefully at the American situation would say the economy is still fragile and that cutbacks, meaning budget retrenchment, would be crazy right now.”

Besides, he insisted, the midterm election was not a mandate for the GOP agenda or for cutting spending, no matter what pundits and Republicans may be saying.

“This was a mandate against the status quo and Obama policies–against 9.6 percent unemployment that has lasted for a long period of time,” Hunt said. Speaking directly to some of the issues that Republicans have targeted, he also said there is no consensus nationally to repeal healthcare and that public opinion is mixed on whether to extend the Bush tax cuts for the wealthy.

Hunt predicted that Congress will not repeal either the landmark healthcare reform act–officially the Patient Protection and Affordable Care Act–or the Dodd-Frank Wall Street Reform and Consumer Protection Act, during the next two years. He said it is likely to chip away at components of each, primarily by withholding funding.

While cautioning against premature spending cutbacks, Hunt conceded that the growing federal debt is a “chronic, long-term, serious, destabilizing situation” that must be addressed once the economy is on firmer footing. Congress may not have the spine, or at least the bipartisan spirit, he lamented, needed to resolve the problem.

Democrats, Hunt noted, frequently cite the federal debt as a reason for enacting higher income taxes on the wealthy, while Republicans use it as a rallying cry for spending cuts. But neither approach would, in isolation, solve the problem, he said.

Meanwhile, he warned, neither Democrats nor Republicans seem to fully grasp the country’s impatience with Congressional impotence or partisan politics. He cited the decision by Republicans in mid-November to postpone a scheduled meeting to discuss the economy with President Obama on the grounds that they couldn’t find the time. He also cited the decision by Democrats to reelect Senator Harry Reid of Nevada and Representative Nancy Pelosi of California as their leaders in the Senate and House, respectively. The latter move, he said, appeared to send the message that it’s “business as usual” in Congress.

Of course, it may be hard for politicians to know what course to set when the electorate itself appears to be so confused. In a Bloomberg poll taken just several days before the midterm election, Hunt noted, a majority of respondents said incorrectly that the economy was shrinking (it had been growing for more than a year); that much of the money distributed under the federal TARP program will not be paid back by the financial services firms it helped (much has already been repaid), and that federal tax rates have gone up under President Obama (they have gone down).

Beyond that, voters repeatedly confirmed prior to the midterm election that they were unhappy with both Republicans and Democrats in Washington. “Previous change elections,” Hunt noted, “didn’t see the winners as unliked as the losers.”

Whether any of this ultimately changes the way Washington operates remains to be seen, but in the meantime, politicians are already turning their attention to the 2012 presidential election. Republicans will be helped by the vast number of seats they wrested from Democrats in state legislatures, Hunt said, since state legislatures will soon be engaged in the voter redistricting activities that always follow a census year. Republicans took control of 19 additional state legislatures in November, he noted, netting more than 750 new members.

Still, he said, none of this guarantees the GOP will reclaim the White House in 2012.

“The Republican field is not that strong,” Hunt cautioned. Among potential candidates, he said, former Alaska Governor Sarah Palin is viewed by many as unqualified, though he guessed that if the Iowa caucuses were held today, she would win them. He said former Massachusetts Governor Mitt Romney would be hurt by parallels between the healthcare plan he developed for his state and President Obama’s federal healthcare plan, while former Arkansas Governor Mike Huckabee would be hurt by voter resentment of the number of prisoners he pardoned when he was governor. Former Speaker of the House Newt Gingrich could be hurt, he added, by reports that he left his first two wives while they were recovering from serious illnesses.

So who will win the White House in 2012?

“If I had to pick one person likely to be sworn in in two years,” Hunt said, “it would be Barack Obama.”