The Great Debate

Institutional failure week

-The opinions are the author’s own-

By the end of this week, the U.S. will face a government that is unable to act to aid the economy and a Federal Reserve that is unable to stop.

The stock market may well rise on this dysfunctional combination, only serving to prove that the economy and market are becoming fundamentally disconnected.

Tuesday’s election may well deliver a split Congress with the Republicans in control of the House of Representatives and the Democrats clinging to a narrow majority in the Senate. This means that there is no chance of further meaningful stimulus and that Democratic timidity will likely harden into an intransigence to match that of the Republicans.

Rather than building bridges, the next two years will be spent dickering over tax codes, and, as the 2012 election nears, fighting trade and currency wars.

Many will argue that this is right, that the election will freeze stimulative spending that is wasteful and unpopular.

Why Obama isn’t sweating the midterms


By Joshua Spivak
The opinions expressed are his own.

With the Democrats thought to be facing a tidal wave of voter anger, and Republican incumbent Senators already being swept out of office in record numbers, the one person who seems unconcerned is President Obama. He has good reason not to sweat: while conservative activists are hoping the 2010 result is a harbinger for the presidential election, history shows that even disastrous mid-term elections don’t say much about a president’s re-election chances.

It has become a cliché that the president’s party suffers defeat in their first mid-term election. With a few exceptions, most notably the Republicans in 2002, the president’s party invariably witnesses setbacks in that first national return to the voters. Sometimes the impact is modest, other times the impact is so severe that it costs the party in power control over the legislature. Everyone is quick to remember the Democrats disaster in 1994, when they lost 54 seats and control of the House for the first time in four decades.

But the same phenomena occurred in 1954 when the Republicans coughed back the House to the Democrats, and in 1946 when the Republicans took control after a gain of 55 seats. Similarly, before the 1982 election, the Republicans had a minority in the House, but it was large enough to make deals. But a decisive Democratic performance ended that. Practically every mid-term has examples, including a 60+ seat deluge to the Republicans in 1914 following Woodrow Wilson’s first term and a 50+ seat victory that gave the Democrats control of the House in 1910.

from James Pethokoukis:

Are Obama’s healthcare troubles actually a good thing?

Mickey Kaus gives his theory:

It’s easy to forget that, even if Obama’s health care effort is bogging down, the effort itself still serves his presidency as a crucial time-waster, tying up Congress and giving him a reason to postpone (or the public a reason to ignore) those other divisive, presidency-killers. Obama needs some excuse for putting off unpopular Democratic demands; health care’s a good one. If he keeps failing to pass health care until spring, that might not be such a bad outcome. In fact, even quick passage was maybe never in his interest. There are things more unpopular than struggling. ... Cap and trade, immigration legalization, “card check”—these are not what you’d call confidence building appetizers leading up to the main course of Obama’s presidency.

Me: None of it works when Americans have less and less confidence in Obama. And that number will continue to work against him as long as unemployment stays high.