Saturday, June 9, 2012

Wisconsin and the Economy

What’s New Today

Story #1 looks at the national implications of Wisconsin.  Why did Walker raise more money than the opposition? Why was Obama’s total part in this a tweet?  #2 looks at Obama’s “the private economy is doing fine” remark.  #3 looks at who’s had the worst economy since the Great Depression.  #4 looks at the latest Democratic fund raising letter and wonders is it panic or opportunism.  #5 talks about Obama and his dinners with Historians.  #6 looks at what Obama’s doing to other Democrats.

Today’s Thoughts

Amber Lee Ettinger, widely known as "Obama Girl" during the 2008 presidential campaign, told The Daily Caller she is "not as excited as I was the last time, that's for sure."

After Administration officials said of Corey Booker, “He’s dead to us,” Lannie Davis said: “You have vicious people who are working for the president”

1.  The National Implications of Wisconsin

…But back to the national implications. The fact that one candidate raised more money than the other is not just a fact of nature. You have to ask why Walker raised more. After all, there are plenty of rich and upper-middle-class Democrats, not just in Wisconsin but around the country, and this race got lots of national attention. The unions still have millions in dues money to spend—though they're getting a lot less, now that workers actually have a choice in the matter. They also have the benefit of an extensive network of grass-roots advocates and volunteers, which can do a lot to make up for a gap in spending. Then, of course, there is the national Democratic Party.

Ah, but there's the rub. In the weeks leading up to the recall, the national party pretty much abandoned Wisconsin. Money and organization didn't flow into the state, and President Obama's contribution amounted to exactly one "tweet " the day before the vote….

…But this actually makes it worse for the left. Walker's limitation of union power was not bitterly contested, because it is popular.  It is popular because it has been a success, moving the state government from a deficit to a surplus and helping many local governments and school boards avoid mass layoffs.

That is the wider significance that the left is trying to avoid. The Wisconsin vote reflects a national shift in favor of controlling government spending.

Jay Cost has an interesting piece in which he points out that the slowdown in growth during the Great Recession has led to a "politics of loss." The idea is that for most of the post-World-War-II era, economic growth allowed politicians to avoid difficult choices. The level of taxation stayed relatively stable as a proportion of the economy, but because the economy grew so quickly and so steadily, those taxes could keep paying for an ever more generous welfare state. So we could have an economy in which everyone seemed to gain, in which Republicans could promise to reduce taxes without slashing welfare benefits, and Democrats could keep expanding the welfare state without jacking up taxes very much.

Now that the economy has essentially stopped growing, that has been exposed as unsustainable. Every dollar paid out to public employees or to middle-class entitlements has to be taken out of the hide of taxpayers, one way or another—or if the taxpayers aren't fleeced, then the unions are going to be forced to scale back their benefits and entitlements are going to have to be reduced. It is now a zero-sum game…

The Unions and the Democrats should hope that Romney wins and that he can get the economy moving again (he can).  If the economy doesn’t grow, there are huge cutbacks that must happen. 

2.  Obama blows it again
It was just six words from a 29-minute news conference, but President Barack Obama's assertion that "the private sector is doing fine" looks primed to play a starring role in this already-fevered campaign season.
In a discussion that focused in large part on Europe's problems, Mr. Obama turned at one point to the U.S. He said Republicans needed to join him to help state and local governments that have continued to pare jobs while private-sector employment expands.

"The truth of the matter is that … we've created 4.3 million jobs over the last 27 months, over 800,000 just this year alone," he said in response to a question. "The private sector is doing fine. Where we're seeing weaknesses in our economy have to do with state and local government," which, he said, isn't getting the support it needs from Washington. 

Within minutes, Republicans including House Speaker John Boehner of Ohio and Sen. Mitch McConnell (R., Ky.), the Senate minority leader, reacted.

Mr. Obama's Republican presidential challenger, Mitt Romney, called the comment "an extraordinary miscalculation and misunderstanding" by the president. "I think he's defining what it means to be detached and out of touch with the American people," Mr. Romney said at a campaign stop in Council Bluffs, Iowa….

This is akin to the joke about the person who falls off a 50 story building.  At floor 25 someone asks him how he’s doing.  He responds, “Pretty good so far.” 

3.  Obama vs Reagan

Our current economic slowdown is being called the "Great Recession."  How often have you heard someone say this economy is the worst since the Depression?  The economic problems we face today are enormous, but that does not mean that the problems are unparalleled in recent decades.  In terms of unemployment, the economy President Reagan faced in the early 1980s was actually worse than today's.

Unemployment, which stood at 7.8 percent when President Obama took office in January 2009, peaked at 10.0 percent near the end of that year and was at that level for just the one month.

Ronald Reagan inherited an unemployment rate of 7.5 percent in January 1981.  Unemployment, which peaked at 10.8 percent in 1982, was at 10 percent or higher for ten straight months.

These numbers suggest that President Reagan faced a jobs challenge at least as great as the present one.
Our current unemployment rate (May 2012) is 8.2 percent.  In May 1984, the corresponding month in President Reagan's first term, unemployment was down to 7.2 percent, a 3.6-percent drop (compared to a 1.8-percent decrease to date for President Obama).  Unemployment has declined only half as much under President Obama, and it has taken us longer to get there.

Both presidents relied on budget deficits to stimulate the economy, but the similarities end there.  President Reagan's deficits were much smaller.  Deficits during his first term averaged 4.3 percent of gross domestic product (GDP), compared to 9.1 percent of GDP during President Obama's first term.  President Obama's deficits, which have been twice as large as President Reagan's were, have produced only one half the reduction in the unemployment rate….

Democrats don’t want to compare Reagan to Obama because it doesn’t work well for them.  With Obama “It’s mourning in America.”

4.  Panic or opportunisim?

Ann Marie Habershaw, the Obama campaign's chief operating officer, told supporters in a blog post published Friday that last month was "the first time that the Obama organization has been outraised by an opponent since 2007." She warned that "we are not guaranteed to win this election."

"If there's anyone still out there acting like we have this thing in the bag, do me a favor and tell them they're dead wrong," Habershaw wrote. "Now that Mitt Romney has locked up his party's nomination, yesterday's numbers are only the beginning. The Republican big-dollar donors and special-interest cash will only keep coming out of the woodwork, lining up to support him."

The message caps a steady and increasingly doom-laden series of entreaties by the campaign to step up the fundraising pace for the final stretch of the presidential campaign. Campaign manager Jim Messina wrote in an e-mail that "we got beat" on money, and urged supporters to "fight like hell and win this thing." 

The call-to-arms follows a remarkable surge in fundraising by Romney, who brought in $76.8 million last month after locking up the GOP nomination. The total overshadowed Obama's own monthly fundraising tally of $60 million, which was his best so far in 2012.

I’m not sure which it is, perhaps both.  But I think the Democrats are starting to realize it is serious.  I’m interested in seeing what kind of money Romney brings in this June after Wisconsin.  Perhaps donors will smell blood in the water. 

5.  Obama and the Historians

On the evening of Tuesday, June 30, 2009—just five months into his administration—Barack Obama invited a small group of presidential historians to dine with him in the Family Quarters of the White House. His chief of staff, Rahm Emanuel, personally delivered the invitations with a word of caution: the meeting was to remain private and off the record. As a result, the media missed the chance to report on an important event, for the evening with the historians provided a remarkable sneak preview of why the Obama presidency would shortly go off the rails

Today, with Mr. Obama in full campaign mode, that event—as well as two more unreported White House dinners with the historians—is worth examining. Together, they shed light on the reason this president is likely to find it much harder than he expects to connect with the public and win reelection to the White House.

At the time of the first dinner, the new president was still enjoying a honeymoon period with the American people; according to Gallup, 63 percent of Americans approved of the job he was doing. Brimming with self-confidence, Mr. Obama had earlier confided to David Axelrod, his chief political strategist: “The weird thing is, I know I can do this job. I like dealing with complicated issues. I’m happy to make decisions.…I think it’s going to be an easier adjustment for me than the campaign. Much easier.”…

…When one of the historians brought up the difficulties that Lyndon Johnson, another wartime president, faced trying to wage a foreign military venture while implementing an ambitious domestic agenda, Mr. Obama grew testy. He implied that he was different, because he could prevail by the force of his personality. He could solve the worst financial crisis since the Great Depression, put millions of people back to work, redistribute wealth, withdraw from Iraq, and reconcile the United States to a less dominant role in the world.

It was, by any measure, a breathtaking display of grandiosity by a man whose entire political curriculum vitae consisted of seven undistinguished years in the Illinois senate and two mostly absent years in the United States Senate. That evening Mr. Obama revealed the characteristics—arrogance, conceit, egotism, vanity, hubris and, above all, rank amateurism—that would mark his presidency and doom it to frustration and failure….

Over the two-hour dinner, Mr. Obama and the historians discussed several past presidents. It wasn’t clear from Mr. Obama’s responses which of those presidents he identified with. At one point, he seemed to channel the charismatic John F. Kennedy. At another moment, he extolled the virtues of the “transformative” Ronald Reagan. Then again, it was the saintly Lincoln…or the New Deal’s “Happy Warrior,” Franklin Roosevelt….

…In the wake of the shellacking the Democrats took in the midterm elections in 2010, Mr. Obama held a second dinner with the historians, which was devoted to the question of how he could “reconnect with the public.”

A third dinner took place in July 2011, shortly after Mr. Obama and his team botched the budget-deficit negotiations with Congress, and the United States government lost its Triple-A credit rating for the first time in history. It revolved around the theme “the challenge of reelection.”
That fall, I spoke to one of the historians who attended all three of the dinners. We met in a restaurant where we were unlikely to be seen, and our conversation, which lasted for nearly two hours, was conducted under the condition of anonymity….

 “There’s no doubt that Obama has turned out to be a major enigma and disappointment,” the historian told me. “He waged such a brilliant campaign, first against Hillary Clinton in the primaries, and then against John McCain in the general election. For a long time, I found it hard to understand why he couldn’t translate his political savvy into effective governance.

“But I think I know the answer now,” he continued. “Since the beginning of his administration, Obama hasn't been able to capture the public's imagination and inspire people to follow him. Vision isn't enough in a president. Great presidents not only have to enunciate their vision; they must lead by example and inspiration. Franklin Roosevelt spoke to the individual. He and Ronald Reagan had the ability to make each American feel that the president cared deeply and personally about them.

“That quality has been lacking in Obama. People don’t feel that he’s on their side. Obama doesn't connect. He doesn't have the answers. The irony is that he was supposed to be such a brilliant orator. But, in fact, he’s turned out to be a failure as a communicator."

If the verdict of this historian is correct, and Barack Obama’s fundamental failure as president is his inability to connect with people, he is in far more serious trouble than most people realize as he seeks a mandate for a second term in office. Or, as this historian put it: “I wouldn’t bet the ranch on his getting reelected.”

"More than that, Obama might not have the place in history he so eagerly covets. Instead of ranking with FDR and Reagan and other giants, it seems more likely that he will be a case-study in presidential failure like Jimmy Carter." 

I believe the American public is like a wife who is considering divorce, but doesn’t want to admit it to herself.  And Obama is like a husband who knows he’s in trouble and he’s trying to blame everyone else.  So the polls are still close, but it won’t be when in November.

6. Fallout from Obama

A surprising new poll of the Connecticut Senate race shows Republican candidate Linda McMahon not only leading the primary field, but within striking distance of the likely Democratic nominee, Rep. Chris Murphy.

A Quinnipiac poll released Wednesday found McMahon, World Wrestling Entertainment co-founder and 2010 Republican Senate candidate, leading her primary opponent, former Rep. Chris Shays, by a whopping 29 percent. 

Equally surprising was that in a trial heat with the presumptive Democratic nominee, Rep. Chris Murphy, McMahon trails by only 3 points, 43 percent to Murphy’s 46 percent. Shays, on the other hand, gets beaten 45-37.

Quinnipiac is a poll that gets more accurate the closer we get to the election because they go from registered voters to probably voters to likely voters.  Right now their polls are skewed toward the Democrats. 

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