One taxpayer's opinion

Conservatives need to face it squarely: We lost the argument. Voters gave us a hearing, gave us the opportunity to make our case, then decided they didn't trust us to solve their problems any more than they did a president who passed legislation they didn't like, by means they didn't approve of, behaved recklessly with the nation's finances, and seemed uninterested in working with the opposition. We need to take ownership of losing the argument rather than taking refuge in excuses or despairing for the future.

Foreign policy was not the fulcrum of this election, but it did matter, and in ways that helped President Obama. Governor Romney is a pragmatic, problem-solving politician who failed to believe he could be elected as one, and adopted an amalgam of policies to cast him in Ronald Reagan's mold. But amidst the mythologizing of Reagan on the right, we ought to consider whether Reagan's national security stance would make sense in our current conditions: When our defense budget is half the world's total, when an actual peer able to contest American primacy is fifteen or twenty years in the future, when our people are weary of all we've undertaken and discouraged at how little help other countries have been, when our economy is shaky and its recovery slow and household incomes pinched, when we are poised to ask Americans worried about the future to receive less from government retirement and medical programs.

Conservatives talk an awful lot about the public losing its commitment to defense spending, and Governor Romney outlined an increase to 4 percent of GDP even as government spending contracts, while the president kept repeating the importance of nation building at home. We ought perhaps to consider that our taxpayers simply aren't persuaded by our arguments that the world is so dangerous or our defense spending too low. Looking at what we have spent across the past decade, and the cost-exchange ratio we are experiencing with our enemies, they may not be wrong. Voters are worried about the state of our union, appear willing to accept near-term risk in national security in order to gain more near-term confidence in our domestic security. It's not an irresponsible choice, given how wide our margin for error is on national security issues and the multiplicity of means beyond military we have to affect them.

The president more accurately read the public mood about the wars than conservatives, too. We Republicans are savagely and rightly critical of President Obama's handling of both Iraq and Afghanistan. But voters don't want to hear it from the people who lost the Iraq and Afghanistan wars the first time, even if we righted the ship on Iraq. The cost of our mistakes remains fresh in the public mind, and Team Obama got lots of mileage off the trope about returning to office the same people who made the mistakes in the first place. Maybe if we sounded less strident about going to war they would trust our judgment more; but maybe our credibility problem will persist until all of us with connections to the Bush administration are purged from the rolls of future administrations.

We can celebrate that we have won half the argument about the direction of our country: we have pushed debt into the center of political discourse. Voters are worried about our national insolvency, understand it is constraining our ability to fix our problems and sure to lead to even worse problems unless we take corrective action. But we were implausible in our policies. We insisted defense must increase and emphasized growing dangers that will demand more wars. We railed about the Obama administration's defense cuts when our alternative in the House included the same reductions. We criticized the president for not embracing Bowles-Simpson but didn't vote for it ourselves. After arguing debt's centrality, we flatly rejected deals that would have a ten to one cuts to spending ratio. We sounded unsympathetic to our fellow Americans receiving government assistance. Voters considered us right in our descriptions, but reckless or mean in our prescriptions. Perhaps we ought to return to the idea of compassionate conservatism as we frame and argue for our policies. We need more Paul Ryan, not less: Details and principles did get traction, but we didn't have the consistency across our policies to build voters' confidence.

One of the most grevious mistakes of the Bush administration was to assert by executive order what could have been achieved legislatively; it made solutions more brittle and less enduring not to reach for broad public support. In some senses, it feels like we conservatives may be making a similar mistake of asserting what we believe should be done on national security issues instead of listening more to what limits our public wants to place on what we will do and negotiating solutions that don't overwhelm voters.

I urge caution on our Democratic opponents: You ought to be worried that with all its problems, the Republican party captured 48 percent of voters nationwide. And you ought to remind yourselves that every single member of the House of Representatives just got reelected, too; the president isn't the only politician returned to office. That's not a mandate, it's an invitation to compromise.

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Shadow Government

The color of your glasses

From an economic perspective, should we be optimistic or pessimistic in the wake of the election? The redoubtable Wolfgang Munchau offered an appealing and different way to think about this in the Financial Times over the last couple weeks. In the context of the euro crisis, he asked not what a crystal ball foretells for the future of the euro crisis, but rather what you have to believe in order to be optimistic about that future. How heavily tinted do your rose-colored glasses have to be for things to look good?

So, what does one have to believe to be optimistic about the U.S. economic situation? There certainly are such optimists. A fundamental premise of the Obama campaign was that the president had adopted all the right economic palliatives, but that they just took time to kick in.

There are at least a couple broad economic arguments one could make in support of a cheery view. Carmen Reinhart and Ken Rogoff cannot usually be accused of excessive cheerfulness in their forecasts. They have been vehemently arguing that downturns that stem from financial crises take a long time to sort out. This is a prompt to lower our expectations. We need not be disheartened by weak economic performance, the message goes. These things just take a long time; they get better eventually. This suggests restored confidence in tools (such as the stimulus) that might otherwise seem to have been ineffective. It would seem to promises payoffs to the patient and perseverant. That was an Obama campaign theme: Give it more time.

This plug for patience is consistent with the second principal positive premise: It's all cyclical. Economists have long discussed the booms and busts of business cycles. Such discussions had faded during decades of relative prosperity (sometimes referred to as "the great moderation"). Moderation is now out the window, so we can turn back to some familiar cyclical arguments. Why should things turn around? Cars and dishwashers and machine tools wear out. People can put off replacement purchases for a while, but eventually they need something new. Along the same lines, young people who may have stayed in their parents' house a while longer than otherwise finally go out, get married, get a place, and furnish it. The price of the house they had looked at may finally seem to have bottomed out. These are all cyclical arguments for a turnaround. Enthusiasts of such explanations point to blips in consumer confidence like buds signaling the start of spring.

If one buys this reasoning, President Obama will now get to reap the benefits of his work and take credit for the inevitable recovery to follow. Had Gov. Romney won, the reasoning goes, he would have unjustly taken credit for the good times to come. Perhaps.

What does one see with untinted glasses? U.S. economic growth has to come from somewhere. It is hard to argue that it will emerge from a bold revival of consumer spending. Pessimism on this point is part of what is behind discussions of a "new normal" that features slower growth. Consumers are still working their way out of debt, the country is still borrowing, and the future liabilities toward an aging population loom large. This is a difficult time for a spending binge. The impending fiscal cliff is one sign of this, though much bigger pension and entitlement challenges remain unaddressed. If you tax people now, they have less money to spend. If they worry about future taxes, they may well save to meet those coming obligations. That would be in lieu of spending.

If the growth is not to come from selling to U.S. consumers, what about selling abroad? The Obama administration did this math quite a while back. The president set a goal of doubling exports in 5 years. Laudable, but how to achieve it? The administrations proposals largely centered around small export promotion initiatives and initial success was claimed when exports rebounded from their recession lows. When the administration finally moved to pass the free trade agreements with Korea, Colombia, and Panama, it claimed those, too, as part of its plan to double exports. Serious new market-opening could help spur markets, but the only such initiative that President Obama has pushed forward -- an expanded version of President Bush's Trans-Pacific Partnership -- faces major obstacles.

In terms of growth through exports, all of these policy measures pale in comparison to the economic health of trading partners. For the United States, NAFTA looms largest, taking almost 1/3 of U.S. exports in 2011. Any economic booms to be found there? The latest IMF World Economic Outlook predicted that Canadian growth would slow from 2.4 percent in 2011 to under 2 percent in 2012 and 2013. Mexican growth, while faster, was 5.6 percent in 2010, 3.9 percent in 2011, and is supposed to keep decelerating through 2017. So where else might we see growth? The European Union takes 18 percent of U.S. exports, but it has its own well-publicized troubles. The latest figures show that Germany may be approaching a recession. China buys about 7 percent of U.S. exports, but its growth has also slowed. Add in a troubled Japan and we've now described just over 60 percent of U.S. export markets.

In all likelihood, the actual picture is worse than just described. These tepid growth prospects assume nothing drastic will happen to throw off the world economy. One of the striking things about this last election season was that there were any number of foreign policy and economic crises that could have exploded. Syria came closest, but Iran, U.S. fiscal troubles, and the euro crisis all remained relatively quiescent. That may be considered good fortune, or it could be the result of hard policy work sweeping problems under the rug. It was no accident that the fiscal cliff arrived after the election. Treasury Secretary Geithner was pretty blatant about asking European countries to move smoothly past deadlines that might have ignited an economic conflagration. I do not have the expertise to speculate about why Israel was so well-behaved over election season, despite its deep-seated concerns about Iran. The upshot was that there was no Middle East conflagration disrupting oil supplies.

These all appear to be problems deferred, not problems solved. Such deferrals often lead to more explosive outcomes later on. To foresee that these potential problems will all remain tranquil for the four years to come would require one to look through a particularly garish set of lenses.

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