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November 02, 2012 2:29 PM The 2012 Stakes, Part I

By Max Ehrenfreund

After a football game, the winning team gets to go home and celebrate. After a presidential election, the winner gets to set national policy for four years. Today and Monday, D.K. and I are going to take a break from the odds-making that inevitably consumes the press in the last few days of a campaign to write about what’s at stake.

Which is a lot. First, I’ll write about financial reform and the federal budget, and later on, we’ll discuss the environment, the courts, health care, and other issues.

Romney and Congressional Republicans have shown their support for policies that would leave the financial system vulnerable to another catastrophe. If they are elected, they will have the authority to implement those policies.

The new Consumer Financial Protection Bureau is a powerful agency, one of the few real accomplishments of the Dodd-Frank financial reform law. It’s true that Obama abandoned Elizabeth Warren in the face of opposition from Republicans in the Senate, but he did manage to appoint Richard Cordray during a recess. Cordray is a devoted advocate for consumers, but his appointment only lasts through the end of next year, and without a director, the bureau is legally impotent. If Romney wins, it is easy to imagine how the bureau could go without a director unless Democrats in Congress agreed to weaken the bureau’s authority. This agency’s purpose isn’t only to protect borrowers with poor access to credit from exploitation by unscrupulous loan officers. It could also shield the entire global financial system by preventing the predatory practices that led to the crisis in 2008.

If Republicans win control of the Senate, they will probably use the reconciliation process to avert a filibuster and pass budgets that deny regulatory agencies the money to implement the Dodd-Frank law. Romney has also said he will repeal the Sarbanes-Oxley law, which President George Bush signed in 2002 after the Enron and WorldCom scandals. The law places more stringent requirements for transparent accounting on corporations.

Neither candidate has been particularly forthcoming about their plans for the federal budget if they win. Jonathan Chait writes:

Of the many secret post-victory plans floating around in the inner circles of the campaigns, the least secret is Romney’s intention to implement Paul Ryan’s budget. The Ryan budget has come to be almost synonymous with the Republican Party agenda, and Romney has embraced it with only slight variations. It would repeal Obamacare, cut income-tax rates, turn Medicare for people under 55 years old into subsidized private insurance, increase defense spending, and cut domestic spending, with especially large cuts for Medicaid, food stamps, and other programs targeted to the very poor.

The Romney team would get their wish, again if Republicans win the Senate and use reconciliation to bypass a filibuster.

If Obama wins, he can simply wait until January, when budget sequestration, tax increases, and all the other components of the fiscal cliff will automatically become law. Republicans in Congress will be forced to compromise with the president if they want to protect defense contracts or to restore the extremely low tax rates of the past decade. A lot of people hope that the result will be a serious, bipartisan effort to resolve any range of heretofore intractable problems, from a fee on carbon to a tax code overhaul.

Obama has said several times that he supports the proposal of the Simpson-Bowles commission, or something similar, and Ezra Klein has speculated that the president might nominate Erskine Bowles to replace Treasury Secretary Tim Geithner. The president did nothing to advance the proposal in Congress in his first term, although he may have simply felt that trying to persuade his opposition to compromise wasn’t worth the time. What does seem clear if Obama wins, he will not extend Bush’s top marginal rate cut again. The result will be a more equitable tax system, one in which all citizens, including the wealthiest, share the burden of deficit reduction.

Max Ehrenfreund is a former Monthly intern and a reporter at The Washington Post. Find him on Twitter: @MaxEhrenfreund