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Obama’s Economy

Obama’s Economy

April 25th, 2011 // 2:09 pm @

For the last two years the story in Washington has been the same: “President Bush got the U.S. into the worst economic downturn since The Great Depression, and the Obama Administration has been hard at work pulling our economy back from the brink of another collapse.” This storyline has provided the background for President Obama’s numerous policy proposals, most notably the huge government stimulus bailouts, the health care law, and a chilly attitude in Washington toward business.

The plotline changed in the November election of 2010, though it took a while for everyone to realize the full significance of this shift. The White House has reluctantly followed the Republican script in refusing to raise taxes so far, and Republican proposals for balancing the budget and dealing effectively with the national debt have fueled rebound plans from leading Democrats—including from the Obama team.

During all this, a major alteration has occurred in the American psyche: Obama, not Bush, now “owns” the economy in the popular mind. If the slow recovery of jobs and growth turns into real recovery, President Obama will get the credit. Republicans will argue that it was their anti-tax-raising and pro-business work that got the economy flourishing again, but only Republicans will listen. Democrats and the majority of independents will see lasting economic recovery as an Obama victory.

If, on the other hand, the economy continues to sputter or dips again, if unemployment stagnates or rises, Obama will get the blame. Most Democrats will likely still see the policies of the Bush era as the problem, and most Republicans will find ways to blame President Obama regardless of what happens, but the majority of independents have moved past blaming Bush.

Right here, right now, as most independents see things, it is up to the Obama Administration to steer the economy in the right direction, and independents will hold him to this responsibility. They won’t blame Bush anymore, and they won’t blame the new Republican majority in the House. If the economy booms, they’ll reward Obama; if it contracts, they’ll blame Obama.

It’s now Obama’s economy. That’s Big Political Trend Number 1. Number 2, to be clear, is that independents now determine presidential elections. Big Political Trend Number 3 is that we are likely to see inflation ravage the economy in the months ahead.[i] In fact, this third trend has the most potential to significantly impact and hurt most Americans. A Fourth Big Trend is that China is losing faith in the U.S. dollar and is looking to diversify its portfolio—meaning that it will likely stop buying as many U.S. bonds as it has and this will drastically hurt our economy.[ii] All of this is exacerbated by rising oil prices and the downgrading of the S&P rating of U.S. securities from Stable to Negative.

This doesn’t mean that a down economy will necessarily drive Obama out of office, however. Such an outcome will depend on who the Republicans nominate for the presidency. When the general election arrives in November 2012, most Democrats will probably vote for Barack Obama and most Republicans will likely vote for the Republican candidate. Independents will vote for…well…it depends.

If the Republican nominee is mainly a social conservative, most independents may well vote for Obama regardless of how the economy is doing. Since many of the Republicans who left the party to become independents in the last decade are most interested in economic issues, the relative strength of the social conservatives in the GOP has grown and social conservatives may emphasize social issues in the primaries and at the national convention. The Democratic Party faces its own challenges due to losses to independents, but it is almost sure to nominate President Obama. In short, it is not unlikely that Republican Party loyalists will appoint a presidential nominee who won’t appeal to most independent voters.

If, on the other hand, Republicans nominate an economic powerhouse who appeals to independent views on economic issues and can compete with Barack Obama on the tricky ground sometimes referred to as “the leadership thing,” the election of 2012 could be a close race. A Republican could win, or President Obama could win.

It is unclear if any of the current Republican field could be such a powerhouse. There are several Republicans who might make the case to independents for leadership and economic wisdom, and let’s not forget that someone new could arise—at this point in the last presidential election cycle most people in America had never heard of Barack Obama, and Hillary Clinton was expected to be the obvious Democratic candidate. To date, however, no potential 2012 Republican presidential candidate has caught on with independents—or seems poised to do so.

Regardless of what Republicans do, or don’t do—in the various policy debates of 2011 and 2012 and also in the 2012 election—a bad economy will probably convince most independents to lean away from voting for Obama. But only if the right kind of Republican is in the race. The larger point in all of this, a point which many Democrats and Republicans haven’t yet noticed, is that even in a bad economy most independents would still vote for Barack Obama over, say,  Richard Nixon, Gerald Ford, George H.W. Bush or George W. Bush.

Obama has lessened the gap between himself and Bush by basically following the Bush agenda in Afghanistan, Iraq and Guantanamo. He has failed to implement his various campaign promises about these areas and he has significantly increased the number of troops in Afghanistan. “Bush or Obama? What’s the difference?” many are wondering.

In domestic policy, the differences are glaring—if you are a Republican or Democrat. Bush supported business and the free market, some conservatives argue, while liberals point out that Obama has significantly helped the most vulnerable and weak among us. Independents, however, are underwhelmed by either argument. In their view, Bush gave lip service to the free market while drastically increasing government spending above President Clinton’s levels, and all of Obama’s rhetoric about helping the “little guy” has led to more government spending on programs that arguably have done little to actually help the needy or anyone else. Both administrations, as seen from the independent view, have done much harm to our economy and nation.

The stimulus package and health care law are unpopular among independents, but not as unpopular as the corruption of Bush’s administration (from various “witch hunts” and investigations of political opponents to no WMDs in Iraq). Obama talks like a liberal, spends like a liberal, and leads like a liberal, according to the independent perspective, but Bush spoke like a conservative and then led and spent like a liberal. Independents are thus understandably skeptical of Republican candidates promising to be fiscally responsible. “At least with Obama, we know what to expect,” is a common independent refrain. A Republican nominee will have to convince independents that he or she will exhibit truly great leadership and economic wisdom, while President Obama  must simply convince independents that the Republican candidate won’t do any better than a second-term Obama.

The common political wisdom is that with a bad economy the sitting president suffers in a national election. In 2012, a bad economy will be seen as “Obama’s bad economy.” But unless Republicans nominate a presidential candidate who can appeal widely to independents on both economic and leadership issues (especially in the battleground states), “Obama’s economy” will likely last until 2016.

[i] See, for example, “Let Them Eat iPads,” by Ken Kurson, Esquire, May 2011

[ii] See The Chris Matthews Show, April 24, 2011


odemille 133x195 custom The Freud DoctrineOliver DeMille is a co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.

He is the co-author of the New York Times, Wall Street Journal and USA Today bestseller LeaderShift, and author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Blog &Business &Current Events &Economics &Independents &Leadership &Politics

4 Comments → “Obama’s Economy”

  1. Blake Elliott

    13 years ago

    Your a good analyst, certainly better than many people on TV. I have spent the last several years (since the 04 election) deeply concerned about the polity of the nation and next year I’m going to be old enough to vote, so this article makes me feel pumped!

    On another note, you made good future guesses, but I’m not so sure on there having been so much corruption in the Bush administration. The WMDs for example, Iraq must have hid or gotten rid of them because they did have them. If you don’t believe me, might I remind you of the Gulf war when Iraq fired two WMDs on Israel? I know that was in 1991, but if then, why not in 2003? How about Saddam using chemical WMDs on the Kurdistan province in Iraq? Anyway, the “Witch hunts” you refer to may be naive, but they were and are just another example of government over reach, are they not? Their certainly not corrupt in and of themselves.

    Thanks Oliver, over all good article.

  2. Oliver DeMille

    13 years ago

    RE: WMD’s–I think there is some evidence of “now you see them, now you don’t.” Probably we’ll never know the whole truth there.

    As for the corruption of the Bush Administration, you need look no further than the witch hunt on political enemies conducted by the Justice department for evidence of this.

  3. Oliver DeMille

    13 years ago

    Blake, for the continuity of the discussion it is best to post a new comment below the latest one, rather than editing your previous one to include your new response.

    Re: Corruption–On that we disagree. The corruption I speak of was not mere overreach resulting from a difference of opinion on the proper role of government, but clear and specific abuse of power by so-called “conservatives”–in violation of their own professed principles–to target political enemies for persecution, skewing the process in local elections using innuendo and official intervention, etc.

  4. Blake Elliott

    13 years ago

    What I meant by corruption, (and should have said) is that it’s a secret abuse of power. You seem to define corruption differently. It’s just a difference of definition, not opinion. What you say on the WMDs of “now you see them, now you don’t”, and “probably we’ll never know the whole truth there” is true. I also believe that the Bush administration was tyranical-as you point out-but we did use different definitions of the word corrupt, as I described above. This is kind of a sensum literam trap isn’t it?

    Anyway, happy writing! ☺

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