Dr. John Chapman, a dual resident of Canton, OH and Washington, D.C., is chief economist at Alhambra Investment Partners, a Miami-based investment management firm, and a research analyst at Hill & Cutler Co.
The media are prone to hyperbole in expression: every two years we are told that the upcoming election “is among the most crucial in history”. With hindsight, we know that isn’t true: few elections were more important than the very first one in 1788, which set the tone for a new nation based on a radical precept of self-government. 1860 was a seminal election given the seething passions of the day: U.S. history would have been very different under a President Breckinridge. And in the modern era, 1980 involved a major inflection point, as President Reagan offered a dramatically different policy mix than his predecessor, changing the course of American history in the offing.
However, 2012 is big – it’s a national referendum on the historic societal change initiated by President Obama. Before voters is a simple question: should the federal government’s role in the economy and society be permanently enshrined as that of a European-style welfare state, as Mr. Obama intends; or should we return to a more free market model? Specifically, 2012 is the last chance to preserve some aspect of a competitive market in health care delivery: the most significant legislative changes wrought by ObamaCare commence in 2013-14, and hence will be permanently enshrined as entitlements by 2016. Among the consequences of this is the certain destruction of the private market for health insurance, as businesses “dump” employees into government-run pools of coverage to cut costs; once the single-payer model confers upon the federal government monopsony buying power, controls on every aspect of the entire health care industry, from research to provision to access to care, follow axiomatically.
While other Obama measures such as Dodd-Frank financial reform (which has led to increasing costs that will be fully passed on to bank customers over time in the form of higher fees, e.g., debit-card usage), energy production restrictions, and regulatory moves designed to benefit the labor movement all entail higher costs and lower profits for American business – and thus, slower economic growth and fewer U.S. jobs – it is the repeal of Obama’s health care law that is paramount. For it is a canonical law of empirical economics that de facto government-run health care guarantees a permanently-lowered rate of economic growth. Like high levels of government debt, government-run health care enervates an economy, and regardless of exact degree of causation, the correlation is indeed 100%.
Given this, and myriad economic challenges now (viz., high unemployment, stagnant real incomes, rising consumer prices, incipient negative cash flow of entitlement programs, and outsized government debt-burden that will soon impel higher taxes on most Americans), Ohio voters deserve a vigorous contest of ideas in the U.S. Senate election next year, as the make-up of the Senate will crucially determine the degree to which real change is possible: remember, only with a 60th seat in the Senate did such radical legislation as ObamaCare or Dodd-Frank become possible.
To understand just how critical Ohio is next year, consider the current US Senate map: in 33 contests next year, Republicans must defend their 10, and then take 13 of the Democrats’ 23 seats up for election, if they hope to get to a filibuster-proof 60 seat majority. Pickups due to retiring or vulnerable Democrat incumbents in Nebraska, New Mexico, North Dakota, Montana, and (assuming a Republican year) Virginia and West Virginia would take the Republicans to 53 seats. With good candidates, potential wins in Florida (against incumbent Bill Nelson) and Wisconsin (versus incumbent Herb Kohl) offer a “decently reasonable” chance to get to 55. But then the climb to 60 gets harder: wins in Connecticut (likely only if it is a three-way race including Independent Joe Lieberman), Michigan, Pennsylvania, and Washington would have to be counted upon, again due to weak Democrats defending on a night when President Obama is led to electoral slaughter. This would leave the number at 59; which state could provide the 60th seat? Ohio seems most likely thanks to Senator Portman’s strong showing a year ago; otherwise, an unlikely win in Delaware, Hawaii, Minnesota, or New York would be needed – two from these states if Scott Brown cannot hold his seat in Massachusetts, as is quite possible. A look at this line-up shows how hard it will be to get to 60 without Ohio.
But sadly, unless Ohio’s Republican Party fields a credible candidate to argue opposite the incumbent, Obama-acolyte Sherrod Brown, there will be no voice to counter Senator Brown’s ratifying defense of current economic policies. And in such a critical year, Ohio is the poorer because of this.
Currently, GOP stalwarts in the state such as former Secretary of State Ken Blackwell or Congressman Jim Jordan have taken a pass at the race, which has only two likely entrants at this point: former State Senator Kevin Coughlin from Cuyahoga Falls, and the incumbent State Treasurer, Cleveland’s Josh Mandel. Absent any change, Mr. Mandel, who’s already raised several million dollars, will win the nomination based on vastly superior fund-raising.
Barely eight months into his first term in statewide office, the 33-year old former Marine reservist and Iraq veteran may well have a bright future in politics. But his deeply-limited experience in government is surpassed only by nonexistent time spent in the private sector in his young life. And in a year in which jobs, economic growth, and the revival of Ohio’s moribund economy will be foremost among voter concerns, Mr. Mandel will be ineffective at best in persuading voters that he has the experience or a coherent vision for how to ignite an investment and job-producing turnaround in the Buckeye State, based on policy changes in Washington. Additionally, Mr. Mandel enters the race ethically burdened: the Cleveland Plain Dealer’s Mark Naymik points out that Mr. Mandel has not been forthcoming about his own finances, even as he touts transparency as State Treasurer. And sadly, Mr. Mandel has also evidently decided to embark upon a quest for high national office on the back of what in blunt terms was once called a lie: he is on record last fall as stating on several occasions that he will serve his full 4-year term as State Treasurer, and disavowed a Senate run. In an era when voters are fed up with self-promoting politicians who lack authenticity, this alone guarantees he will be tuned out.
Any Republican challenger faces uphill odds in a state carried by Mr. Obama by more than 260,000 votes, and where registered Democrats outnumbered Republicans by more than 10% in 2008. Modern-era history also teaches that Americans demand the wisdom that comes from age in the U.S. Senate: in the nearly 1100 U.S. Senate elections held in the post-war era, roughly 3% were won by candidates under the age of 40, and only two were won by 35-or-under candidates in states where they were the minority-registration party: John Tower in Texas in 1961, and Joe Biden in Delaware in 1972 – though both states were tending toward the victors’ political party in those years. Far more so than the U.S. House, voters insist upon a level of gravitas in U.S. Senators, and for this reason too, a Mandel candidacy has no real chance in 2012. This will deprive Ohioans of a well-articulated debate about the future at a time it is most needed, which is a shame given the serious Republican talent in the state. Congressman Jordan, or (wildly successful) Timken Co. CEO James Griffith, are you listening?
Senator Brown remains highly popular among Ohioans, and perhaps his victory next year is assured in any case. But given the serious tenor of the times and seismic changes that have occurred in our economy and politics in recent years, the Buckeye State will be best served if a legitimate contender, ideally one with private sector depth and integrity, can oppose him in a high-octane debate about our future. Post-script: It should be pointed out that at least one prominent Republican strategist, Karl Rove, thinks that ObamaCare can be repealed with only 51 votes in the U.S. Senate. Others with Senate rules/parliamentarian and constitutional expertise tell me this is incorrect: it will take 60 Republican Senators to forestall a certain Democrat filibuster over any bill to repeal ObamaCare.