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Aug 04 2012

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The Liberal Closet of Anxieties

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The Promise and the Reality

Last winter, I took time for a coffee with a friend who is  a staunch and active Democrat.

Our talk turned to politics and the Republican primaries then going on. In a voice that was tinged with disappointment, my buddy tagged the Republican candidates running for president as the biggest collection of misfits and clowns he’d ever seen put up for a major party nomination.

Talking about the fall campaign he spoke almost sadly of Team Obama having to put the GOP down – as one would have to do with a terminally sick animal. No real contest, no real race. The only question was how big Obama’s margin of victory would be.

That was January.

Here we are in August, and after spending more than $130 million on attack ads pillorying Mitt Romney over the last 90 days, the presidential race is essentially even.  Karl Rove reported that after the spending spree, Romney actually gained a point on Obama and that it is a 2 point race nationally, within the margin of error.

Despite highly charged narratives coming out of Chicago, such as  the “war on women,”(the false contraception debate),  the “war on seniors” (the false charges on the Ryan budget plan), the hat tip to Latinos, implementing parts of the Dream Act by Executive Order, and a presidential nod on gay marriage, the numbers haven’t moved. Even the harsh assault on Romney’s record at Bain Capital and of course the Romney tax returns have failed to move the dial significantly.

This is largely because Team Obama does not want to talk about the 800 pound gorilla in the room – the economy.

GDP, which was 4 percent in QIV of 2011, slowed to 2 percent in QI 2012, and slowed further to 1.5 percent in QII.

The unemployment rate is up to 8.3 percent for July as 150,000 people dropping out of the workforce, offsetting the 163,000 in job gains. The U-6 report – which includes all categories of unemployed now stands at a depressing 15 percent. This has an immediate impact on housing, particularly mortgage holders. 30 percent of American mortgage holders – 16 million – are underwater on their mortgages to the tune of $700 billion. This has been and will continue to be a huge drag on the economy as a whole.

Hourly earnings for workers are increasing, but less than inflation, which completely eats up the gains. The ISM Manufacturing Index came in below 50 for the second month in a row.  Anything below 50 signals contraction. ISM Services came in barely above 50. Meanwhile factor orders are down 2.6 percent over the past three months. Core capital-goods orders (non-defense and excluding aircraft) fell 1.7 percent in June and 3.9 percent over the past three months. Worse, most analysts do not see a QIII rebound, but at best, more of the same if not a contraction.

All of this has had a profound impact on American attitudes.

According to a NBC News/WSJ poll, 60 percent of Americans believe the country is going in the wrong direction. According to CNN, a combined 70 percent of Americans believe jobs and the economy are the highest priorities. And looking at individual issues, on the economy, Americans decisively favor Romney. A USA Today/Gallup poll, asking respondents to rate the two candidates by issue favored Romney on taxes (49-45%), job creation (50-44%), the federal deficit (55-36%) and the economy overall – (51-41).

So what does this all mean?

That President Obama could actually lose.

It shouldn’t be a shock, really.  The economy is in the tank, its the number one issue for voters, and the Republicans are set to nominate a businessman  – a turn around expert at that – as their candidate.

Despite all this, the actual possibility of a Republican victory is just now seeping into the cognitive bias of President Obama’s most loyal supporters, most of whom, until now, never thought to consider a White House without Obama in it. And this, in turn, is provoking anxiety and alarm. This is an issue bigger than Obama himself –  it is about the future of liberalism.

Politically, President Obama came to power at a most auspicious time. The economy was in free fall. Millions of Americans were losing their jobs. Millions more were at risk of losing their homes. Wall Street titans were laid low by their own hubris, and forced to seek billions in taxpayer money lest their mistakes tank the economy completely.

The Republicans, still reeling from their mid-term defeat in 2006, bore the brunt of taxpayer anger at the voting booth in 2008; casting aside John McCain and significantly shrinking the Republican Caucus in the House and Senate to verge of irrelevancy.

 At no time since the early 1930s had free market capitalism been so thoroughly discredited in the eyes of voters. And at no time since Franklin Roosevelt had a presidential candidate so embodied the hope for something both different and better. Indeed, as the first African American president, Obama commanded unprecedented moral authority and significant leeway from voters to build a different path.

For liberals, it was the greatest moment since Johnson’s ’64 landslide and the start of the Great Society. For liberalism, Obama’s victory was the fusion of  an absolute political majority with a president who was intellectually one of their own; potentially the pivot to decades of progressive governance to come.

And Team Obama and the Democrats blew it.

Big Time.

Listening to President Obama campaign today, with his constant harping on congressional Republicans and whining about the depth of the crisis he inherited, you’d forget that for the first 732 days of his Administration, the President had an absolute majority in the House and Senate.  He could do whatever he wanted to do. Indeed, he did do what he wanted to do, which is the central problem.

Instead of a carefully tailored and integrated plan to heal the economy, thus gaining credibility for the more ambitious social pieces of his agenda, Obama backed a pork-laden, ill-conceived and easily lampooned Stimulus bill, and then, inexplicably, pivoted on to other items on his agenda while the economy wallowed.

19 days after the Stimulus bill became law, President Obama held the first White House Summit on health care – March 5th.  The summit kicked off what would become a full year of singular Democratic focus to pass a comprehensive health care law. The Democratic Congress also set to work on a new regulatory structure to monetize carbon emissions (Cap & Trade), new regulations for Wall Street that did not include reform of Freddie and Fannie (Dodd-Frank), and card-check legislation, a sop to unions that would abolish the secret ballot in unionization efforts.

Efforts regarding the economy were ad hoc, temporary and unsustainable. “Cash for Clunkers”, a 1st time home-buyers tax credit, ill-conceived aid to homeowners as well as the multi-billion dollar bailout of the auto industry that deliberately violated existing shareholder rights by unilaterally reordering ownership, providing auto unions with ownership and a seat at the table that they neither paid for nor earned.

Democratic hubris and myopia in the first two years of governing was such a thorough overreach that it gave rise to the first organic, national protest movement since the 1960s, this time on the center-right; the Tea Party.  And it led to the worst midterm defeat of an incumbent party since 1994, with the Republicans taking control of the House and gaining six seats in the Senate, effectively ending Harry Reid’s ability to pass legislation without Republican agreement.

Having effectively squandered his first two years on non-economic issues when it was well within his power to do something, the President now faced opposition to his brand of economic policy in Congress, setting off the ideological gridlock that endures to this day today.

Thinking back to the early days of 2009, it appeared as if the free market had been so discredited that policies to promote and nurture its growth might be years or decades away. Yet, in the span of only three and a half years, Team Obama and the Democrats have so botched their governance that an agenda that curbs government spending, cuts regulations, lowers tax rates in a simplified tax system and slows the growth and power of Washington is not only viable, but an acceptable alternative.

Indeed, by failing to tackle entitlements, the largest driver in the sea of red ink that grows bigger each year, and the national debt, the Democrats lost an opportunity to reform the programs on their terms, demonstrating both fiscal restraint, while preserving the best available safety net. Instead, they created the miasma of Obamacare, built on the rickety pillars of the soon-to-be- insolvent Medicare/Medicaid/Social Security axis.

As voters go to the polls in November, Democrats will have to cope with this verdict of their stewardship, captured succinctly by Stephen Moore of the Wall Street Journal,Obamanomics may be the most expensive failed experiment in free-lunch economics in American history.”

Buti it’s worse. Liberals are not only in danger of losing the White House.  They are in real danger of losing the argument.

What decades of Republican rhetoric failed to do, the Democrats have managed to disprove all on their own through a lack of discipline and a contempt for the priorities of average Americans – that a liberal economic agenda can be both a powerful engine of growth as well as expanded “social justice.”

They have exposed their own agenda as little more than a special interest spoils system, where favored constituencies and causes are rewarded with ever more public dollars, while the engine of production is strangled with taxes and regulations as a subordinated interest to progressive governance.

It is a recipe for government insolvency and business disaster.  But it is what is at stake for liberals nevertheless in the artifice they have constructed.

If the race stays close, or if Romney pulls ahead, look for the panic to begin.  When the search for scapegoats starts in earnest, you’ll know the liberals have thrown in the towel. At that point the blood-letting on the left will be vicious and ugly.

Just another example of how consequential November will be to the future of America.

 

 

 

 

 

 

 

 

 

 

 

 

 

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