Here is a terrible conundrum: we all want our fellow Americans to do well, to be happy, to find the jobs they desire. We all want the economy to recover — and soon. But if that recovery happens, it is likely that President Barack Obama will get the credit (presidents get the blame or credit regardless of what they do) and will be a strong favorite to be re-elected in 2012.
Furthermore, his big government spending spree will be credited with the recovery — just as FDR’s New Deal “cured” the Great Depression. For generations to come, historians, political scientists, and economists will once again praise massive federal spending as the sure-fire cure-all for economic problems.
On the other hand, we can’t be rooting for the economy to remain lifeless. Yes, that might very well spell doom for President Obama’s chances in 2012. But do we want years more of the misery we are experiencing now?
So we root for economic recovery. And if the price is Obama getting re-elected, so be it. Maybe the Republican House and a 2012-elected GOP-controlled Senate can restrain the worst of Obama.
By the way, many economists do not believe we are poised for a real job-creating recovery. The stimulus was a flop. And there isn’t enough in the system to ignite a true recovery. Thus the Fed’s move to buy $600 billion more of Treasuries as yet another way to inject liquidity into a frozen lending and investing situation.
Meanwhile the 2010 election is over. The Republican/tea party/conservative movement has won a startlingly large victory. President Obama and Nancy Pelosi have been severely rebuked by the American people — even though they don’t seem to understand why.
The next — and only — order of business, re-invigorating the economy, will include major decisions over taxes, the raising of the national debt limit, and the hardest of them all: curtailing entitlement and Pentagon spending.
The American business community will be watching carefully. D.C.’s decisions will determine whether or not consumers, banks and business begin spending again and thus hiring workers again.
But here is the crux of the matter: if the economy does not improve and if the unemployment numbers don’t drop substantially by the 2012 election, both parties and President Obama will have a hard time being re-elected. This year’s tea party anti-establishment fervor will seem like a festive holiday compared to what will greet the political establishment in 2012 unless things improve.
There will be an opening for a credible independent candidate to come along and run against both political parties.
We do not — as of today — know who this person might be. But with the power of on-line fundraising, this independent candidate does not have to be rich, ala Ross Perot in 1992. No, nowadays you can raise the money from hundreds of thousands of people online in the snap of a finger.
Conversely, if things do improve by 2012, then Obama and incumbents in both parties will most likely be re-elected. We will have more status quo, with no one wanting to rock the boat by making any large, revolutionary structural changes. Thus, the deficits and debt will continue.
Conclusion: the United States is in deep, deep trouble — all caused by our own addiction to personal, state, and federal debt. In the long run, we might overcome this problem, but we have a long way to go before we get there. Politically, the results of this debt-ridden economy are going to roil us for several more election cycles.
We are billiard-balling back and forth — from the Republicans to the Democrats and back — in rapid time. The voters are impatient. They are shopping for someone and some party to fix this mess. The GOP has been given a new life. Will they make the right moves? Or will they misstep — again — and hand it back to the Democrats?
Stay tuned. We’ll find out in the next year.
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