Mid-term Election Irony

[Timber Loftis]

Talk about a lack of communication. The anxiety that drove this election was based on the truthiness felt by Americans, which was based on a lot of misrepresentation by the right. The heir to the great communicator in 2008 somehow became unable to communicate simple facts and figures to voters in 2010. Anyway, I think this guy does a good job outlining all the misconceptions, and how Obama failed to address them.

Note that a lot of statements in this article have links to graphs and charts and articles to back them up in the original posted on the Time website. So, if that interests you, the link is http://opinionator.blogs.nytimes.com...pagemode=print


November 2, 2010, 11:59 pm

How Obama Saved Capitalism and Lost the Midterms
By TIMOTHY EGAN

If I were one of the big corporate donors who bankrolled the Republican tide that carried into office more than 50 new Republicans in the House, I would be wary of what you just bought.

For no matter your view of President Obama, he effectively saved capitalism. And for that, he paid a terrible political price.

Suppose you had $100,000 to invest on the day Barack Obama was inaugurated. Why bet on a liberal Democrat? Here’s why: the presidency of George W. Bush produced the worst stock market decline of any president in history. The net worth of American households collapsed as Bush slipped away. And if you needed a loan to buy a house or stay in business, private sector borrowing was dead when he handed over power.

As of election day, Nov. 2, 2010, your $100,000 was worth about $177,000 if invested strictly in the NASDAQ average for the entirety of the Obama administration, and $148,000 if bet on the Standard & Poors 500 major companies. This works out to returns of 77 percent and 48 percent.

But markets, though forward-looking, are not considered accurate measurements of the economy, and the Great Recession skewed the Bush numbers. O.K. How about looking at the big financial institutions that keep the motors of capitalism running — banks and auto companies?

The banking system was resuscitated by $700 billion in bailouts started by Bush (a fact unknown by a majority of Americans), and finished by Obama, with help from the Federal Reserve. It worked. The government is expected to break even on a risky bet to stabilize the global free market system. Had Obama followed the populist instincts of many in his party, the underpinnings of big capitalism could have collapsed. He did this without nationalizing banks, as other Democrats had urged.

Saving the American auto industry, which has been a huge drag on Obama’s political capital, is a monumental achievement that few appreciate, unless you live in Michigan. After getting their taxpayer lifeline from Obama, both General Motors and Chrysler are now making money by making cars. New plants are even scheduled to open. More than 1 million jobs would have disappeared had the domestic auto sector been liquidated.

“An apology is due Barack Obama,” wrote The Economist, which had opposed the $86 billion auto bailout. As for Government Motors: after emerging from bankruptcy, it will go public with a new stock offering in just a few weeks, and the United States government, with its 60 percent share of common stock, stands to make a profit. Yes, an industry was saved, and the government will probably make money on the deal — one of Obama’s signature economic successes.

Interest rates are at record lows. Corporate profits are lighting up boardrooms; it is one of the best years for earnings in a decade.

All of the above is good for capitalism, and should end any serious-minded discussion about Obama the socialist. But more than anything, the fact that the president took on the structural flaws of a broken free enterprise system instead of focusing on things that the average voter could understand explains why his party was routed on Tuesday. Obama got on the wrong side of voter anxiety in a decade of diminished fortunes.

“We have done things that people don’t even know about,” Obama told Jon Stewart. Certainly. The three signature accomplishments of his first two years — a health care law that will make life easier for millions of people, financial reform that attempts to level the playing field with Wall Street, and the $814 billion stimulus package — have all been recast as big government blunders, rejected by the emerging majority.

But each of them, in its way, should strengthen the system. The health law will hold costs down, while giving millions the chance at getting care, according to the nonpartisan Congressional Budget Office. Financial reform seeks to prevent the kind of meltdown that caused the global economic collapse. And the stimulus, though it drastically raised the deficit, saved about 3 million jobs, again according to the CBO. It also gave a majority of taxpayers a one-time cut — even if 90 percent of Americans don’t know that, either.

Of course, nobody gets credit for preventing a plane crash. “It could have been much worse!” is not a rallying cry. And, more telling, despite a meager uptick in job growth this year, the unemployment rate rose from 7.6 percent in the month Obama took office to 9.6 today.

Billions of profits, windfalls in the stock market, a stable banking system — but no jobs.

Of course, the big money interests who benefited from Obama’s initiatives have shown no appreciation. Obama, as a senator, voted against the initial bailout of AIG, the reckless insurance giant. As president, he extended them treasury loans at a time when economists said he must — or risk further meltdown. Their response was to give themselves $165 million in executive bonuses, and funnel money to Republicans this year.

Money flows one way, to power, now held by the party that promises tax cuts and deregulation — which should please big business even more.

President Franklin Roosevelt also saved capitalism, in part by a bank “holiday” in 1933, at a time when the free enterprise system had failed. Unlike Obama, he was rewarded with midterm gains for his own party because a majority liked where he was taking the country. The bank holiday was incidental to a larger public works campaign.

Obama can recast himself as the consumer’s best friend, and welcome the animus of Wall Street. He should hector the companies sitting on piles of cash but not hiring new workers. For those who do hire, and create new jobs, he can offer tax incentives. He should finger the financial giants for refusing to clean up their own mess in the foreclosure crisis. He should point to the long overdue protections for credit card holders that came with reform.

And he should veto, veto, veto any bill that attempts to roll back some of the basic protections for people against the institutions that have so much control over their lives – insurance companies, Wall Street and big oil.

They will whine a fierce storm, the manipulators of great wealth. A war on business, they will claim. Not even close. Obama saved them, and the biggest cost was to him.

[Felix The Assassin]

My 401K has only produced positive numbers in the last weeks leading up to the elections, which is a historically trackable event. And I dare say that is less than an 8% gain, with a deficit of a 22.8% since I transfered out of MMA and into regular funds on 1 JAN 2009.

In my circle, we know it was the democratic controlled house and senate that moved the hand of W. in which the first stimulus check was issued. So again, the author is misleading.

So with that, I will just say, nice one sided op-ed article TL.

[Timber Loftis]

Originally Posted by Felix The Assassin In my circle, we know it was the democratic controlled house and senate that moved the hand of W. in which the first stimulus check was issued. So again, the author is misleading.

First off, the article said that the BAILOUT was started by Bush. Which is absolutely true. It's important, so we need to stop and go over it.

http://www.washingtonpost.com/wp-srv...ine/index.html

That link is to a timeline of the crisis. Scroll down for earlier dates.

Originally, it was Paulson and crew (the ex-Goldman "Fraternity" that runs our Fed and Treasury), part of the Administration, who urged a bailout was needed. Congress was dubious.

Look at Sept. 23rd, when the house Republicans object to a bailout. Sept. 24, Obama objects in the Senate, arguing for debate on the issue.

On Sept. 29, after a weekend closeted up in negotiations with the bankers and the Fraternity, the House rejects the bailout. The Dow drops 800 points.

The Dow comes back up 500 points the next day due to bargain-hunters, but the Fraternity continue to preach doom & gloom and urge for the bailout.

On October 23rd it finally passes the House.
__________________________________________

Now as for the Stimulus, which was a different thing, yes that $700bn in stimulus is mostly attributable to Democrats. By the way, $300bn of that went to giving middle class Americans the largest tax cut they have ever gotten in the history of the nation. The $700bn in stimulus did save roughly 2-3mil. jobs, so if you want to take the Democrats to task for that they should throw you a party and televise it.

Paul Krugman has argued all along that the Stimulus was about half or less than what was needed. I agree. But I think that Stimulus should have been solely targeted in infrastructure. When faced with high unemployment as well as old sewer systems coast to coast built in the 1800's, and crumbling roads and bridges that have been neglected for decades, putting people to work building our essential shit we need to function is a good idea. Unfortunately, the Stimulus was not focused so laser-like and we didn't get as many public works projects as needed, but it did work, at least on a half-assed level.

[Timber Loftis]

SORTING OUT THE ELECTION
NYTimes

Tuesday’s election was indeed a “shellacking” for the Democrats, as President Obama admitted after a long night of bad news. It was hardly an order from the American people to discard the progress of the last two years and start over again.

Mr. Obama was on target when he said voters howled in frustration at the slow pace of economic recovery and job creation. To borrow his running automotive metaphor, voters threw the keys at Republicans and told them to drive for a while, but gave almost no indication of what direction to drive in.

Republican leaders, who will take over the House and have a bigger minority in the Senate, say they heard the American people tell them to repeal the “monstrosity” of health care reform, in the words of the likely House speaker, John Boehner. In fact, the American people said no such thing. In polls of Tuesday’s voters, only 18 percent said health care was the nation’s top issue. While 48 percent of voters said they wanted to repeal the health care law, 47 percent said they wanted to keep it the way it is or expand it — hardly a roaring consensus.

The “loud message” to cut spending cited by Mr. Boehner was actually far more muted. The polls showed that 39 percent of voters say cutting the deficit should be the highest priority of Congress, but a statistically equal 37 percent prefer spending money to create jobs. Fully a third of those who want to spend money to create jobs were Republicans.

More voters (correctly) blamed President George W. Bush for the economic problems than President Obama, and even more (also correctly) blamed Wall Street.

The Republican victory was impressive and definitive, although voters who made it happen were hardly spread evenly across the electorate. The victory was built largely on the heavy turnout of older blue-collar white men, most in the South or the rusting Midwest.

Democratic candidates did better among voters younger than 30, minorities, city dwellers, and those living on the East or West Coasts. But women essentially split their vote between the parties — and that is a major challenge to the Democrats, who also failed to turn out their core voters among young people and minorities.

The new Republican officeholders will have to quickly address the economic pain and fear expressed by the voters who flocked to them in frustration. But it does those voters no good to say the answer is as simple as cutting discretionary government spending. It is time to show how cuts would lead to jobs and to specify which ones should be made — and how they plan to reduce the deficit while also preserving the Bush-era tax cuts.

Mr. Obama offered some specific ideas. Extending unemployment insurance. Extending tax cuts for the middle class. Providing tax breaks for companies that are investing in American research and development.

He proposed finding common ground on energy policy, developing domestic natural gas resources and encouraging electric cars. He took Republicans up on their offer to start banning earmarks, while urging greater investment in infrastructure. And he acknowledged that he could have done more to change Washington’s messy and secretive ways, and to have been in closer touch with those suffering from the recession.

The question is how the Republicans will act. For two years, they have refused to cooperate on any of those ideas, simply to deny Mr. Obama a policy victory and try to reduce his re-election prospects. If they are serious about accepting Tuesday’s mantle, they will join in governing and not simply posturing.