Thursday, May 23, 2024

A Turning Point in the Presidential Campaign

Last Friday, President Obama finally revealed in a few words what he thinks is the real problem with the current state of the US economy. The instant reaction to his statement was so negative that the White House had to immediately start a damage control operation in the media to try to contain political fallout. The furor was touched off by Obama's statement at a White House press conference that “the private sector is doing fine.” He then added that he believes the real problem with the economy is that the federal government is not spending enough money to prop up government employment on the local and state levels.

Obama’s ultra-liberal diagnosis of the economy’s ills even embarrassed Democrats who realized that it amounted to a repudiation of the essential role of the free market sector in the prosperity of the US economy.


As Mitt Romney and his campaign were quick to point out, Obama’s call to increase federal spending on state and local government flew in the face of last week’s vote in Wisconsin, in which voters clearly expressed their support for Republican Governor Walker and his policies reducing the cost of state and local government by eliminating the collective bargaining rights of the state’s public employee unions.


Romney used the Wisconsin outcome to ridicule Obama’s formula for reviving the economy. “[Obama] wants to hire more government workers. He says we need more firemen, more policemen, more teachers. Did he not get the message of Wisconsin? The American people did. It’s time for us to cut back on government and help the American people,” the GOP nominee said.


Romney said that Obama’s statement that the private sector of the economy is “doing fine” is bound to “go down in history” as “an extraordinary miscalculation.” Romney then added in wonderment, “Is he [Obama] really that out of touch?” Apparently, the answer to that question is yes.


In the opinion of former GOP Florida governor Jeb Bush, Obama’s has revealed that “he does not understand that the private economy is the US economy.”




Even one of Obama’s own chief economic analysts, Jared Bernstein, admitted that Obama’s statement caught him by surprise. His first reaction was to send an e-mail to a White House staffer to verify the accuracy of the quote, and when it was confirmed, he recalled, “I thought, ‘Did he really say that?’”


Later Bernstein said that Obama had misspoke, and that he really does not believe that the president meant the statement literally, but Obama’s refusal to issue a retraction created even more doubts about his grasp of this country’s economic problems.


Because it does appear to reflect his view of the economy, and his belief that the private sector does not need any policy help from him, Obama’s statement that “the private sector is doing fine” is likely to haunt his re-election campaign for months to come.


While the need to boost the economy and create new jobs is the single most important issue in the campaign, Obama has no new solutions to offer. Instead, his re-election platform consists largely of a series of excuses to explain why his expensive tax and spend policies have failed to jump start the American economy. His formula for the future is more of the same, including more taxes, more spending, and bigger budget deficits for years to come.




Obama’s damaging statement on the economy was the second serious blow to his campaign in less than a week. Democrats nationwide were still reeling from their defeat in Wisconsin, signaling a further decline in the influence of the national organized labor movement, a traditional stalwart of Democrat supporter. Wisconsin’s public employee unions had been determined to remove Walker from office in revenge for his bold action stripping them of their collective bargaining rights. An equally serious blow was Walker’s move to end the compulsory deduction of union dues from the paychecks of all Wisconsin government employees. The result was a drastic decline in the membership of the Wisconsin chapter of the American Federation of State, County and Municipal Employees, from 62,218 when Walker took office, to only 28,785 members now paying their union dues voluntarily. In effect, most state and local government workers in Wisconsin were saying by their actions that they did not believe that their membership in the union was worth the cost.


With the power of the public employee unions in the state broken, Walker was able to quickly halt the spiraling growth of the cost of state and local government, which had been driven for years by overly generous wages and benefit packages which the unions had won through political blackmail rather than merit.


Even though Walker was never that popular with Wisconsin voters, they did approve of the results of his efforts to limit the power of the unions, which allowed him to deliver services and balance the budget without the need to raise taxes. As a result, not only did Walker survive the recall challenge, he won by an even bigger margin than when he was first elected governor in 2010. Walker’s strong victory was taken as an encouraging sign for Republicans that American voters now appreciate and support their approach to small and more efficient government on all levels.




Obama’s statement on the state of the economy tends to confirm the Romney campaign’s narrative explaining Obama’s failures as president. The Romney campaign has gone over to the offensive since the GOP primary season ended two months ago, and he has gradually closed Obama’s lead in the polls to the point that, according to most national polls, the presidential race today is too close to call.


Romney’s more aggressive campaign stance was highlighted by his recent visit to the closed Solyndra factory in California. The bankrupt solar panel company is another symbol of the failure of Obama’s “green energy” economic initiatives. It also represents the crony capitalism practiced by the Obama administration, which granted a $500 million loan guarantee to the company largely because its primary owner was a major Obama campaign contributor. All of that taxpayer money, as well as 1,000 jobs, were lost last September when the company went bankrupt.


After Romney attacked Obama’s statement, Democrats were quick to accuse him of failing to appreciate the value of firemen, policemen and teachers. But as the results of the Wisconsin recall election show, most voters agree with the Republican position that because of the public employee unions, many state and local governments are being forced to spend too much taxpayer money to provide essential services.


Obama’s statement is likely to be much more important to the outcome of the presidential campaign than the occasional verbal gaffes that Romney made during the course of the GOP primaries. Democrats are still trying to distort some of Romney’s statements by taking them totally out of context, such as when he said that, “I like being able to fire people.” Contrary to the insinuations of his opponents, Romney was not referring to the employees of the companies which his buyout firm, Bain Capital, had purchased. Romney was actually talking about getting rid of underperforming suppliers. While there were a few failures, most of the troubled firms which Romney bought out as the head of Bain Capital ultimately succeeded, saving tens of thousands of jobs.




Romney does have an impressive professional track record of bringing success to failing companies, an experience which has prepared him well for the challenge of restoring America’s prosperity. As president, he can be expected to apply the classic conservative formula of lowering taxes in order to encourage private sector investment in small businesses. The small American entrepreneur has always been the main engine driving America’s prosperity and the creation of new jobs benefitting American families across the income spectrum.


By contrast, Obama’s statement Friday shows that he does not understand the crucial importance of the private sector to the health of the US economy. Obama has no faith in the free market system, and does not appreciate the need to motivate business leaders and entrepreneurs to reinvest their capital and profits in order to accelerate growth and job creation. Instead Obama’s divisive rhetoric has painted America’s business leaders and entrepreneurs as the enemies of the middle class, who must be taxed and regulated by government rather than encouraged as punishment for their success.


Though Democrats were quick to accuse Romney of failing to appreciate the contributions made by this country’s firemen, policemen and teachers. But most voters understood what Romney really meant. As they demonstrated in Wisconsin, most voters feel that they can accomplish more by spending their own money rather than giving it to the government in the form of higher taxes, only to be lavished on government employees who get more generous wages, pensions, health insurance and benefits than the taxpayers themselves are receiving for doing equivalent jobs in the private sector.




Obama’s current proposals to jump start economic growth are very similar to the failed $800 billion stimulus package which he pushed through Congress, almost entirely with Democrat support, shortly after he took office in early 2009. At that time he promised taxpayers that it would jump start the economy which was starting to emerge from the recession. He claimed that the “shovel ready” infrastructure projects funded by the stimulus would quickly create enough new jobs to keep the unemployment rate below 8%.


Clearly, by its own criteria, the stimulus package was a very expensive failure. The few new jobs it created cost taxpayers an average of about $4 million each, and instead of 8% becoming the ceiling for the national unemployment rate over the past three years, it has been the floor.


In a rare moment of candor, on October 13, 2010, Obama joked that most of the “shovel ready” infrastructure jobs that he promised as part of the stimulus package never materialized.


Most taxpayers didn’t think that was funny. That is why many of them now have no faith in Obama’s latest proposal for a new stimulus package which looks very much like the old one which failed.


Obama has called on Congress to swiftly approve a proposal for $35 billion in infrastructure spending, and blaming Republicans for blocking its passage. But what he doesn’t tell people at his campaign stops is that Republicans are refusing to pass it unless Obama drops his opposition to the Keystone XL pipeline. Even many Democrats support the pipeline, which would create thousands of jobs in the domestic oil and gas exploration industry in mid-America, while lowering the price of gasoline at the pump and reducing American dependence on imported oil..




Obama claims that his economic policies are working. He cites statistics showing that under his leadership the economy has created “4.3 million jobs over the last 27 months [and] over 800,000 in the last year alone.”


Let’s ignore for the moment that Obama job creation numbers are grossly misleading. In fact, job creation has almost ground to a halt over the past three months, and has been the slowest for any recovery since the end of World War II.


We have also ignored the fact that the official unemployment rate seriously understates the true extent of joblessness in this country today. It counts only those still actively looking for a job. If we were to add the number of “discouraged workers” who have dropped out of the work force or who are holding part time jobs in the belief that they cannot find a full-time job, the unemployment rate in May would be 14.8%, nearly double the official figure and representing almost 23,000,000 Americans out of work.


Obama has ignored growing concerns voiced by many economic analysts about the so-called “fiscal cliff” which is approaching at the start of 2013, when the Bush tax cuts are set to expire, along with the end of a 2% payroll withholding tax, and the implementation of a series of new tax hikes imposed by Obamacare on American businesses and higher income taxpayers. He has stubbornly refused to consider extending the expiring tax cut without imposing a punitive tax increase on upper income earners, in the name of “fairness,” even though such policies would inevitably inhibit new job creation.


Instead, Obama’s answer to the problem of unemployment is to continue padding the payrolls of state and local governments whether they can afford to pay for them or not.




Obama’s attacks on Romney as a surrogate for the American business community have already created a great deal of discomfort and some confusion in Democrat ranks. Shortly after the Obama campaign came out with its first attack ad targeting Romney’s business record at Bain Capital, Newark Mayor Corey Booker called the attack “nauseating” to most voters who believe in America’s free enterprise system of capitalism.


Then, former President Bill Clinton openly contradicted the Obama campaign’s ad, when he called Romney’s record at Bain “sterling.”


Last week, in commenting on the faltering US economy, Clinton went off-message again by calling for a short term extension of the Bush-era tax cuts for all taxpayers, regardless of their income levels. He explained that in light of May’s disappointing job creation numbers, the economy appears to be so weak that even the threat of allowing the tax cuts to expire at the end of the year could drive it into a double dip recession.


Like Booker, Clinton was immediately pressured by the Obama campaign to walk back the offending comment and endorse the president’s insistence that any extension of the tax cuts exclude those in the top income brackets.


Clinton’s attempt to explain away his earlier statement lacked credibility. In an interview with CNN, he claimed that at the time he made it he simply did not realize that no action had to be taken to extend the expiring until the end of the year. But such ignorance is hard to believe about Clinton, who has long prided himself on his great expertise in every facet of government policy.




Despite growing concern among his supporters over the recent setbacks to Obama’s campaign, the media is still covering for him. While the liberal media would have ridiculed a Republican candidate for saying the same thing about the private sector economy, it treated Obama’s declaration that “the private sector is doing fine” as nothing more than a one-time verbal gaffe, rather than a window into his deeply flawed view of the US economy.


The deteriorating economy and Obama’s unforced errors have not yet significantly impacted his approval rating or his head-to-head matchup in the polls against Romney. Democrats are hopeful that this represents continuing voter good will towards Obama, his so-called “likability factor,” but even they admit that his personal likability will not be enough alone to secure his reelection, especially if the US economy continues to deteriorate between now and Election Day.




On the other hand, after months of angst among some Republicans over Romney’s weaknesses both real and imagined, the shoe is now clearly on the other foot. It is the Democrats who are worried about Obama’s apparent inability to keep the election from becoming a referendum on his first term record, or to shift the focus of the campaign to his opponent.


Another rude surprise for Democrats was the fact that in May Romney’s campaign out-fundraised Obama for the first time in this campaign. To explain their embarrassing loss last week in Wisconsin, Democrats complained bitterly about Governor Walker’s advantage in the money race. But those complaints sound hollow coming from Obama’s campaign, which abandoned federal campaign financing limits in 2008, and began this campaign with an astounding $1 billion fundraising goal.


Disturbingly, at this point, Obama seems to be running full time for re-election, while leaving much of his day-to-day responsibilities as president to govern the country largely on autopilot. Instead, Obama has spent the lion’s share of his time flying around the country for campaign and fundraising events.




Apparently, any major new government policy decisions by Obama have been put on hold by until after the November election, including any attempt to avoid the “fiscal cliff” by temporarily extending the tax cuts due to expire at the end of this year.


In the meantime, US foreign policy consists largely of desperate efforts to keep a lid on bubbling crises around the world. These range from the continuing stalemate with Iran over its nuclear weapons program, the ongoing massacres and humanitarian outrages in Syria, and, of course, the economic soap opera playing out day-by-day in Europe.


Meanwhile, everything coming out of the White House on the domestic front seems to be driven by its impact on Obama’s re-election prospects. Obama’s travel and public speaking schedule seems to be almost entirely governed on re-election considerations, to the extent that Republicans have suggested that virtually all his travels on Air Force One should be paid for by his re-election campaign.




In recent months, the liberal media has been filled with pieces openly promoting Obama’s record in managing national security issues. These range from directing the secret cyberwar being conducted against Iran’s nuclear program to Obama’s personal management of “kill lists” for American drone air strikes against terrorists in countries such as Pakistan, Yemen and Somalia.


While few Republicans question the need for such actions, and are relieved that Obama has continued the war against international terrorism begun by his predecessor, George W. Bush, they question the propriety of using such covert actions as campaign talking points, especially when they compromise national security.


The furor is first gathering over these deliberate security leaks to the media from inside top level White House meetings and their use for clearly partisan political purposes. The recent assignment by Attorney General Eric Holder of two Justice Department prosecutors to investigate the leaks will not stifle the growing political uproar for long.


The authors of the two articles which appeared in the New York Times acknowledged that they were based upon first person reports who attended the secret White House meetings, which means that investigators should have little trouble in narrowing down the list of suspected leakers.


At some point in this campaign, if Republicans do their job properly, they should be able to convince voters that Obama crossed a line by taking partisan advantages of his position as president in order to help secure his re-election.




According to Wall Street Journal columnist Peggy Noonan, a former speechwriter in the Reagan White House, the result of Obama’s recent campaign missteps and the effective paralysis of his government have transformed the White House into a virtual house-of-cards, empty of any real content or policies not directly related to his re-election effort.


Noonan’s conclusion is that Obama is now so busy running to be re-elected president that he no longer has enough time to do his day job, and has effectively stopped being president. If more voters come to agree with this conclusion, it could become the most damaging self-inflicted blow to Obama’s re-election prospects yet.


The Washington Post contributed to this story.



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