Americans Giving Up The Hope That Swept Obama into Office

http://www.cnbc.com/id/43268037

The above-linked piece appeared on CNBC’s web site a couple of days ago.  A new poll shows that Americans are losing hope that the economy will ever recover – not just anytime soon, but ever.

… according to the latest survey from business-advisory firm AlixPartners … an increasing number, some 61 percent, say they don’t expect to return to their respective pre-recession lifestyles until the spring of 2014, if ever.

What’s worse, a full 10 percent said they expect they will never return to pre-recession spending.

This morning, a new ABC poll finds that, if an election between Obama and Mitt Romney were held today, Romney comes out ahead by 3 percentage points among registered voters.  59% disapprove of the president’s handling of the economy.  89% say that the economy is in bad shape.  And 25% are “downright angry,” matching the highest reading on that poll question reached in 1992, when George H.W. Bush was swept out of office.

Since the election of Obama, the economy’s slide into recession – perhaps even depression – was arrested by a sugar high of deficit spending and quantitative easing (printing money) by the Federal Reserve.  As long as the sugar was flowing, the illusion of prosperity that was long maintained by one economic bubble after another, was kept alive a little longer and, with it, Obama’s approval ratings.  But now that the 2-year stimulus spending plan and the latest program by the Federal Reserve are simultaneously coming to an end, perception is once again giving way to reality.  The economy is tanking and, with virtually no appetite for any further deficit spending or Fed balance sheet expansion, the prospects are grim.  In spite of Republican assurances that the private sector will rush in to fill the void left by big cuts to government spending, few really believe it.  Most understand that, once the government shuts off the money tap, the party’s over. 

Obama was swept into office on a tidal wave of hope, fueled by his oft-repeated campaign promise to address our broken trade policy and bring back American manufacturing jobs.  Not a single promise on trade has been kept, including his promise to at least not make matters worse by signing any more job-killing free trade agreements like the one he signed with South Korea, limiting  our auto exports to 75,000 per year while giving the Koreans unlimited access to our auto market. 

Now it’s too late.  When 2nd quarter GDP numbers are released in July, it’ll confirm what everyone already knows – that the economy has slipped back into recession.  Although it’s never too late to fix our trade policies (not that Obama will do it), it’s too late for the effect to take hold before the next election.  Such a move would exacerbate inflation in the short term and only after manufacturing has begun its shift back to the U.S. – a process that would take a minimum of 2-4 years – would the positive effects of the change begin to be felt. 

So, at this point, Obama’s fate is sealed.  By the time the election rolls around, there will be proverbial pitchforks in the streets and his re-election hopes will be doomed.  Good riddance.  He broke his promise of “hope and change” and substituted the Democratic standard approach – deficit spending, leaving the root cause of our problems – the trade deficit and worsening overpopulation – untouched. 

Unfortunately for Americans, all we’ll get from Romney or whoever else survives the Republican primary, despite any promises to the contrary, will be the usual – tax cuts and trickle down economics (which, since the explosion of the trade deficit since Reagan, is more properly described as “trickle out” economics).  What will be the Republican mantra?  Instead of “hope and change,” it should be something like “change for the sake of change, since there is no hope.”

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2 Responses to Americans Giving Up The Hope That Swept Obama into Office

  1. ClydeB says:

    We’ve passed the point where tax cuts or increases can be effective in solving the problem. It is even beyond the point that spending nore or less will provide the solution. No one in Washington appears to be able to see beyond one of these obsolete remedies.

    Peter Diamond, Nobel prize winning economist, is little more than a tunnel visioned Keynesian number cruncher and it is good that he was not approved for the Fed. He is a re-distributionist and his apparent solution to employment variations is to tinker with the tax code. Still no one appears to be able to look beyond the border.

    • Pete Murphy says:

      “Obsolete remedies” hits the nail on the head, Clyde.

      I’m curious to see what Ivy League economist will take over as head of the president’s economic council now that Goolsbee has left, and what sort of gimmicks he/she will propose.

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