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.
Tags: analysis, economy, election12, politics
And that’s why the Republicans want people to think they’re doing so badly now, even in the face of evidence that it is getting better.
Ooh. I feel the chill running up my leg over Obama. He is the president who will measured by what he didn’t do.
Or could he have made different and better choices to speed job growth and heal the housing market, as Mitt Romney argues?
True, if the Republicans were willing to compromise and stop hindering.
PNElba: “True, if the Republicans were willing to compromise and stop hindering.”
That speaks of a weak president. Poor, poor, Obama. Can’t get by those bad Republicans. He wants to soooo bad.
With regard to the Euro crisis, there may be a silver lining if Greece implodes (and possibly other European nations) as the dollar, US T-bills, and American banks, stocks, real estate, etc. will be a safe haven for many investors who pull their money out of Europe and the Euro. That could actually provide for an additional jolt in the overall American economy in the long term.
While the market reaction of late doesn’t necessarily indicate the above, it will most likely come around to this possible scenario and go up as a result.
There is another scenario, Brian: Romney wins, and proceeds to totally screw-up the mildly recovering economy. Since he plans to implement the policies that make the presidencies of Herbert Hoover and G.W. Bush so memorable, I’m about 90% sure that this will happen if he wins and has enough majority support in Congress.
And it couldn’t happen to a more deserving nation. Fool me once, shame on you, etc.
Of course, he could win and have his policies stonewalled by Senate Dems, who can, and will, do unto Romney what ‘Pubs are doing to Obama. Unable to do enough damage to destroy it, Romney may then get a recovery, and get the credit.
OnewifeVetNewt –
Both candidates actually have fairly strong stimulus packages in mind, by which I mean that they both are proposing policies that would involve massive amounts of deficit-building.
Obama’s proposals are classic stimulus spending approaches, with a lot of money pumped into things like education, infrastructure.
Romney’s proposal are what you might call conservative stimulus aproaches, with huge increases in military spending (a lot of it routed through private companies) and big tax cuts (which, because they’re not paid for with significant spending cuts, would leave more cash flowing in the economy).
Most independent economists say Romney’s plan would bring about more long-term deficit spending.
But in the short term, I think there’s a lot of stimulus built into both approaches.
–Brian, NCPR
Brian: Like I said, Hoover and Bush: the worst of both.
If Romney wins the Republicans will devastate what remains of social safety net programs, which substantially have protected both the people and the economy, sending us into a European-style tailspin. And, as a good neo-neo-con, he seems to want to eager us into a splendid little war with Iran, which might indeed produce some military spending, but also a few unintended (for him) consequences, e.g., $15 a gallon gas.
Barring this, I don’t see how a Romney deficit-funded military expansion could forestall something somewhere between economic sclerosis and economic catastrophe.
Of course, the billionaires will still do well, and that’s all that really matters to a substantial number of voters.
I think the economy will recover some with the emphasis on some.
What happened back in and around 2008 was the result of forces brewing for over 50 years.
What forces? How about a population growing beyond the needs of employers brought on by advances in automation which was then compounded by computerization. This has resulted in fewer workers needed to do more. When you ad the fact that people in the “developing world” want what we have and can produce what we formerly produced for less, the above problem is made worse.
Governments can’t solve the problem of unemployment. Business has no interest in solving the problem for the simple reason they now sell worldwide and no longer depend on just the American consumer. Business will always seek to maximize profit and one of the chief ways to do this is to produce more with fewer workers.
Ad all of this together and you are dreaming if you ever expect to see unemployment at 3% again.
On a positive note, just be glad you live in the US and not in places like Greece or Spain. They have it far worse and will never ever get their unemployment rate down to the 8 or 9% we complain about.
Pete-
There was an excellent article to your point in the January Vanity Fair by Joseph Stiglitz, http://www.vanityfair.com/politics/2012/01/stiglitz-depression-201201, one of the few economists who accurately predicted the Great Recession. He says that recent research has shown that both it and the Great Depression were not, at root caused by bankers, Wall Street, and bought officials (though they did their part), but rather by a economic weakness brought about by job losses resulting from technology. In the Twenties, it was millions of farmers displaced by mechanization, leading to an-ever weakening farm economy, and eventually, the Depression. In the lead up to the recent one, it was the same forces displacing industrial industries and jobs.
Stiglitz, says that it took WWII to end the unemployment crisis of the Depression. I don’t recall what his solution for the current one is, except that it did not seem terribly convincing.
“And that’s why the Republicans want people to think they’re doing so badly now,” The last time I checked with my neighbors and family they didn’t THINK things were bad, they ARE bad! Hope and change didn’t work for them now they want REAL Change…..in the White House!
And it couldn’t happen to a more deserving nation. Fool me once, shame on you, etc.
I’m with you OWNewt! The working class in this country still haven’t learned a lesson.
That speaks of a weak president. Poor, poor, Obama.
Nope. It points to the weakness of the Speaker of the House, the fact that conservatives these days refuse to compromise (just ask them), and the fact that conservatives have openly proclaimed that their only goal is to prevent President Obama from getting another term.
BTW, JDM – for a supposed Christian, the hate just oozes from you whenever you speak of President Obama.
yuck. more polls and more horse race nonsense.
PNElba: “BTW, JDM – for a supposed Christian, the hate just oozes from you whenever you speak of President Obama.”
I was mocking you, actually, in that last post. But I don’t hate Obama. I think he is not a good president (for this country). He may want to put in his application for Hugo Chavez’s post, should it come available.
Romney’s core policies for the domestic economy will likely be the same as Obama with the exception he will likely run an even larger deficit if he lowers taxes. It is very doubtful he would actually cut anything, Bush didn’t cut anything either. Republicans just spend.
The biggest danger with his election is not the recovery but foreign policy, he will probably start more wars and escalate Afghanistan; those are things he has actual power over, unlike the economy and the defense industry would like him. (notice they are already starting to whine about upcoming cuts).
If Obama is re-elected, I agree there is a good chance the economy will continue to recover. However, Obama has not gone after the criminals on Wall Street and at the Big Banks. The too-big-to-fail banks are now even bigger than before the financial collapse and continue to operate as casinos with government insurance. It won’t be long before we have another financial catastrophe which will be Obama’s legacy. Only there won’t be any government intervention this time and the Great Recession becomes the second Great Depression. Massive social unrest will follow and Obama will suspend liberties and we become essentially a police state with unlimited surveillance.
On the other hand, if Romney is elected there will be drastic cuts in Social Security, Medicare, education, food stamps, unemployment insurance and all other types of social programs and safety nets. Meanwhile the rich will get their tax cuts and the military industry will get their budget increases. The 1% become even wealthier and local police (armed with all the latest deadly anti-terrorist equipment – courtesy of federal “homeland security” funding) will be called out to put down massive protests. Protesters will be labeled terrorists and arrested with indefinite detention – providing more prisoners and profits for the big incarceration corporations.
Obviously neither scenario is pretty – and I hope neither comes to pass. But the Republic is unraveling and level of discourse and stridency is approaching no return. Just as a civil war was probably unthinkable until it happened we seem blind to the polarization that is paralyzing our politics. There is no room for compromise anymore. Republicans in particular seem willing take the whole country hostage to force their ideology on everyone. And Democrats like Obama have no problem with expanding the powers of the President in ways that would make Bush and Chaney envious. And both parties are so beholden to the money from Wall Street and Big Corporations that they essentially represent only the 1%. The rest of us are quickly becoming serfs with no hope of economic security or stability which is how the 1% desire it. The future will be working your whole life for peanuts with no hope for retirement because that’s the way The Man wants it. Grovel before a Big Corporation for a job with no union protections or safety and they will use you up and spit you out when you are no longer productive.
Bleak? Sure. But if enough people feared this could be our future maybe we can prevent it from happening.
Kudos for being the North Country’s least-subtle spinmeister.
What you are saying:
Obama is not responsible for current problem. Still Bush’s fault?
If he loses, which you suggest might happen, it’s because of something he wasn’t responsible for.
If Romney wins, and the economy recovers, then he’s just “riding a wave” created by Obama!
So, apparently the electorate is just too stupid to realize what you can clearly see. *Smacking my forehead in amazement!*
Oddly, you slipped up a little and mentioned the effectiveness of “trickle-down”, but then you did throw in that bit about the bailouts to hedge your bet. Again, Kudos for this.
Tourpro –
You got me. Sneaky, sneaky Brian. The part where I make it clear that Bill Clinton got credit for a booming economy that he wasn’t responsible for? Sneaky.
Making no mention whatsoever of George W. Bush’s role in creating the Great Recession? Sneaky.
Suggesting that whichever politician arrives in the white house — Romney or Obama — will be “riding the wave”? Sneaky.
You’re working at this too hard, Tourpro. Sometimes the point I’m making is just the point I’m making.
–Brian, NCPR
PNElba: “It points to the weakness of the Speaker of the House”
Poor, poor, Obama. John Boehner is more powerful and able to carry the day.
I wish there was something the president could do. Maybe, be a leader. But no. Those bad Republicans are tooooo powerful.
On the other hand, George W. was powerful. Even Nancy Pelosi couldn’t stop him from all the “damage” he did. Now, there’s a leader.
Harry Reid wasn’t powerful enough to stop him, either. Bush just mowed them over.
Obama, however, can’t seem to work with one little speaker from Ohio. Reid can’t seem to help him, either.
Poor, poor Obama.
JDM, it has nothing to do with the relative powerfulness of Obama vs. Bush. It has everything to do with the Republican party being willing to risk destroying the economy in the attempt to make sure Obama is a one-term president. The Democrats have never sunk quite so low.
Obama, like JDM, apparently cares nothing about the lessons of history, or did not during the first three years of his term.
He was, as many suggested, unready for prime time when elected (though probably better than Hillary and the rest of the Dems, and certainly better than the Sarah Palin’s clueless running mate, who wanted to make Phil Gramm -a prime architect of the ’08 Crash- Secretary of Treasury).
He, unlike Lincoln and FDR, Obama either did not know or did not care about the importance of rallying the nation at a time of crisis. Remember his lame inauguration speech?
Instead of using his own campaign’s progressive economists, he brought in Wall Street tools Geithner and Summers to fix the problems they had done much to create (Summers was Robert Rubin’s -Clinton’s Sec. of Treasury. later Citibank CEO- major hatchet man preventing attempts by whistleblowers to prevent the deregulation train wreck).
Instead of focusing on the economy “like a searchlight” early in his term, Obama wasted time and political capital pushing through an affordable care act that failed to address the immediate economic crisis, and will be for nothing if the Supreme Court decides as predicted.
Instead of focusing on prosecuting financial criminals who brought on the Crash,, which both liberals and Tea Party members supported, he continued Bush’s policy of pouring unconditional government money on them, a principal reason for Dem. losses in 2010.
Having annihilated his political capital and Congressional majorities, Obama seems to have learned his lessons quite late in the game.
In many ways does not deserve re-election, except that the opposition is so much worse.
Yep, disappointing, Onewife, except I don’t think there was an either/or with health care and the stimulus. He pushed for both at the same time, just not hard enough on either, in my opinion. Never even discussing single payer was a massive lost opportunity. Almost as much as not pushing for a needed reconstruction of our electrical grid and transportation system.
oa-
Maybe, but I think he would have done better with healthcare in the long run had he held off until he got the economy up and running again first, thereby establishing his credibility.
I don’t think he ever seriously supported single payer, but he might have gained some negotiating space had he done so, and maybe gotten at least a government option health program out of it.
OwVN: Thanks for comparison of me and the highest office in the world. I don’t mind the fact that you think I know nothing of history, because I know more about that than you.
JDM-
I think you know more about Magical History, wherein, as you stated last week, FDR caused the Great Depression four years before he was elected President.
I am disgusted with my fellow republicans. Totally disgusted. They have done absolutely nothing to help with our fiscal crisis brought on mostly by their own policies. A business person I know has been raking it in during this crisis and he rants and raves about the social policies, welfare, food stamps, unemployment, etc. You name it, it’s all bad. Well guess what? He sells grocery products. LOL! So if you take away all that social welfare, who is going to buy those products. If society doesn’t help in some way to weather the crisis then you will end up with a European Social Style crisis. Violence in the street, etc. People got to eat. I’m not advocating unlimited unemployment or welfare fraud but the money invested in our communities for job training, infrastructure improvement, etc. make the USA a safer, better place to live. The republicans had an opportunity to help shape the recovery and blew it, wasting energy, time and money on obstruction rather than construction. Don’t worry this republican will be voting for Obama this time around along with a lot of others I’m sure.
“Nope. It points to the weakness of the Speaker of the House, the fact that conservatives these days refuse to compromise (just ask them), and the fact that conservatives have openly proclaimed that their only goal is to prevent President Obama from getting another term.”
This is a good point. Perhaps Harry Reid will be better at getting senate democrats to vote up conservative policies proposed by President Romney and approved by the house?
JDM-
My two comments above comparing your knowledge of history to Obama’s etc, were rude, gratuitous, not germane to the discussion, and inappropriate for this forum.
Too much coffee and immaturity on my part, I guess.
I apologize to you, if not to Mr. Obama.
Another awesome article by conservatives Mann and Orstein in today’s WP.
http://www.washingtonpost.com/opinions/want-to-end-partisan-politics-heres-what-wont-work–and-what-will/2012/05/17/gIQA5jqcWU_story.html
Generations of Europeans have grown up with and lived in a socialist system where the government provides the all-encompassing safety net so many liberal Americans dream of. Socialism is communism without the terror and like communism, it doesn’t work. You can’t spend money you don’t have and thankfully, socialists generally do not terrorize people into compliance. We have seen communism collapse under its own weight and we are beginning to see the same in socialist Europe. Yet many Americans still support Obama’s euro-style programs. It doesn’t work there and it won’t work here. The president who follows Obama will have to clean up his predecessor’s mess as was the case with Johnson, Carter and Clinton. Did I leave anyone out?
Here is something to chew on and I wonder if anyone might know the answer.
We hear a lot about the 1%. My question is this. What is the actual number of people who would be counted to make up the 1%? But don’t stop there. How many people would belong to the next 1% and so forth and so on until you have a number for each of the 1%’s that comprise the 100 in !00% to include the number of people in the bottom 1%.
I think this would be interesting to know and I also think you/we/me would find that the true medium income is not what you/we/me would think it is.
OwVN: very kind of you. thank you.
Paul –
Do you agree that Harry Reid has been willing to compromise with Republicans in this Congress but Republicans have been hindered by their TEA party members?
Was there not a compromise on budget cuts that Republicans are now threatening to renege on? Are the current filibuster rules sane? Should the majority be allowed to rule? Even if it’s a Democratic majority?
http://www.washingtonpost.com/opinions/lets-just-say-it-the-republicans-are-the-problem/2012/04/27/gIQAxCVUlT_story.html
Larry –
Yet many Americans still support Obama’s euro-style programs.
I would be interested in hearing your example of one of Obama’s euro-style programs. Thanks.
There is no 1%! People cling to that nonsense as if it were a basic tenet of economic theory instead of a clever catch-phrase with no real meaning. Where anyone ranks on the economic scale is relative to many factors, especially the region they live in and its current economic condition. This 1% nonsense is thinly disguised trash-the-rich jealousy.
PNElba: Obama’s health care proposal? That alone is enough to qualify him for the presidency of Greece, for example.
PNElba: “I would be interested in hearing your example of one of Obama’s euro-style programs. Thanks.”
Life of Julia. Cradle to grave socialism.
http://www.redstate.com/hanoverhenry/2012/05/04/obama-website-life-of-julia-cradle-to-grave-socialism-for-america/
“Paul –
Do you agree that Harry Reid has been willing to compromise with Republicans in this Congress but Republicans have been hindered by their TEA party members?”
Yes.
Nothing is going to be actually cut. They might try to cut food stamps because the interest groups for the poor are not as strong as interest groups for the defense industry but I don’t think it will happen in the end.
As far as a 1% goes, well they exist on both sides of the political spectrum, in fact I would bet that the 1% is more democrat than republican. But anyway the big problem is not the 1% but the lack of economic mobility. This used to be what we were all about, no more. Now if you are born rich you stay rich and vice versa, you have a better chance of being born into a lower middle class family and becoming wealthy in Europe than you do in the US, which is a very bad thing for us.
We are getting poorer, look around. For those of you who have traveled to Europe in the past couple of years, when you drove around the countryside how did it look compared to driving around the north country?
We have to get out of this attitude that we are the wealthiest country in the world, this is simply empirically false, the median German is wealthier than the median US citizen.
There should be universal healthcare that covers all registered citizens. It should be a no frills benefit which covers the basics and catastrophic health issues such as cancer treatments but not experimental treatments. For those who want deluxe healthcare options, extended private care, experimental or naturalopathic care, there should be insurance options available for that type of coverage. The insurance companies would be happy, people with high quality care programs will be happy and others can make a choice to how much they are willing to spend on their healthcare treatment. Basic or any of several levels of treatment at additional costs. My fear of universal coverage is that it will be, anything goes, and be hugely expensive or the opposite, not enough availability for treatment options, and long waits for treatments. Before we can get to some level of care there are a lot of logistics to be worked out but nobody really wants to work on it they just want to politicize it.
Larry, if communisim doesn’t work, why is China eating our lunch?
Zeke,
China is so not eating our lunch! We could attract millions of manufacturing jobs (if that’s what you mean) if we forced workers to accept slave wages, unsafe working conditions, etc. Never underestimate the persuasive effect of state-sponsored terrorism, especially when practised on one’s own people. China has accomplished their economic growth by state-sponsored capitalism that enslaves their own people, brutaly eliminates dissent and savagely despoils their own country.
Larry, one of our major creditors is China. Plus, you dissapoint. I really expected you to blame the unions.
Mervel,
Your USA-bashing comments are merely recitations of long disproved liberal rhetoric that goes back at least to the time of Ronald Reagan. The fact is, although many European societies still enjoy an excellent standard of living they are flat broke and their economies are failing. Take a look at Spain and Greece, for example. Pensions have been cancelled or devalued, accumulated wealth has disappeared and political tension is rising. THAT is the inevitable consequence of Euro-socialism. All the free health care in the world can’t help them now.
Zeke,
I might be disappointed in you if any of your arguments held water. 30 or 40 years ago everyone was crying about the Saudis “owning” the USA, yet here we still are: the world’s largest economy and the essential linch-pin of the world economy. Like it or not, and I suspect you don’t, for all our challenges, issues and failings, we are still the world leader in everything that counts. Why does that make so many liberals uncomfortable?
Larry,
Great then the debt is noooooo problem. Carry on.
Larry –
Obama’s health care proposal? That alone is enough to qualify him for the presidency of Greece, for example.
Seriously? That’s all you’ve got? I guess you have a very skewed definition of socialism then.
And, Greece? I guess you also don’t understand the differences in the economic problems of Greece vs. the USA. All you really have are conservative talking points.