Jed Graham of IBD highlights the coming fiscal drag in a pretty picture:

Me: What would that mean for GDP growth? A pre-financial crisis analysis by Goldman Sachs predicts, for instance, found that getting rid of all the Bush tax cuts at the end of 2010 would cause a 3 percentage point drop in the economy in 1Q 2011.  In any event, anti-growth fiscal policy is one more reason to believe in the dreary New Normal

David Rosenberg of Gluskin Sheff doesn’t think so:

These attempts to stimulate consumption at a time when household spending relative to GDP is already at an all-time high are not going to carry much of a multiplier impact. There is a youth unemployment crisis, a skills crisis, a crisis among the ability of small businesses, who have been responsible for 65% of the new hiring in the U.S.A. over the past 15 years — to secure financing for working capital purposes, there is a crisis in terms of a declining manufacturing capital stock, and the programs we get are these old and tired Keynesian attempts at temporary boosts to consumer demand. It truly boggles the mind, and as we show below, American taxpayers are still a long, long way from paying for all these transitory fiscal policies out of Washington.

Me: When I hear folks start talking about new WPA and CCC programs, I know they’re out of ideas.

One residual from Timothy Geithner’s rough confirmation back in January — “Turbo Tax Tim” and all that — is that his political position is probably a bit more precarious than that of the typical newbie treasury secretary.

Not only has Geithner been a frequent target of late-night comedy shows, he’s the public face of the unpopular bank and automaker bailouts. High unemployment rate isn’t helping either.

No surprisingly, a new Rasmussen poll finds that 42 percent of Americans think Geithner has done a “poor” job handling the economy versus 20 percent who rate him “good or excellent.” And the furor over his handling of the AIG bailout has yanked the competence issue back to the forefront.

So there is little political risk from calling for his resignation, as Representative Peter DeFazio, an Oregon Democrat, and several Republicans have done. But, my sources say, there seems to be little White House appetite at this moment for ousting Geithner, who certainly has no plans of his own for a fast exit.  Expect him to stick around until at least November 2010.

And why would Obama cut him loose when doing so would be tantamount to a vote of disapproval in his own economic policies?

No one has charged Geithner with going rogue, after all. So blame the model, not the man, if you must. Not to mention a quick hook would stink of panic. Top cabinet secretaries of first-term presidents rarely leave before the midterm elections.

Nor does Geithner have much to fear from a whisper campaign to put JPMorgan CEO Jamie Dimon in the job, according to insiders. Despite the rumors, Dimon doesn’t want the gig. What banker would, given the current populist political climate?

It seems unlikely that radioactive Wall Street will be supplying Geithner’s eventual successor. More likely candidates: Rahm Emanuel (he of the frequent phone calls to Geithner), White House chief of staff; Janet Yellen, president of the San Francisco Federal Reserve; Lawrence Summers, director of the National Economic Council; and Roger Ferguson, CEO of TIAA-CREF and former Fed vice chairman.

But the calls for Geithner’s resignation, as well as stunts like the Congressional Black Caucus blocking a key House committee vote on financial reform, indicate a degree of desperation among congressional Democrats. They see high unemployment and dissatisfaction with Obama’s scattered focus on the issue as driving the anti-incumbent mood.

Unlike in sports, in government it’s the players, not the coach, who gets fired. And that’s why some Dems think one way to save their jobs in 2010 is by suggesting that Geithner lose his today.

Trust me, these are not the kind of numbers that the White House and congressional Democrats want to see. Goldman Sachs is now forecasting unemployment to rise all next year, peaking at 10.5 percent. The firm expects the economy to grow at just 2.1 percent. Also, the budget deficit will be a few billion bigger at $1.6 trillion. If correct, these stats absolutely confirm the collective freakout happening right now among Ds on Capitol Hill, such as calling for Geithner to resign. Economist Jan Hatzius:

Until hiring resumes in earnest, the jobless rate is apt to keep drifting up. This is less tautological than it sounds, as net changes in unemployment mask significant flows into and out of the pool of unemployed workers. However, most research finds that stronger hiring rather than reduced layoffs is the key driver of changes in unemployment early in a recovery. Unfortunately, none of the indicators of labor demand—job vacancies, help-wanted indexes, and consumers’ perceptions of job availability— shows any significant sign of life. The best that we can find is that respondents to the Michigan confidence survey, who have a decent track record for forecasting one-year changes in unemployment, are looking tentatively for stabilization.

Don’t interpret passage of the watered-down Kanjorski amendment as the peak of the “break up the banks” movement. It may be about to get some new allies on the right, folks tired of Big Government, Big Money and crony capitalism.

For the moment, though, it was arguably the best that Representative Paul Kanjorski, a Pennsylvania Democrat, could have gotten through the House Financial Services Committee. All the committee Republicans and even some of the Democrats voted against it. And even in its much-diminished state, the Kanjorksi amendment would likely be weakened further in the Senate. At the same time, the Obama administration seems little interested in such pre-emptive powers.

Wall Street, however, is hardly getting any more popular with Main Street. The Goldman Sachs Apology Tour is evidence of that. And there are mid-term elections in less than a year. Republican candidates will probably do well as high unemployment continues to drive voter anger at incumbents. As Gallup diplomatically puts it, “Republicans seem well-positioned to win back some of their congressional losses in 2006 and 2008.”  More accurately, fear of losing the House is now running high among congressional Dems.

And all those new Republicans are likely to be infused with the ethos of the Tea Party movement: anti-TARP, anti-Fed (the House GOP is already there on this), anti-bailouts and anti-Wall Street. It could be a group of newcomers, as John McCain recently said, that is populist, protectionist when it comes to China and the yuan and pro-financial regulation.

Sarah Palin could be a harbinger. Although she diligently promotes the wonder-working power of Reaganomics in her autobiography, she also warns about “the return of corporatism - government collusion and co-option of big business.”

On the web, right-of-center bloggers wrote favorably of a recent proposal by Bernie Sanders, the socialist independent senator from Vermont, to break up the banks.

Even among conservative intellectuals, there is little love for an unrestrained Wall Street these days. University of Chicago economist Luigi Zingales argues that “the finance sector’s increasing concentration and growing political muscle have undermined the traditional American understanding of the difference between free markets and big business.” Like a 21st century Teddy Roosevelt, Zingales would use anti-trust law to disperse financial power.

And one veteran Republican politico says he would be surprised if the 2012 GOP nominee wasn’t far tougher on Wall Street than President Barack Obama.

So it isn’t hard to imagine that the next incarnation of Congress — filled with “free-market populist” Republicans — might take another look at the state of Wall Street and conclude, as has Alan Greenspan, that any firm too big too fail really is too big to exist.

The less popular Obama gets, the less political capital he has to push forward his agenda. I think this chart from Nate Silver nicely encapsulates things:

My sources tell me that reconciliation — pushing through HC in the Senate with 51 votes with a special parliamentary procedure — isn’t going to happen. So the big votes will need 60, including just opening debate. And rest assured that if Reid thinks he has 60 to pass, the debate will immediately come to an end.

Keith Hennessey gives his odds update:

I am lowering from 60% to 50% my projection for the success of comprehensive health care reform.

1. Pass a partisan comprehensive bill through the House and through the regular Senate process with 60, leading to a law; (was 40% –> 30%)
2. Pass a partisan comprehensive bill through the House and through the reconciliation process with 51 Senate Democrats, leading to a law; (steady at 20%)
3. Fall back to a much more limited bill that becomes law; (was 20% –> 15%)
4. No bill becomes law this Congress.  (was 20% –> 35%)

I think there is zero chance a bill makes it to the President’s desk before 2010.  If a bill were to become law, I would anticipate completion in late January or even February. …

I have lowered my projection of Leader Reid succeeding for three reasons:  Pretty much everything has to go right for him to win on cloture in mid-December. He has no more wiggle room on the schedule, and new intra-Democrat policy fights are popping up.

I think his members are going to get beat up about health care and jobs over Thanksgiving recess, then return to Washington to face another bad jobs day Friday the 4th. If moderates demand large substantive concessions for their votes, liberals like Senators Rockefeller and Boxer may refuse. They may tell Reid they will oppose cloture if the bill moves toward the  center, and instead advocate abandoning regular order and starting a clean reconciliation process in January. House liberals might join this effort.

“We no longer expect Congress to pass impactful health reform legislation this year, or even in this political cycle.” That is the opinion of Sector & Sovereign analyst Richard Evans:

1. Voter attitudes are shifting away from both Democrats and health-reform; placing the considerable number of Dems from conservative states and districts in increasingly untenable positions.

2. Substantial time should pass before a vote on final legislation; the Senate is unlikely to vote on a bill by year end, and a final vote on a conference bill is virtually impossible before late January. If trends in voter opinion continue, this is almost certainly too late.

3. On top of this, efforts to keep abortion as a neutral issue have failed. 20 pro-life House Dems have put the issue ahead of health reform, refusing to support legislation that does not completely bar abortion coverage in plans that receive Federal funding.

4. Pro-choice House Dems outnumber their pro-life House Democratic peers nearly 8 to 1. As any final legislation will certainly be well to the right of the House bill, this means House progressives may be asked to support a final bill whose healthcare provisions they find lacking in appeal, and to surrender ground on choice in the process. We bet at least a few refuse.

5. Immigration is a less potent but still meaningful wild-card; 20 House votes rely on the Senate ultimately agreeing to loosen its language and let illegal immigrants purchase coverage on the exchanges with their own money, and to extend subsidies not only to citizens, but to anyone who is in the US legally. 15 Senate Democrats hail from states that Obama either lost, or carried with a 5 percent margin or less. These swing-votes hold inordinate power, and are much more conservative on immigration than their blue-state peers; we believe they may balk at these House provisions.

6. The House bill’s largest source of funding is an incremental tax on the wealthy, which the aforementioned 15 Democratic Senators from red- or swing-states cannot support. The Senate Bill’s largest source of funding is taxes on relatively more expensive ‘Cadillac’ health plans, which the union friendly House cannot support. In effect, each has settled on a plan that the other cannot pass.

Me: Never underestimate the power of numbers. And the Ds do have a big majority in the Senate. And what do they fear more, passing the bill or not passing it? Obama might still sign something, but it might not resemble comprehensive healthcare reform anymore. We await the CBO score ….

Nate Silver on 2010:

My 30,000-foot view is that between the pressures of the jobs situation and the health care debate, the Democrats are in fairly bad shape. But, there’s a long way to go before next year, and their situation does not seem to be quite as bad as it was in August.

Certainly, if I were the Democrats, I’d be adopting a fairly defensive posture, putting money into defending seats — especially those held by non-Blue Dog incumbents — rather than getting cute and trying to pick off more than a handful of potentially vulnerable Republican seats. I’d also be thinking about policies — like a jobs package and financial regulation — that tap a little bit into the populist spirit and might result in somewhat awkward Republican positioning.

So, should the Democrats be panicking? Yeah, maybe a little. But the fundamentals — particularly the poor labor situation and the Republican enthusiasm advantage — should be the reasons for their concern, rather than the results of any one particular poll.

A few thoughts on healthcare reform:

1) Just talked to a very insightful Capitol Hill Watcher who doesn’t think Harry Reid has the votes in the Senate to pass anything resembling comprehensive healthcare reform. You can count out Lieberman, Landrieu, Nelson and maybe even Bayh.

2) First, of course, comes the CBO’s analysis of various proposals. Any of them that boosts the deficit or healthcare premiums are DOA. Remember, healthcare reform was supposed to expand coverage, lower premiums and bend the curve on the long-term deficit.

3) Assuming Reid can get 60 votes to proceed to the floor sometime next week, we are talking December being taken up with debate on amendments concerning the public option, abortion, taxes. As it is, Reid is reworking the Senate bill on the fly. One day it is a new version of a PO trigger, the next a hike in payroll taxes. Reconciliation? “That ship has sailed.”

5) Time does not help.  Once the Congress goes homes, members could be inundated with complains and protests, just like in August. Also, the rising unemployment rate continues to sap public confidence in the Obama agenda and Washington, in general.