Fair or not, the next president will own the recovery

One of the basic rules in American politics is that life just ain’t fair.  Elected officials get credit for things they had nothing to do with.  They get blamed for stuff that lies outside their control.

Another basic rule is that timing is everything.  Which is one reason why the 2012 election will be definitive for both major political parties in the US, and for the way that American voters perceive them.

Consider Bill Clinton.  The Democrat is remembered as a steward of good times, a man who ushered the republic back toward solvency and prosperity.  Was he responsible for the dot-com bubble and the other upward trends that defined the 1990s?  Hardly.

The next POTUS — Barack Obama in his second term, or Mitt Romney in his first — will ride a similar wave.

All economic indicators suggest that, unlike Europe, the American economy is muddling its way back toward vitality.

Housing foreclosures are down, and new home construction is up.  We’ve had a couple of years of uninterrupted job growth.  Tax revenues at the state level are back to record 2007 levels.

There’s also growing evidence that corporations have held off on hiring and expansion about as long as they can.  Profits are sky-high again and the stock market is soaring.

That energy is startling to trickle down to average Americans.  Consumer spending is up.  A poll by Fox News found that the number of Americans who rate the economy as “poor” dropped from 66% last December to 45% this month.

That’s a big shift.

None of this is to suggest that America’s long-term economic challenges will evaporate in 2013.  They won’t.  The next president will make decisions that will shape our future for decades to come.

How many American kids are able to go to college?  Who will be able to afford health care?  What will our infrastructure look like? How will we bend the curve to cut deficits?

But I suspect that the next president’s power to influence those decisions will also increase, as Obama or Romney rides the optimism of lower unemployment rates.

Obviously, it’s possible that something will happen to derail next year’s recovery, but I suspect that a lot of the “threats” are overblown.

If Europe falls into economic chaos, for example, it will hurt a lot of American businesses and banks.  But it will also cement the United States’ role as the most stable big Western economy, a safe place to invest and buy currency.

It’s also certain that during this campaign season there will be a lot of debate over who deserves credit for cuing up the recovery.

Did Barack Obama stave off an even deeper depression, and begin the hard work of rebuilding strong economic foundation?  Or could he have made different and better choices to speed job growth and heal the housing market, as Mitt Romney argues?

Was it smart to bail out Wall Street?  What about the car companies?  Whatever voters decide, here’s my first big prediction of this election cycle:

Whoever wins in November, he will be remembered fondly as the president who sat in the Oval Office when America finally escaped the Great Recession.  And his party will be viewed for years to come as the party of prosperity.

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77 Comments on “Fair or not, the next president will own the recovery”

  1. Larry says:

    PNElba: Try me.

  2. Larry says:

    Zeke,
    The debt is no bigger a problem than it ever was and arguably, less of a problem than it has been at times in the past. Check out national debt as a % of GDP in the 1940s and 50s. As for China, they are currently the largest foreign holder of our debt in terms of dollar amount. As a % of their GDP, not so much. TAke a look at Taiwan, Belgium or Hong Kong. One needs to look at these things in perspective instead of being bowled over by large numbers. By the way, if we are in such sad shape, why does the rest of the world own our debt? By the way, I am sure it will surprise you to know that the Ferderal Reserve is usually (I don’t have current stats at hand) the largest overall holder of US Government debt.

  3. Peter Hahn says:

    Europe has been trying that ‘austerity” thing and it has made things much worse. The most socialist countries – the Scandinavian ones – are the ones doing the best. Ireland – which has played by the conservative playbook the longest – low taxes and big cuts to public spending is in terrible shape.

    Europe’s big problem now seems to be the Euro – a common currency without the rest of the common economic package that they would need to make it work. It has little to do with Socialism.

  4. Paul says:

    “Fair or not, the next president will own the recovery”

    I think by the election or later this summer you can maybe make this comment but right now I would not be too confident making this statement.

  5. Paul says:

    “The most socialist countries – the Scandinavian ones – are the ones doing the best.”

    Peter, are you suggesting that this country could be run like a Scandinavian county?

    Many policies in those countries would make American liberals throw up. First off it would basically require us to throw out everyone that is not a native American. Comparing us to these countries doesn’t make any sense.

  6. OnewifeVetNewt says:

    I agree that true socialism would be both impossible and undesirable in the U.S.

    But, if the argument is that socialist countries cannot be successful, then the questions should be asked,
    1. Why do Denmark, Finland, Norway, and the Netherlands have the world’s highest level of personal happiness, as measured by this study?http://www.huffingtonpost.com/2012/04/06/world-happiness-report-2012_n_1408787.html#s838681 (Canada is 5th, US 11th).

    2. Why are these nations, as well as the highly socialistic, but apparently more miserable, Germany, so economically successful?

  7. Paul says:

    We should probably avoid the Icelandic model!

  8. Larry says:

    Scandinavian socialism has been a liberal touchstone for decades, but it’s not relevant, if it ever was. Secondly, the Euro isn’t the problem, at least not in Spain and Greece. Their problems began with governmental over-spending followed by an inability to refinance debt on favorable terms and the resultant banking crisis. How revealing is your comment about the “austerity thing” – spoken like a true liberal who thinks the government can spend their way out of anything. It’s people like you who are enablers of socialism.

  9. Paul says:

    Maybe it is because the cross country skiing is so good over there!

  10. Paul says:

    The skiing isn’t good in the Netherlands but there everyone is high!

  11. Paul says:

    In my experience visiting these countries (OVN what is your experience?) is that they are fiercely nationalistic. They seem very welcoming of the occasional American visitor (or Yankee as they call us) but they do not care much for their European neighbors. And in the case of Finns and Russians they are borderline hostile. If we want to adopt some of the “benefits” of socialism we also better be ready to defend them and to make sure that our borders are locked tight.

  12. Peter Hahn says:

    Larry in Spain the Euro is definitely the problem. They have a banking problem from a real estate bubble like we had. Banks gave lots of loans because they assumed that the Euro would guarantee they get paid back (in Euros) If the debts were in Spain’s own currency, spain could devalue their currency, to become competitive, but they can’t. If they could let inflation grow, to devalue the debts – but they can’t do that either. The Germans could pump a bunch of money into Spain but they don’t want to and don’t have to.

  13. Peter Hahn says:

    and – Larry I was pointing out that Europe is not a simple object lesson about the evils socialism. There are lessons to be learned, but they aren’t what you would like them to be.

  14. OnewifeVetNewt says:

    Peter is correct. I’ve seen it endlessly pointed out, and not just in the liberal media-sphere, that Spain (SPAIN IS NOT GREECE!) was running balanced budgets, but was totaled by the real estate bubble. On the ultra-reliable ON POINT this morning it was pointed out that Greece is not in trouble because it had big government programs, but because everybody there wants benefits, and nobody pays taxes.

    I haven’t been to any of the those countries in a long time, or in some cases, ever, but my understanding from reading and talking to those who have is that there is a rising degree of hostility toward foreigners. Especially against Muslims, who they feel have failed to assimilate, and, in a few cases, committed ,or planned terrorism,

    A little like Arizona or Alabama, except for the ” failed to assimilate, and, in a few cases, committed or planned terrorism,” part.

  15. zeke says:

    I say again, Larry, glad to hear the debt is no problem and one of YOUR apparent main concerns is that people might have to pay into a health care system that either already is or someday will include them. Sound like a terrible unfair thing to do to people. My God making them pay for something they are going to use. Like it or not!

  16. Paul says:

    OVN, there are basically no Muslims in the Scandinavian countries. There is also a hostility toward other nationalities because they do not want those foreigners coming in an mooching off their system. Once they are sucking on that teat they defend it with vigor. When I lived in France for two years in the early 90s the hostility toward African immigrants was sickening.

  17. Peter Hahn says:

    Paul – the scandinavian countries took in many Muslim refugees, and I think there is considerable hostility. That Norwegian psychopath who killed all those liberal children was defending his country from Muslims, among other things.

  18. mervel says:

    The bizarre thing is even with the recent immigrants the numbers are miniscule compared for example to the numbers of new people that we absorb every year.

  19. Paul says:

    Peter, I stand corrected. There has been a lot of immigration of Muslims into those countries over the last decade. I was going with my personal experience there which is not how it is now after looking at some numbers. The hostility does not surprise me. The way they talk about the Germans is bad enough!

  20. Paul says:

    Mervel,

    If you look at Oslo for example this is relatively speaking pretty significant:

    Year Muslims Percent
    1980 1,006 0.02%
    1990 19,189 0.45%
    2000 56,458 1.30%
    2010 98,953 2.03%

    Back when I was last in Oslo then there were not too many.

  21. mervel says:

    Larry I am not USA bashing.

    But we need to realize that we are no longer the wealthiest country on earth. Given that fact why are we the world’s police force? We need to dismantle our empire and start becoming the right size. The most inefficient and largest government agency is the US military, we need to start cutting there.

    I think it is actually unfair to compare us to individual European nations. Sure I mean we could pick out Connecticut and compare it to Italy and do very well. A better comparison is all of Europe, including Eastern Europe.
    But this recent lack of upward mobility is a huge problem for us now and into the future it is a new issue and will breed long term problems for the US. The US is about hope and taking risks and moving upward, when that goes away we don’t have much to offer. You can’t have a nation where only 40% of the people don’t have even a high school degree and be competitive in a world economy focused on technology.

  22. mervel says:

    Thanks, compare that to the US, and immigration here from just Latin America. I mean they are freaking out over those numbers? 2.03% is nothing.

  23. Paul says:

    “compare that to the US” yes, I think that 2% is pretty comparable to the US if you look. Hispanic immigration is a different story. One thing about that is that you will have to shut it all off before you could ever hope to be successful with a Scandinavian system of universal healthcare. You would also want to do what they do with educations and decide early who will get what kind of education and where.

  24. Peter Hahn says:

    We are probably the best country in the world in terms of absorbing immigrants and other minorities. Not that we are so wonderful, but everyone else is terrible.

  25. mervel says:

    How is immigration from Latin America a different story? It is the number one source of immigrants to the US.

    Peter is right we have some big problems but our problems when it comes to absorbing new people and yes welcoming new people as true Americans is nothing compared to the xenophobia that is still rampant in Europe. Even if they “accept” North African immigrants will a North African ever really be Norwegian, or will they always forever be an African living in Norway?

    I think it is our strength and we need to really think about the advantages we have with our wonderful Hispanic heritage and new immigrants who desire to come here and work.

  26. Pete Klein says:

    I predict Obama will win. This should become obvious after the first debate between him and Romney.
    And let’s be honest. His biggest problem has been and will be that he is not lily white.

  27. knuckleheadedliberal says:

    Larry: “The fact is, although many European societies still enjoy an excellent standard of living they are flat broke and their economies are failing.”

    Isn’t it a baseline belief for a Conservative that the Nation, states and local governments should always be flat broke? Isn’t that what they call a balanced budget? Ideally the cost of government exactly equals the revenue from taxes and fees. Net result = zero. Zero = flat broke.

    When the government puts away too much money in a rainy day fund during good economic times the conservative run around screaming “that is the peoples’ money. Give it back to them because they know how to spend it best.” Then a major economic failure happens and there is no money to pay for necessary services and governments big and small have a hard time making ends meet.

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