Monday, August 22, 2011

Early Arm-Chair Quarterbacking

I'm pretty reluctant to spend too much time speculating specifically on the 2012 election. It's several months away from the point at which the nominees will be decided, and a few more months until the actual election. In other words, it's a political lifetime, and anything can happen. That said, we are getting close enough that the early pressure is starting to build, and with politics being politics, people can really shoot themselves in the foot or put themselves ahead with the smallest of things. I'll probably start working some election stuff in every now and then, but I'll try to make sure it's something that has some usefulness beyond pure speculation.

First in this line of thinking is a post at Hot Air:

In order to win re-election, Barack Obama really needs an economic renaissance. As James Pethokoukis reports for Reuters, it’s looking increasingly clear that he’s not going to get it. The big analysts are now banking on almost zero growth and even higher unemployment than we have now for next year’s presidential election:

The White House’s worst-case scenario for the economy on Election Day next year has become Wall Street’s baseline scenario. After looking at a string of weak economic reports and Europe’s growing fear of debt meltdown and contagion, JPMorgan – led by Obama pal Jamie Dimon – has just come out with a politically poisonous forecast.

The megabank now thinks the economy won’t grow much faster over the next 12 months than it did during the first half of this year — and that’s assuming Europe doesn’t go all pear shaped. It sees GDP growth at just 1.5 percent this year, 1.3 percent next year with unemployment at … 9.5 percent heading into the final days of the election season. “The risks of recession are clearly elevated,” the bank said. Here’s its reasoning:

Consumer sentiment has tumbled and household wealth has deteriorated. Survey measures of capital spending intentions have moved lower and the housing market shows little sign of lifting. Small businesses, retailers, builders and manufacturers all report a weaker business environment. Global growth has disappointed and foreign growth forecasts have been taken lower. In response we are lowering our projection for growth, particularly in the quarters around the turn of the year.

Team Obama had better permanently shelve any plans of running a “Morning in America”campaign. In fact, if a) the economic forecasts of Morgan Stanley, JPMorgan and Goldman Sachs are accurate, and b) voters behave as they usually do during bad economic times, then c) Barack Obama will be a one-term president. No president in the modern era has been reelected with the unemployment rate higher than 7.4 percent, much less two percentage points higher.

It’s worth noting that we’d have to actually improve to get to 1.5% GDP growth in 2011. The advance Q2 number was 1.3%, and the Q1 figure got downgraded to 0.4%. So far, there have been no indications of improvement by the middle of Q3, and the Philly Fed economic index drop suggests a weaker GDP number for this quarter. If we stay in the mid-1% range for an extended period of time, we will start losing net jobs again, which will feed into the pressure on Obama.

Basically, we’re looking at a replay of 1980′s election, and perhaps even the 1976 election as well, although that had a lot of other baggage than just economic malaise, such as Gerald Ford’s pardon of Richard Nixon and general anger at Republicans for Watergate. George H. W. Bush lost his re-election bid after the economy tipped over into a mild recession in 1990-1 and had already begun recovering by 1992; Clinton ran on the economy and managed to win it in a three-way race. These kind of economic numbers suggest a landslide defeat for Obama. Even if they turn out to be a little on the pessimistic side, Obama won’t get much support for, say, 2.2% growth and 8.7% unemployment by next summer.

Can Obama make the election next year about anything else but the economy? The only issue that voters care about at even close to the same level is the federal budget deficit and the debt, where Obama wants to raise taxes and leave the drivers of debt and deficits – entitlement programs – largely alone. Unless Obama manages to score a big victory on national security, this next election is looking pretty grim. And Obama can ask Bush 41 about how much a big victory over Saddam Hussein in 1991 helped him in the 1992 election.

I think there's a lot of red meat here, and much of it is stuff that I've mentioned before. The economy is almost always the #1 issue for most voters (the only notable exceptions being active war sometimes taking precedence). If the economy turns around between now and election day, Obama is likely a shoe-in for a second term. However, if things get worse -- or even if they stay the same -- things are going to get ugly for him.

The Democrat talking points are going to be something along the lines of:
- yesbut yesbut...if we hadn't done what we did, things would have been much worse
- yesbut yesbut...we could have accomplished so much more if it weren't for those awful obstructionist Republicans Don't fall for either of these tactics. The facts don't support them. There's absolutely no way to prove how much worse things would have been, and there's a lot of evidence suggesting that what Obama did actually made things worse themselves. If debt and spending are the problem (and I don't think even the Dems would disagree with that assertion at this point) then how is more debt and more spending going to solve the problem? It just makes the problem worse. Reality has been affirming this exact point for the past two and a half years. Remember these charts, and in particular the one of all of the recessions and recoveries over the past several decades:

These are no-brainers. If you talk with someone about this and they give you that 'so much worse' line, just show them these charts and ask them to explain how Obama's actions have helped us out.

The second argument is even easier. In order to obstruct, the minority party has to have enough members to actually stop something on a vote. Here's the not-so-secret secret: from 2007 until January of this year, the Democrats ran Congress. And, obviously, starting in January of 2009, they ran both Congress and the White House. And, also up until earlier this year, they had veto-proof majorities. The Republicans couldn't have obstructed anything if they'd tried.

Another thing that is blindingly obvious about this argument is that Obama got everything he wanted. TARP? Check. Stimulus? Check. Obamacare? Check. Bank bailouts? Check. Insurance company bailouts? Check. Takeover of car companies? Check. The list goes on and on. He got every single one.

So again, I ask you: what obstruction? There was none from Republicans until the beginning of this year, and even that has been lukewarm at best. Don't allow these fallacious arguments to go uncontested.

So, back to Hot Air's point. If things don't improve big-time, Obama is looking at essentially the perfect storm of debacles for his re-election campaign. I've still never been convinced that Hillary isn't out there waiting in the wings, patiently biding her time, waiting to step in. Not even Obama can overcome everything, and given
what is potentially brewing against him, if he remains the head of the Democrat party, we could see a monumental shift away from Democrats like we haven't seen in decades. Don't think for a moment that the power brokers behind the scenes will allow that do happen.

If things don't improve, I wouldn't be a bit surprised if Obama 'chose' not to run for re-election, and Hillary stepped in to fill his shoes.

Time will tell, but as the ugliness continues to grow, I personally think it's more and more likely.

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