Domestic issues can be decisive....
Ex-hedge fund manager Andy Kessler argues that mass market products created by the super-rich drive consumption equality that narrows the practical difference between what products are available to the middle class. Contrary are the liberal tax-relief Obama carve-outs for the largest corporations--political favors not given smaller companies. Corporate crony capitalists like GE CEO Jeffrey Immelt reap the benefits--call them the Democrats' one percent of the one percent--at the expense of less favored firms.
Economist Irwin Stelzer spins up/down economic scenarios, whose interplay is beyond our paltry powers of prediction; Obama, and the 2012 election results, are effectively hostage to how they play out. Stelzer's take:
To each his own set of “ifs.” My own view might well be excessively colored by being in Washington, where rancor and recrimination substitute for reasoned debate, where the president has become a general in the new class war, and the Republicans refuse to recognize the need to reform market capitalism, where politicians seem intent on adopting the fiscal policy of southern Europe. So I incline to short term gloom, although I will not be surprised if the consensus forecast of 1.5 percent - 2 percent growth in 2012 is exceeded a bit—a continuation of the jobless recovery.
But longer term the outlook brightens. America is still the world’s largest source of major innovations. It remains the home of risk-taking venture capitalists, deep and liquid securities markets, and a labor market so flexible that thousands can flee, and indeed are fleeing high-tax, regulation-heavy, union-ridden California for booming Texas. It is a safe haven for investors and the country of choice by immigrants. And so it will remain.
Columnist Robert Samuelson sees the economy as a political wild card in 2012, with some positive signs in the US but ominous overseas portents. The 2012 vote depends, as always, on voter perceptions of the state of affairs. In 1992, the economy was in its seventh consecutive quarter of recovery, after a brief (six-month) recession, when the election was held. But Bill Clinton, aided by the then-still regnant near-monopoly of liberal mainstream media, (and, of course, by President Bush 41 having broken his "Read my lips, no new taxes!" pledge) convinced enough voters that the economy was in the worst shape it had been since the great Depression. "It's the economy, stupid!" won the day.
Mark Steyn sees America in denial, with worsening prospects unlikely to be reversed. But will voters see this? George Will sees 2012 as a conservative year, because even if "O" wins the GOP likely will keep the House & take the Senate. Will offers this gem as to the trillion-dollar student loan unpaid debt, which in 2011 exceeded American credit card debt, long a barometer of borrowing excess, for the first time:
Political logic suggests that this year Obama will try to rekindle the love of young voters with some forgiveness of student debts. But one-third of students do not borrow to pay college tuition. The average debt for those who do borrow to attend a four-year public institution is $22,000, and the average difference between the per-year earnings of college graduates and those with only a high school diploma is . . . $22,000.
Future student loans, if a student loan program survives after 2012, it should be confined to students studying remunerative disciplines, who could plausibly pay back their taxpayer stipend--lend to prospective engineers, not to what Will calls "Social Justice" studies.
Leave us add to the economic arguments one more tidbit, a John Kenneth Galbraith quotation about economic forecasting that explains why President Obama should not have forecast that his stimulus package would bring unemployment below 8 percent in short order, a forecast that fairly may be linked to his monumental self-regard: "The only function of economic forecasting is to make astrology look respectable."
Emerging Issues. Among the key electoral issues are emerging in recent battles in Washington: the Wall Street-K Street axis, which primarily benefits Democrats and their pals in the top one percent of the one percent; tax reform--closing loopholes that favor the well-connected (4,500 in the past decade alone, according to George Will, who also notes that entitlement programs transfer money from the working young to the retired elderly, who have 47 times the assets of those under 35); the Keystone XL pipeline, in which a phony environmental issue, alleged risk to the Oglalla Aquifer (debunked ably by Deroy Murdock's NRO piece), is President Obama's excuse for stalling a major new energy source and stiffing close ally Canada; foreign investors have poured nearly $5 billion into US shale ventures, despite natural gas wellhead prices plummeting from $5 to $3 in the past year; huge subsidies to the Chevy Volt & other Green energy flops, and perpetuating the corn ethanol subsidy (raising world food prices in the bargain, to the detriment of the desperately poor worldwide); regulatory over-reach by Team Obama--see George Will's gem on a Washington State ferry monopoly.
Also: wavering Senate Democrats reaching a payroll tax accord that the President dare not veto, despite it including a provision keeping the Keystone XL pipeline alive (briefly topped, however, by dopey House Republicans, who for several days resisted a two-month payroll tax cut extension, nearly committing political suicide before facing reality and caving).
In a broader sense, economist Irwin Stelzer spots two emerging mega-trends: (1) the collapse of voter faith in democratic governmental control of markets, with Europe's travails Exhibits A, B & C; (2) the collapse of voter faith in free markets, with China's mandarin-run economy looking (at least, for now) better than America's freer, market-oriented economy. With Obama having lost his mandarin mystique, these issues are open for a good GOP candidate to sway swing voters.
A longer-term emerging issue is rising industrial unrest in Asia, which could have a huge impact on world markets & severely strain it will put on vital alliances. Yet another is America's crumbling military budget, with big-ticket programs unwisely canceled.
And there also is a sleeper domestic policy issue: breaking up "too big to fail" banks, a policy advocated by Fox business reporter Charles Gasparino--THE OPPOSITE OF THE CORPORATIST RULES IN THE DISASTROUS DODD-FRANK FINANCIAL PSEUDO-REFORM BILL.
As for climate change, if "hybrid" sharks can adopt, let's assume humans can do so as well....
Bottom Line. The GOP's ace-in-the-hole may be a dismal economy, which is also driving America's shrinking global presence.
Letter from the Capitol, LFTC, Conservative Politics