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The Penultimate Day of a Dreary Eight Years

Today is President Barack Obama’s last full day in office, and it’s been a long wait. We were loudly grousing about the man back when he was first elected on a waft of hope that he was some sort of messiah, we groused again when he ran re-election on the argument that his opponent was some sort of devil, we’ve been grousing ever since, and we feel obliged to grouse once again as he leaves office with unaccountably high approval ratings.
Obama’s more die-hard admirers have already unleashed newspaper serials and hour-long video tributes and full-length hardcover books explaining how great he was, almost as great as promised back in the days when he was talking about how sea levels would fall and the national debt would decline and all that unpleasantness with Islam and the rest of the world would surely be worked out, but the case is hard to make at the moment when Donald Trump is about to be inaugurated as president.
All the testimonials point out how very bad the economy was when Obama took office, and how not -so-bad it is upon his departure, but we’ve paid enough attention that we’re not impressed. The economy was indeed in a deep recession starting some four or five months before Obama was inaugurated, but recessions always end and this was officially over before Obama could get his literally more-than-a-trillion-dollar “stimulus package” passed, and despite all the spending that had been added on top of the literally-more-than-a-trillion dollar Troubled Asset Relief Program that Obama and pretty much everyone else from both parties voted for the recovery has been the weakest on post-war record, and although the headline unemployment rate looks pretty good the broader measure that includes part-timers and the unemployed and those out of the workforce and is buried deep in story hasn’t fully yet fully recovered. Massive new regulations for the financial industry and a major government power grab of the health care sector almost certainly had something to do with the sluggishness, and what growth did occur can largely be attributed to an oil boom that Obama tried to thwart. There was also a stock market boom, but that was because the Federal Reserve kept pumping money that had nowhere to go but the stock market, where it naturally wound up exacerbating all that economic inequality that Obama had vowed to end with his tax hikes, and although he has Bill Clinton’s luck that the bubble won’t burst until the next administration we’re not counting it as a major accomplishment.
Accomplishments are even harder to find in Obama’s foreign policy, although that doesn’t stop his admirers from trying. No one dares say that Obama’s Libyan adventure or that “red line” he in drew in the Syrian sand have worked out at all, and his past “reset” appeasement of Russian dictator Vladimir Putin is suddenly unfashionable in liberal circles, but they do try to cast the deal with Iran where we give them billions of dollars and they sort of pretend not to be building a nuclear bomb as a breakthrough victory. The decision to withdraw American troops from Iraq helped win Obama re-election, and after four years it gets occasional mention, although even his most ardent admirers must admit there have been unhappy consequences. Obama’s efforts on behalf of the European Union and Israel’s more liberal political parties and Latin America’s more Marxist types have not proved fruitful, China and Russia and Iran and all the usual troublemakers are more troublesome than they were eight years, and we can’t think of any of international relationships that have been improved. His most ardent admirers point to his good intentions, which we’ll conceded for the sake of argument, but the only thing that good intentions wins is a Nobel Peace Prize.
All the promises of a post-racial and post-partisan and altogether more tolerant society have also proved hollow. The past eight years of attempts to impose racial quotas on law enforcement and school discipline have made life more dangerous for many black Americans and understandably annoyed a lot of the white ones, Obama’s declared belief that politics is a knife fight and the Democrats should bring a gun and the Republicans can come along for the ride so long as they sit in the back of the bus because “I won” has heightened partisan acrimony, and although we’ve got the same sex marriages that Obama claimed to oppose in both of his runs he’s fueling the intolerance for anyone who doesn’t want to bake a cake for the ceremonies.
Although it’s good to at long last see it all come to an end after today, we expect the effects to linger for a while. The next president has already promised a more-than-a-trillion-dollars stimulus package, plenty more market interventions, health insurance for everybody that’s going to be cheaper and better than what was promised in Obamacare, and no messing around with those Social Security and Medicare and Medicaid entitlements that are the main drivers of the national debt. So far Trump’s Russian policies make Obama’s seem downright Truman-esque, and our erstwhile allies in Europe are as alarmed as ourselves, and although Trump also seems a friend of Israel we have no idea what he has in mind for the rest of the Middle East. As far as that hyper-partisan atmosphere of guns and knives and relegating enemies to the back of the bus and the might of an electoral victory making right, we see little improvement ahead.
We’ve already been grousing about Trump for more than a year now, and expect to do so for another four years or more, but we’ll always attribute some share of the blame to Obama. Those who cheered on Obama’s racialist and partisan and intolerant rhetoric should have known what they were bound to provoke, and those who cheered on the executive actions and bureaucratic harassment of political enemies are about to find out what it’s like to be on the receiving end, and despite all promises about making America great again none of us are likely to find out it works out any better than the Obama administration’s blather about hope and change.

— Bud Norman

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Handicapping the Hypothetical

There’s always a lull in the news between Christmas and New Year’s Day, even in such a crazy election year as this, so the papers have fill to space with what might have been. President Barack Obama helped out on Monday by confidently speculating, in a widely quoted interview, that he would have won a third term if he’d run for re-re-election. The 22nd amendment to the Constitution prevented it, so he didn’t, but it nonetheless makes for interesting speculation on a slow news day. Donald Trump, who did wind up winning the race, of course helped out further by responding with one of his typically eloquent “Tweets”: “President Obama says that he thinks he would have won against me. He should say that but I say NO WAY! — jobs leaving, ISIS, OCare, etc.”
Although we’re loathe to say any such thing about either of these loathsome men, we think that both can make a plausible case for their boasts.
Obama’s approval ratings are inexplicably high at the moment, despite his party’s loss, and far higher than Trump’s, despite the honeymoon bump a president-elect always gets in the fresh aftermath of a victory. Many of the economic numbers are also better than last time around when Obama beat a Republican who didn’t go out of his way to offend women and minorities, and the awfulness of his foreign policy was just as apparent back then. Trump did wind up losing the popular vote by a whopping 2.8 million to a charmless old white woman with 30 years of scandals the press could not ignore, so it’s not hard to believe that Obama could have used his teflon-coated charm and undeniable political savvy to muster just enough young folks and black people in those three rust-belt states he won twice but where Trump’s razor-thin pluralities swung the electoral vote.
On the other hand, we suspect that Obama’s approval ratings can be explained by the fact that he’s mostly been out of the news lately, what with Trump’s illiterate “tweets” and other embarrassing antics taking up all the space. Given all the vastly more qualified candidates he thrashed on his way to that electoral victory, it seems quite plausible Trump could have dragged Obama down to the same unfavorable muck. Trump and all the rest of the Republican party ran on various platforms that were mostly defined by their opposition to the past eight years of Obama, and most of them did pretty well with it, so we can see how even Obama himself might have faced difficulties. At this point it’s hard to put much in the faith in the polls, too, and some of those seemingly rosy economic numbers are also fishy to a whole lot of people.
So there’s no telling how that hypothetical Obama versus Trump cage match might have turned out, and whose head would have been shaved at the end, but as long as we’re speculating about what might have been we will wistfully wonder how it might have been decided on the merits.
The headline employment rate is in undeniably better shape than when Obama took office just as one of the worst recessions ever was beginning a recovery, but the rebound has been historically weak and the less-mentioned U-6 rate of unemployment that includes the under-employed and part-timers and those who have given up on finding work still hasn’t fully recovered. Obama’s massive “stimulus package” of budget-busting infrastructure spending and other market interventions clearly didn’t do any good, but the combination of Trump’s promised tax cuts and even bigger infrastructure spending and meddlesome decisions about the hiring policies at Indiana furnace factories don’t appear any more promising over the long run. The stock market is still sky-high, but that has more to do with the Federal Reserve Board than either Obama or Trump, and we’ll have to wait to see how that might turn out. That Obamacare law is so horrible it should have run its eponym out office eight years when he was running against that Republican who didn’t go out of his way to offend women and minorities, but Trump said too many things about universal coverage and pre-existing conditions and how great things are in Scotland to make us confident things will get better.
The Islamic State turned out to be far worse than the jayvee team that Obama thought it was, and his ridicule of his final Republican opponent’s warnings about Russia looks ridiculous to the Ukrainians and every other country threatened by the rapidly re-organizing Soviet Union, and his deal with Iran seems destined to provide that apocalyptic suicide cult with a nuclear bomb. On the other hand Trump is promising to join forces with Russia to defeat the Islamic State while re-negotiating with the Russian’s good friends in Iran, meanwhile “tweeting” up a renewed arms race with the Russians, and he’s also “tweeted” his disdain for whatever the Central Intelligence Agency or the United Nations or Boeing or Lockheed have to say about it, so there’s no telling how that will end up.
In any case the Obama years are about to come to a decisive end, which will surely bring some good, and the Trump years are about to commence, which might not be all bad, and the both of them are apparently the boastful and thin-skinned sorts we would never trust with such a high office. Once you start to speculating the possibilities are infinite, but in all of them we find ourselves for voting that same quixotic third-party write-in candidate who never had a chance.

— Bud Norman

Hope and Change and Motor Homes

Oh, how well we still remember that heady late spring of ’08, when all of our liberal friends were somehow entranced by the media-amplified celebrity of a youthful and fashionably swarthy young Senator who was standing in front of faux-Greek columns promising hope and change and a fundamental transformation and a lowering of the sea levels. A mere eight years or so later the grayer and more pallid President Barack Obama was in Elkhart, Indiana, “The Recreational Vehicle Capital of the World,” bragging to the locals about the modest comeback of the motor home industry during his administration, and clearly annoyed that he’s already been eclipsed from the spotlight and is now in danger of being replaced by the media-amplified celebrity of an aging and orange-skinned reality show star who’s promising to make America great again and somehow has most of our conservative friends warily going along with it.
The speech was little noted and will soon be long forgotten, to borrow a line from a better day of political oratory, but we think it worth some brief ridicule. Obama attempted to defend his economic record, refute the arguments of his would-be Republican successor, and imply some further annoyance that his would-be Democratic successors aren’t exactly running on his record, and we found it embarrassingly unconvincing in every attempt.
We concede the unemployment rate and the stock market indices and other usually reliable economic indicators are better than when Obama took office at the tail end of a steep recession, and that there’s always an argument to be made that we could have done worse, yet we remain quite unimpressed. We’re a bit older than the president, and started paying attention to these things long before he did, and by now we’ve been through enough recessions to have noticed that whatever’s left of the free market system always pulls out of those slumps no matter what cockamamie solutions the government of the moment might provide. We judge just how harmful those policies are by how quick and broad and persistent the ensuing recovery is, and how much debt was racked up to keep it going, and by those standards the Obama record has been abysmal. The decline in the unemployment rate is largely explained by the unusually high number of potential workers who have dropped out of the labor force, the stock markets are high mainly because capital has nowhere else to go in a time of zero and even negative interest rates, and whatever good news you find in the rest of those leading economic indicators is probably a result of all that fracking and the resulting lower energy costs that the heady campaign of ’08 promised to prevent, and of course we also have all those trillions of debt that will eventually have to be dealt with.
This is also the first time in American history that a two-term president didn’t preside over a full year of at least 3 percent of national economic growth, but he can claim that it has averaged around 2 percent, which inarguably could be worse, and is a full percentage point within 3 percent, and his still-loyal and his mostly economically illiterate and innumerate supporters won’t notice that it’s actually a full 50 percent off the previous historic low benchmark. All in in all Obama needs a better case than that rebound in the motor home market, which was probably already doomed to low-growth no matter how much fracking occurs with the demise of road-loving bohunk seniors who used to show up at the annual local Polkatennial across town at the Cotillion Ballroom on their tours of the polka festivals, and he didn’t seem to have it.
His refutation of the would-be Republican successor’s policies was even more unconvincing, as he seems to have been paying no attention to what his orange-skinned fellow reality star has been saying. Without mentioning the presumptive Republican nominee by name, which we appreciated, the President ascribed to him all sorts of stereotypical Republican positions. He noted that “economic anxiety” had caused an “unusual election year,” which is truthful enough, and argued that “provocative ‘Tweets'” are not enough to support a candidate, which would be truthful enough coming from anyone but Obama, but he went on to add that the Republican would “lower wages, eliminate worker protections, cut investments in things like education, weaken the safety net, kick people off health insurance, and let China write the rules for the global economy.” He further ridiculed the notion that the many billions of dollars of regulatory compliance costs have somehow hampered the economy, and fondly recalled all those Nixon-era regulations that have kept us from doom. The president must have had such old-fashioned and cruel-hearted Republicans as ourselves in mind, because the party’s current presumptive presidential nominee is open to giving a yuuge raise even to the most inept minimum wage workers, promises no changes whatsoever to those debt-driving entitlement programs, likes the single payer system of Canada and the outright nationalized British style of health care and promises “we’ll take care of everybody,” seems intent on a disastrous trade war with China, and promises that he’ll regulate the entire economy right for a change.
No wonder the president seemed to annoyed that neither of his would-be Democratic successors aren’t enthusiastically running on his record. One is a self-described socialist who talks down the Obama economy more derisively than the Republican, and we don’t doubt that Obama would be annoyed to be succeeded by the first president who was at least blunt enough to be a self-described socialist, and the other is a former First Lady and Senator and Secretary of State who was so awful in every capacity that she makes the presumptive Republican nominee look respectable. It’s not the hope and change and fundamental transformation that was promised back in those heady days of ’08, and the sea levels continue their centuries-old rise, but here we all are in the “Recreational Vehicle Capital of the World.”

— Bud Norman

That Uncertain Time of the Year

For some reason or another Time Magazine’s “Person of the Year” issue always gets some amount of attention, even though it’s the only time other than a dental appointment when you’re likely to be aware of Time Magazine’s continuing existence, and this year they have designated Germany’s Chancellor Angela Merkel for the honor. By now it’s no bigger a deal than an Academy Award or a Nobel Peace Prize or any of the other once-prestigious titles, at least as far as the average person is concerned, but it’s always a reliable indicator of what the more important sorts of people are thinking.
In this case it’s clear they’re thinking that a massive influx of immigrants from the most troubled parts of the world is just what western civilization needs to maintain its economy and sense of self-righteousness. Merkel didn’t get such profuse praise from the press when she took power as a center-right alternative to Germany’s previous more liberal leaders, and certainly not when she was wisely rejecting President Barack Obama’s pleas for a coordinated stimulus effort to revive the world economy after the 2008 recession, or when she was stubbornly insisting that Greece’s latest bail-out come with harsh conditions of fiscal rectitude, but now that she’s insisting Germany and the rest of Europe welcome millions of refugees from the Middle East’s wars and general inhabitability she enjoys a newfound respectability. Her stand on immigration is not popular in Germany, or anywhere else in the western world, but that impresses the editors of Time Magazine all the more. “She is not taking the easy road. Leaders are tested only when people don’t want to follow,” the article enthuses, “For asking more of her country than most politicians would dare, for standing firm against tyranny as well as expedience and for providing steadfast moral leadership in a world where it is in short supply, Angela Merkel is Time’s ‘Person of the Year.'”
It seems to us that Merkel is asking her people to surrender their country to an incremental invasion by a markedly inferior culture, that her imposition of her own will over that of her people is itself tyrannical, that she’s doing it for the merely expedient reason of coping with her country’s below-replacement-rate fertility, which is likely a result of an enervating social welfare system and civilizational self-doubt that the centrist and childless Merkel has not addressed, and although we’ll readily agree that moral leadership is in short supply around the world she hardly seems an exception to that rule. Nor do we expect that that such leadership will inspire many followers, in Germany or elsewhere, so her influence on events will likely be short-lived. Those who prefer political correctness and economic expedience to the survival of western civilization will applaud Merkel’s defiance of popular opinion, but they won’t prevail without an ugly fight.
with such respectable leaders as Merkel currently in power in most western countries, the widespread public opposition to their insane policies has too often found voice in the most disreputable sort of parties. The National Front is the big beneficiary in France, similarly nationalist and authoritarian parties are rising throughout Europe, and of course in America all the news is about Donald Trump’s front-running status in the Republican primary race. This makes the likes of Merkel all the more attractive to the likes of Time Magazine, but it won’t make much difference.
Trump’s “tweets” on the issue suggest he is slightly miffed he didn’t get the honor, and we’ll concede that he’s far more likely to have the greater ultimate influence on events than Merkel and all the other open-borders leaders around the world, but at least the editorial didn’t include him with such past “Persons of the Year” as Adolph Hitler and Josef Stalin and Ayatollah Khomeini. We note he was at least among the finalists for the title, along with the former Bruce Jenner, the Black Lives Matter movement, Iranian President Hassan Rouhani, Islamic State leader Abu Bakr al-Baghdadi, and the guy who came up with the “Uber” application. Putative Leader of the Free World Barack Obama didn’t make the cut, despite his own moral leadership on behalf of western civilization’s collective suicide, and neither did any of the Republican candidates who are forcefully arguing for sensible immigration policies, so it’s going to a take a hell of a person next year to set things right.

— Bud Norman

When Winter Lingers into Summer

You might not have noticed, what with all the political scandals and foreign crises and invasions of unaccompanied minors and soccer games vying for your attention, but the American economy remains very, very lousy. According to the ultimately official numbers that were released with little fanfare this week, the American economy is lousier than it’s been since the bad old days of the ’08 meltdown.
The first and most ballyhooed estimate of the first quarter’s Gross Domestic Product was for 0.1 percent growth, which was horrible enough but at least kept alive a streak of anemic growth and could plausibly be blamed on the miserably cold winter that had afflicted much of the nation. That was more quietly followed by a revised estimate of a 1.1 percent decline, and the administration’s apologists arguing that the winter was even worse than they’d realized and it would have been more dire if not for the miracle of Obamacare causing an uptick in health care spending. Only the most nervous sorts of investors and the hard-core news junkies would have heard about the final report of a 2.9 percent decrease in GDP, which is even harsher than the past winter and includes the unsettling news that Americans actually spent less money on their health. Upon closer examination the numbers become even more dismal, with declines in private inventory investment, exports, state and local government spending, and residential and non-residential fixed investment that cannot be explained by snowy roads and falling temperatures.
Still, those ever-bullish proponents of Obamanomics in the popular press are reassuring their readers that the lazy, hazy days of summer will correct the situation. Presumably this is the time of year when a young executive’s fancy turns to thoughts of private inventory investment, and everyone will be herding the kids into the car and hitting the road to a relaxing yet economically stimulative vacation despite the gas prices rising from all those foreign crises that have nudged the economy off the front pages. Those of us less enamored of the high-tax, high-regulation, high-minded anti-caplitalist scheme that has been imposed on the American economy the past six or so years remain bearish.
The smart fellows over at zerohedge.com note that after the miserable winter even if spring and summer and fall bring the rosy 3 percent growth rates that the government has been promising it will average out to a meager 1.5 percent growth for the year. They don’t seem at all confident of that, either, noting that the past 50 years of economic history have never found two years with growth of less than 2.6 percent that weren’t followed by a recession. After a long stretch below that economic Mendoza line another quarter of contraction would force the headline writers to use that dreaded “R word,” and the economy would be once again jostling with the latest scandals at home and catastrophes abroad for news space.
Such dire news should make the stock markets happy, as it will likely force the Federal Reserve Board to keep printing up money and pushing down interest rates at least through the mid-term elections next fall, but it will have an unsettling effect on those portions of economy that make their money honestly. All those scandals and crises don’t inspire much confidence in the nation’s leadership, either, nor do they bode well for the price of energy. Perhaps that invasion of unaccompanied minors from will rescue the economy, but even in the midst of a wet and warm summer we’re still feeling those wintertime blues.

— Bud Norman

Unlucky Number

One year always leads to another, and we shudder to think where a year such as 2012 might lead.
Journalistic tradition dictates that an end-of-the year column either look back at the past 12 months or prognosticate about the upcoming dozen, and at this particular point in history neither task is appealing. The past year saw the United States go yet another trillion dollars and more into debt, with slow economic growth and fewer gainfully employed workers to show for it, the citizenry’s increased dependence on a government that is increasingly bossy about every aspect of life, various scandals from the cover-up of a botched gun-running operation to the “sloppy” foreign policy that resulted in the death of an ambassador and three other brave Americans in Libya and a body blow to free speech rights here, the ascendance of a belligerent and supremacist Islamism in key countries of the Middle East with American support, and an ever stupider popular culture. By far the biggest story of the year was an electoral majority of the country’s decision to vote for more of the same — lest those evil Republicans kill off Big Bird, continue their dastardly if entirely fictional war on women’s private parts, and generally harsh everyone’s buzz — so it’s hard to envision a reversal of this bad fortune.
All indications are that America will begin the new year by barreling over the “fiscal cliff,” that dire-sounding name given the across-the-board tax hikes and arbitrary spending cuts that almost everyone agrees will lead to a recession. Some sort of patchwork agreement remains a possibility, but although it will surely be hailed as further proof of Obama’s transcendent genius it will still involve job-killing taxes that won’t raise sufficient revenue to make a dent in the deficits. Indeed, the deficits are likely to swell when more workers sign up for the never-ending unemployment benefits and a slew of new entitlement programs are deemed necessary to deal with economic downturn. This might even be the year that America’s looming debt crisis finally arrives, and even if the country’s economy continues to crawl along the prospects for the rest of the world remain unpromising. The prospect of a Secretary of State John Kerry and a Secretary of Defense Chuck Hagel certainly do not bode well.
None of this is any reason, of course, not to celebrate heartily tonight as the clock turns over to a brand new year. Nor is it any reason not to make the most of the next 365 days, whatever they might bring, and perhaps even prosper and be happy. Keep clinging bitterly to God and your guns, at least for so long as both are still legal, and give this whole 2013 idea a good shot.

— Bud Norman

That Confounding Obamanomics

Perhaps it’s because Barack Obama’s genius is so far beyond the comprehension of mere mortals, but even after four years of pondering we’re still having the hardest time understanding his economic theories,
We’ve never quite grasped, for instance, the part about how the economy crashed in 2008 and has never fully recovered because the income tax rates for the top 2 percent of earners were set a few points too low way back in the dark days of the Bush administration. So far as we can tell the president has never attempted to explain this counter-intuitive contention, and instead seems content with the knowing nods that it always gets from his avid admirers, but we’d love to hear him walk us through it some day. We thought the recession had something to with the government’s insistence that the banks make hundreds of billions of dollars in home mortgage loans to people who were never going to be able to pay the money back, but the president has never made any mention of that so there must not be anything to it.

Some people have explained on the president’s behalf that the too-low tax rates for the hated rich caused the deficit to rise, which somehow caused all those people to default on their mortgages, and they seem to truly believe this. When we note that federal revenues actually increased in the years after the tax rates were lowered, and continued to rise until all those bad loans brought the banks down, they always respond with an exasperated sigh that sounds quite convincing. We also note that the deficits have doubled since Obama took office, but apparently this is also Bush’s fault, and we’re assured that deficits are necessary to stimulate the economy.

It makes some tenuous sense, we suppose, that if the too-low tax rates caused the recession then upping them a few points would restore the nation’s economic health, but that leaves us wondering why the president is also insisting on another round of multi-billion dollar stimulus spending. According to one story the spending is needed to offset the economic drag of a tax hike, but if so it would seem much simpler to just skip the tax hike. Adding to the confusion, the proposed spending would add to the deficit that is said to have caused the economy to tank and remain tanked, but maybe it will only add to the good kind of bigger deficit that stimulates the economy.

All those trillions of dollars of deficit spending over the past four years don’t seem to have done much stimulating, not at first glance at the statistics measuring economic growth and job creation, yet the president’s many fans insist that without it everyone in the country would now be rubbing sticks together in caves and shooting each other over the last bushel of grain. There’s no way of proving this, economics being such a dismal science, but neither is there any way of disproving it so we’ll just do the fashionable thing and take the president’s word for it.
We’re also assured that no matter how many trillions of dollars of debt accrue there will none of the negative consequences that have followed in Greece, Spain, Argentina, or any of the other countries that have taken such a profligate path. Why this is so we’re not sure. Something to do with American exceptionalism, probably, although the president only believes in that to the same extent that the Greeks believe in Greek exceptionalism.
Oh well, there’s another four years to figure it all out. We’re sure that happy days will be here again by then, and the genius of it all will be clear.

— Bud Norman

Fiscal Cliff Notes

After careful consideration of all the possible “fiscal cliff” outcomes we have concluded there is no way that President Obama can lose or the congressional Republicans can win.If your only rooting interest is for the country at large, well, that also doesn’t look good.
For those who have been blissfully unaware of the goings-on in Washington, the fiscal cliff is what the country will fall off of if the Bush-era tax rates are allowed to expire at the beginning of next year. This would mean a tax increase for nearly everyone who actually pays federal income taxes, which almost every conservative economist believes would result in a severe recession, and it would also cut $1.2 trillion from the federal budget over the next 10 years, which every liberal economist believes would not only cause a recession but also push the earth out of its orbit and send it hurtling into the sun.
With such near-unanimity of opinion that the fiscal cliff is not something any sane nation would want to go over one might expect a quick agreement on the matter, but alas, this nation is insane. The original sticking point was on taxes, with Republicans preferring to retain the current rates for everyone and Democrats absolutely hell-bent on a tax hike for the hated top 2 percent of earners, but now comes word that the president’s list of demands has grown to include $255 billion in “stimulus” spending and no more congressional authority over the government’s credit limit. Although the demands might seem outrageous, if you consider the president’s personality and political position it is more surprising he didn’t insist on an immediate repeal of the twenty-second amendment and a new constitutional arrangement along the lines of what his pal Mohamed Morsi has decreed for himself in Egypt.
Why not? If the Republicans capitulate, always a distinct possibility, Obama will enjoy unprecedented spending power to buy all the votes needed for that third term. If the Republicans resist even at the price of going over the fiscal cliff, they’ll be widely blamed for the dire economic consequences.
That the Republicans would lose in the court of public opinion is a foregone conclusion. Not because of Obama’s vaunted rhetorical powers, which have proved wildly overrated, but because the still-powerful Washington news media and their colleagues on the comedy shows will constantly reiterate that Republican intransigence forced the country into an avoidable recession. The newly unemployed will get louder and more sympathetic than at any time in the past four years, with every sob story conveying the familiar message that Republicans care only for the rich. What little there is of conservative media will argue on the Republicans’ behalf that it would have been irreparably disastrous to hand Obama an unlimited line of credit, but they made the same sensible argument during the election and the result is what has led the country to its current sorry condition.
Nor should the Republicans doubt that Obama is entirely willing to take the country over the fiscal cliff, a destination that looks quite acceptable from his unique perspective. Taking the fiscal cliff dive would allow Obama to raise taxes on everybody, a Democrat’s dream, and do so without political consequences, something beyond the Democrats’ wildest dream. The automatic budget cuts will come mainly from national defense, which Obama has always wanted to gut anyway, and the rest of the spending can quickly restored by the Democratic House that is installed 2014. Spending cuts can always be rectified, but the tax money will never be returned.
The estimable Charles Krauthammer has argued that Obama won’t want his second term marred by a deep recession, but we fear that on this rare occasion he gives the president too much credit. A lousy economy that persisted through his first term didn’t prove sufficiently harmful to Obama’s political standing to prevent his re-election, and he has no reason to believe that his uncanny luck will change now. What’s more, a second recession will give him the same opportunities that the first afforded to push pork-laden stimulus spending and extraordinary money-printing to pay off his loyal constituencies.
There are the millions of Americans who will suffer greatly from the loss of jobs and wealth if the fiscal cliff recession comes to pass, but we doubt their plight will trouble Obama much during his upcoming multi-million dollar vacation. If their suffering helps the president achieve his dream of expanding the welfare state even further he can always console himself that it was well worth the price. We realize this is a very harsh assessment of an American president, but four years of watching his actions, rather than just listening to his lofty speeches, have led us to this conclusion.
No matter the outcome of the current negotiations, the country will continue its headlong rush toward financial insolvency. If the government can’t stop short of this relatively shallow fiscal cliff, don’t expect it will avoid that grand canyon.

— Bud Norman

Bad News in Two Directions

We take a back seat to no one when it comes to gloominess and doomsaying, but the number-crunching folks at the Congressional Budget Office are almost our equal in that regard.

The putatively non-partisan agency released an update to its “Budget and Economic Outlook” this week, and it can be quickly summarized by saying that the outlook is bleak. There are two forecasts included in the report, and both are quite glum, so the CBO’s outlook could actually be said to be doubly bleak.

After starting off with the sobering statistic that the federal budget deficit for the year will total $1.1 trillion, bringing the federal debt held by the public to 73 percent of the nation’s gross domestic product, the CBO assures policy-makers that all of that stimulus has at least ensured that the “economic recovery” will “continue at a modest pace for the remainder of the calendar year 2012.” This modest achievement will doubtless suffice as vindication for Obama’s more stalwart supporters, but after that the CBO sees trouble in either direction it looks.

The CBO has prepared a “baseline projection” based on the assumption that current laws will continue, meaning that in January all of the Bush era tax cuts will expire, the extension of unemployment benefits and the 2 percent reduction in the Social Security payroll tax also disappear, and a number of mandatory budget cuts go into effect. Under this scenario, the CBO expects that the unemployment rate will climb to 9.2 percent, the gross domestic product will shrink by 2.9 percent, and the situation “will probably be considered a recession.” They add the cheery note that the deficit would likely shrink to 4 percent of the gross domestic product, which could delay the day of fiscal reckoning by a few weeks or so, but it is not clear if that is based on assumption that all the tax hikes won’t actually result in less government revenue and more social spending as a result of all the economic carnage.

It is still possible that the government will act to extend all of the Bush era tax cuts — although the president seems ruthlessly determined to raise taxes on the higher earners, and quite confident that the public will blame the Republicans if everyone’s taxes get raised as a result — so the CBO has prepared an “alternative fiscal scenario” that envisions such an action as well as ignoring the mandatory spending cuts. Under this scenario the country goes another $1 trillion in debt for yet another year, but the economy grows by an unimpressive 1.7 percent and the unemployment rates stays stuck at around 8 percent.

All of which leaves one hoping for some possible third scenario. Ideally it would avoid tax increases and the resulting drag on economic activity, allowing the private sector to spend the available capital more productively than the various “czars” has done the past four years, with the ensuing growth and some well-chosen spending cuts whittling down the debt to manageable levels. The CBO does not speculate about such a course, but we suspect it would lead to a happier future.

— Bud Norman

Frolicking With the Bears

Here’s hoping that everyone had a happy weekend. After all the dreary economic news that arrived on Friday, it couldn’t have been easy.

Just a day after the government quietly revised its estimate of the gross domestic product’s growth in the first quarter down to a mere 1.9 percent, a report released Friday by the Bureau of Labor Statistics showed that the economy added a meager 69,000 jobs in the past month, the smallest total in two years, and an increase in job-seekers pushed the unemployment rate up to 8.2 percent. The more telling U6 rate, which includes people forced into part-time work and those still “marginally attached to the labor force,” rose from an already staggering 14.5 percent to 14.8 percent. Oh, and the Leading Economic Indicators declined this month, too. Throw in another slew of stories suggesting that Europe is on the verge of economic implosion, China’s growth is rapidly slowing, and the emerging of economies of India and Brazil are also feeling sluggish, and it was enough to send the Dow Jones down by 274.88 points, with similar carnage on the other boards leaving the stock markets down for the year.

Even the peppiest cheerleaders in the press didn’t try to pretend that it wasn’t completely awful. Some reports alleged that the increase in job-seekers indicated some optimism, however brief and futile, and several added a few perfunctory from the eternal optimist Mark Zandi of Moody’s Analytics blaming it all on the weather, but that was the best they could do. The Hill, a publication that prefers to accentuate the positive when reporting on the economy in the age of Obama, even quoted an unnamed White House official who described the jobs report as an “Oh sh*t moment.” The elision is The Hill’s, so we’re not entirely certain what the unnamed official was saying, but it can’t be good.

Gloom and doom has long been the default mood here, so we welcome the company, but it’s nonetheless unsettling to see such unabashed despair in the popular press. Worse yet, no one seems to be sincerely hopeful that anyone has a solution that will avert further decline if not utter collapse. There’s talk both here and abroad about another round of “quantitative easing,” but after the gazillions of dollars, euros, yuan, and whatnot that have already been printed up in the past few years there is no reason to believe that it will have any positive effect in the short term and every reason to believe that it will have catastrophic effects in the long run. The necessary reforms of entitlement programs and public sector compensation seem to be politically untenable, both here and abroad, as people everywhere seem to be as intent on defying economic reality as the politicians they have elected.

Americans might still choose another path, and what most seemed to alarm the press about Friday was a general consensus among the chattering class that it had been a good day for Mitt Romney. Should the current trends continue into November, and no one seems to have a good theory about why they won’t, the Obama campaign won’t even be able to continue making its conspicuously modest claim that at least we’re making some progress. We expect the president will say that it’s not his fault Europe’s over-taxed, over-regulated economy collapsed under the weight of its lavish entitlements and bloated public sector, but it won’t be Romney’s fault, either, and the Republicans should be able to point out the rather ironic nature of Obama’s excuse.

— Bud Norman