James Pethokoukis

Politics and policy from inside Washington

Obamanomics to blame for historic Democratic midterm collapse

Nov 3, 2010 11:37 UTC

It wasn’t just the economy, stupid. The historic losses suffered Tuesday by Democrats in the U.S. midterm elections owe as much to the unpopular and off-point agenda of President Barack Obama as it does to high unemployment. A policy pivot might have limited the damage, but the White House failed to recognize the trouble until too late.

Of course, Democrats will understandably be tempted to blame the debacle almost entirely on the undeniably poisoned chalice George W. Bush handed them. The Great Recession was of a sort Americans hadn’t experienced since the one Franklin Roosevelt encountered. The two previous downturns were brief and job losses minor. Even now, Americans are as gloomy as they were at the downturn’s depths.

But if the American public was blindsided, so was the White House. It recklessly predicted unemployment would never reach 8 percent if Congress passed its $816 billion stimulus plan. The economic team was also dismissive, even through this spring, of the notion that the U.S economy would suffer the slow-growth aftermath that typically follows deep financial crises.

Still, the magnitude of Democratic losses – the worst drubbing in the House since the 1930s — certainly hints more at play than just economic frustration. In the 1982 midterms, for instance, Republicans lost just 26 House and zero Senate seats despite unemployment cresting at 10.8 percent. The damage was much worse in 1994 — Democrats lost 54 House seats and 8 in the Senate — when unhappiness over President Bill Clinton’s healthcare plan offset a growing economy.

Likewise, voters saw the passage of Obama’s healthcare reform, which helped spawn the Tea Party movement, as at best a distraction from job creation. To this day, as many as two thirds of Americans polled think the stimulus was mostly a waste of money. That might be an overly harsh assessment. But even the White House admits the plan’s “shovel-ready” spending took too long to implement. And instead of cuts in marginal tax rates or payroll taxes, Team Obama chose poorly structured tax credits.

Despite plunging polls, business complaints about regulatory uncertainty and populist rhetoric, and the stunning loss Ted Kennedy’s Senate seat last January, there was no major course correction. To the White House, it was all just a bunch of whining. It was only in September that the administration finally proposed a “second stimulus” of business tax cuts that were too little, too late to change the political or economic dynamic. The economy made a Republican win almost inevitable, but Obamanomics made it a wipeout.

COMMENT

shawngrggs – “The American public handed him arguably one of the worst economic situations in American history, and told him “fix it, NOW!””

The American public didn’t hand him anything. The economic situation that we’re in right now was created by the Govt not the public. The fact is, this is a country of booms and bust……it always has been and it always will be. That’s how free market enterprise works. You can’t be in a perpetual boom forever. At some point it has to go the other way. The problem with the Govt is they’re always trying to “fix” the problem by passing some enormous expensive piece of legislation that really does nothing but make doing business harder which results in less jobs being created and longer bust periods. If we would just let the busts happen and stop trying to fix everything with some ridiculous law we’d all be much better off.

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Obama’s Great Miscalculation and the midterms

Nov 2, 2010 18:51 UTC

Republican pollster Steve Lombardo nails it with this piece of analysis (via The Daily Caller):

1)     Democrats are in this situation mainly because of voter dissatisfaction with President Obama. This election is a referendum on Obama and his policies. While the economy is an enormous part of this equation (we will get to that next), people — and by that we mean swing voters: independents and “soft” Republicans and Democrats — voted for Obama because they thought he was a “different” kind of politician who would bring about “change.” As it turns out, he’s pretty much a conventional, big government, left-of-center politician. And he’s governed accordingly. There’s nothing wrong with that, but that’s not what people thought they were getting. According to the latest NBC/WSJ poll, only 32% of self-identified independents approve of the job Obama is doing, and his job approval among moderates is at 49% (this is lower than in past NBC/WSJ polls). A recent New York Times/CBS poll also makes clear the depth of this disillusionment. Among the voting segments that are currently “disappointed” with the Obama presidency: older voters (63% disappointed), college grads (60%), and those earning $30,000 to $50,000 (57%). Even 52% of voters aged 18-29 are disappointed with Obama.

2)     Our sense is that the administration and the president dramatically misread the economic downturn and its effect on the electorate. It is not just that the economy is bad, it is that Obama and his team gave little impression that they were trying to fix it. Look, we know they faced a huge challenge and were trying to cushion the downturn, but the focus on health care reform —combined with the poor reaction to the Gulf oil spill and other ambitious policy initiatives (the stimulus package, cap and trade, etc.) — created a muddled narrative. While the economy is what it is, perception is reality, and by focusing on other things the president looked out of touch and arrogant. At this point, “hope and change” is to Obama what “Mission Accomplished” was to George W. Bush. If you promise “hope and change” — the implication being that things will get better — and things, in fact, get worse, you get punished, and that is what will happen today.  The problem for the president is that the economic situation is abysmal and no amount of saying that things are “improving” can change that.

Me: I would also add that it is not just the perception of Obama’s policies that is hurting Democrats, but the policies themselves: a) the stimulus was poorly designed; b) healthcare, FinReg and the fate of the Bush tax cuts created vast uncertainty; and c) all the badmouthing of business created a bad vibe about where Obama’s head was at.

COMMENT

High expectations, thats the killer that will take Obama, all he had was communication skills, his charm and charisma, when it comes to economics, its not easy even though you know sociology, political science and if you can make econometric models, how robust is your soultion, where are your spends? where are you injecting stimulus money.
it was easy to punish republicans by not voting for them for loosing your job, does that mean someone can create jobs? the choice is between the devil and the dead sea now.

Why is American government responsible for all oil spills in the whole world, cleaning up is international responsibility, why is’nt China spending enough money on its spills then? why can’t the international community question China?

thx
Arvind Pereira
http://www.ArvindLeoPereira.co.nr

Posted by pereiraarvindin | Report as abusive

10 reasons the GOP might do even better than expected

Nov 2, 2010 14:21 UTC

My call is 64 and 9. But Super-smart, super-plugged-in Washington political analyst Dan Clifton of Strategas lays out his reasoning for a mega-tsunami:

1. The House Has Never Flipped Parties Without The Senate Also Flipping. In the seven cases where the House and Senate flipped together, the Senate was not expected to change parties in six of those elections, similar to consensus expectations for today’s election.

2. The Reliable Gallup Generic Ballot Is Indicating The Dems Will Lose 80+ Seats. If the GOP wins even 60-65 seats, the Senate will also likely flip.

3.  Roughly 70 Pct Of Competitive Districts Go To The Challenging Party In A Wave Election. With 100 competitive seats in the House and 15 competitive Senate seats, the formula suggests the GOP will win 70 House seats and 10 Senate seats.

4.  GOP Enthusiasm Advantage Is 63-37, Up From 44-35 In 1994.

5. Obama’s Approval Rating Is 44 Pct, 2 Pct Lower Than Clinton’s Mid-Term Approval.

6. Congressional Approval Rating Is At Its Lowest Level Ever.

7. Only 33 Pct Of Voters Believe Members Of Congress Deserve Reelection, Down From 38 Pct In 1994. (33-56 2010, 38-45 1994)

8.  The Ratio Of GOP To DEM Voters In This Election Is 55 To 40 Pct, Up From 49 To 44 Pct In 1994.

9. Just 32 Pct Of Voters Believe The Dems Will Keep The House, Leading To Lower Voter

Turnout Among The Dems.

10. State By State Polling Is More Than Likely Oversampling Dem Turnout Based On Overstated 2006 & 2008 Data.

COMMENT

James,

In my opionin the attitude of any citizen group would be of anti-incumbency, as they want results, since the ruling party is not bringing them thier order, the common attitude is to fire the non-performers. In a complex situation like this, we need to focus on policy and make projected cash flows, job flows and take decisions, my biggest issue with democratic set ups is that governments are forced to do popular moves, and the second overbearing the system takes is turn out on elections

thx
Arvind Pereira
http://www.ArvindLeoPereira.co.nr

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Reviewing the midterm election pre-mortems

Oct 29, 2010 18:32 UTC

Let’s assume the Republicans take the House and the Democrats hold the Senate. What will it all mean and what will happen next?  My two cents: I think it will be response by voters who think Obama hasn’t done enough to boost the economy and that the stuff he has done has been ineffective and off-point at best, harmful at worst.  Here’s what are some other folks saying:

1. Passage of unpopular Obamacare represented the high-water mark of progressivism and helped lead to huge midterm losses.

2. Republicans will go to war with White House and not cooperate as they did after 1994 election blowout.

3. With economy weak, there could be agreement on infrastructure spending, payroll tax cut or a unilateral homeowner bailout.

4. Gridlock means U.S. needs to depend more on the Fed to lift economy.

5. Congressional gridlock for next two years other than regulatory action. Obama’s social democratic agenda was rejected by center-right body politic.

6. Public worried about deficit but not ready to accept massive cuts to entitlements.

7. This is a referendum on the Obama agenda. Voters just won’t eat the dog food.

8. GOP will suffer lots of turmoil thanks to Tea Party and fiscal challenges. Gridlock.

Rich Lowry, National Review: Blame Pelosi and Obamacare.

Pelosi needed to flip key moderate Democrats who initially voted “no” on the health bill to “yes.” She might as well have asked them to quit on the spot. The Washington Post finds that in the eight districts where a Democrat switched from “no” to “yes,” a Democrat is favored to win in only one. In the five districts where a Democrat switched the other way, the Democrats look stronger.

She’s been the kind of speaker you’d have expected — indomitably and heedlessly progressive. Moderate and conservative Democrats were her enablers, and she returned the favor by making them cannon fodder. Pickett’s charge reached the Union lines on Cemetery Ridge before falling back. It’s called the high-water mark of the Confederacy. Pelosi’s charge established the high-water mark of progressivism, and she’ll have the bodies to prove it.

Paul Krugman, The New York Times:  GOP will worsen deficit though tax cuts, try to destroy Obama.

After all, that era of partial cooperation in the 1990s came only after Republicans had tried all-out confrontation, actually shutting down the federal government in an effort to force President Bill Clinton to give in to their demands for big cuts in Medicare. … But the lesson current Republicans seem to have drawn from 1995 isn’t that they were too confrontational, it’s that they weren’t confrontational enough.

We might add that should any Republicans in Congress find themselves considering the possibility of acting in a statesmanlike, bipartisan manner, they’ll surely reconsider after looking over their shoulder at the Tea Party-types, who will jump on them if they show any signs of being reasonable.

Right now we very much need active policies on the part of the federal government to get us out of our economic trap. But we won’t get those policies if Republicans control the House. … They’ll refuse to do anything to boost the economy now, claiming to be worried about the deficit, while simultaneously increasing long-run deficits with irresponsible tax cuts.

Noam Scheiber, The New Republic: There are compromises out there if Rs and Ds want them.

Still, a deal on infrastructure spending may not be entirely out of reach, at least if the White House is ruthless enough. One idea along these lines comes care of David Shulman, a senior economist at UCLA’s Anderson Forecast center. Shulman proposes a several-hundred-billion dollar infrastructure package in which the administration agrees to suspend Davis-Bacon, the law requiring contractors for government-funded construction projects to pay locally prevailing wages, as deemed by the Labor Department.

Strike a grand-bargain with Republicans on tax cuts. One obvious basis for discussion here would be a proposal by Larry Lindsey, George W. Bush’s first White House economic adviser. Lindsey has spent the last 20 months urging a two-year halving of the payroll tax for both workers and businesses. This would save each of them about $1,200 on average, and cost about as much overall as the Obama stimulus.

Launch a massive, unilateral homeowner bailout.  The good news is that the administration could do it without congressional approval. Fannie Mae and Freddie Mac basically have an unlimited credit line with the U.S. Treasury, and the government has controlled Fannie and Freddie since it seized them in 2008.

Peter Orszag, The New York Times: U.S. needs more stimulus, delayed deficit reduction and less Washington-business hostility.

To bolster the economy, we need a three-part shift in policy:

· more fiscal expansion (read: more stimulus) now;

· much more deficit reduction, enacted now, to take effect in two to three years; and

· an improvement in the relationship between business and government (the current antagonism, even if not the primary explanation for slow hiring and sluggish investment, does seem to be affecting hiring and other business behavior).

Unfortunately, the necessary shifts in fiscal policy are extremely unlikely to happen, and the strains between business and government are now so deep that they will take time to address. So we’re left relying on monetary policy — and in particular a much-anticipated second round of quantitative easing by the Federal Reserve — which may create more problems than it solves.

Charles Krauthammer, The Washington Post: Obama’s social democratic agenda was rejected by center-right body politic.

Over the next two years, Republicans will not be able to pass anything of importance to them – such as repealing Obamacare – because of the presidential veto. And the Democrats will be too politically weakened to advance, let alone complete, Obama’s broad transformational agenda.

Over the next two years, the real action will be not in Congress but in the bowels of the federal bureaucracy. Democrats will advance their agenda on Obamacare, financial reform and energy by means of administrative regulation, such as carbon-emission limits imposed unilaterally by the Environmental Protection Agency. … The direction of the country will be determined in November 2012 when either Obama gets a mandate to finish building his “New Foundation” or the Republicans elect one of their own to repeal it, or what (by then) remains repealable.

Democratic apologists would prefer to pretend otherwise – that it’s all about the economy and the electorate’s anger over its parlous condition. Nice try. The most recent CBS/New York Times poll shows that only one in 12 Americans blames the economy on Obama, and seven in 10 think the downturn is temporary. And yet, the Democratic Party is falling apart. Democrats are four points behind among women, a constituency Democrats had owned for decades; a staggering 20 points behind among independents (a 28-point swing since 2008); and 20 points behind among college graduates, giving lie to the ubiquitous liberal conceit that the Republican surge is the revenge of lumpen know-nothings.

William Gale, The New Republic:  Voters worried about deficit, but are unsure of what to cut.

Three surveys released in the past week—Pew, Bloomberg, and CBS/New York Times—illuminate what the American people want from the new Congress that convenes next January. Taken together, these polls offer a warning to a new Republican majority: If you push your limited government agenda too far or refuse to cooperate with Democrats and the White House, you’ll pay a price.

So what of the Republicans’ agenda? Will it jibe with what the public wants? The people’s message for the Republicans in these responses: We don’t like how Obama has expanded spending, but we don’t like all your plans for shrinking it either. There are parts of government we like, and you’d better leave them alone. Granted, in the CBS/New York Times poll, 55 percent of respondents said they would rather have a smaller government providing fewer services than a bigger government providing more services, while only 36 percent said the opposite.

The new conservative majority will contain up to 80 members who are in sync with the Tea Parties or who owe their seats to Tea Party support, making many of them among 21 percent who think that cutting spending is the single most important thing they can do in Congress. (Some of them have already said that they won’t even vote to increase the debt limit next year.) GOP leaders are going to have to balance this reality on the Hill with the opposing reality of a public that wants more than just budget-slashing—including compromise with the other side of the aisle.

John Podhoretz, The New York Post:  Voters  are simply rejecting the Obama agenda.

This is an election about Barack Obama. It’s a referendum on him and his party. It isn’t about the Republicans. They’re not being anointed. Obama and the Democrats are being scourged. Analogies abound — to the 1994 election, to the 1964 election, to the 1894 election. The appropriate analogy, though not in scale, is to the 2002 election. Only this year is the mirror image of 2002.

In 2002, voters went to the polls after something of great consequence (9/11) had taken place to which George W. Bush and his party had responded. The question was whether voters believed what had been done had been good or bad for the country and for them. … Candidates ran with Bush and ran strongly against Bush. Quickly, the midterm election in 2002 became “nationalized,” unlike most midterms — meaning that voters weren’t only making judgments on individual races but were using their vote to express their support or opposition for the general response of their government to 9/11.

When the dust cleared, in a surprising reversal of historical trends, the Republicans had improved their position in the House and won seven seats in the Senate, which restored the control they’d lost the previous year.

In 2010, Democrats went to the American people with a potent record of accomplishment undertaken in the wake of an event of great consequence — the financial meltdown of September 2008. The difference is that in 2002, Bush and the Republicans ran on their record. In 2010, Obama and the Democrats are running away from theirs. It’s not that they don’t believe in what they did. It’s that the voters don’t believe in it, and they know it.

Bruce Bartlett, Fiscal Times:  GOP will suffer lots of turmoil thanks to Tea Party and fiscal challenges. Gridlock.

Another difference is that the House Republican leader in 1994, Newt Gingrich, had vastly more power over his caucus than his counterpart today, John Boehner, is likely to have. The reason is that every Republican owed Gingrich very heavily for achieving majority status, something many probably never expected to live to see. Therefore, as Speaker, he could get away with doing things and impose discipline in a way that Boehner cannot hope to duplicate

Among the things Newt was able to do once he took control was effectively neuter the committees. The committee chairmen’s roles were diminished, their staffs were slashed, and virtually all power in terms of policy and legislative initiatives was centralized in the speaker’s office. … There’s no way Boehner can hope to get away with that sort of thing. It’s clear that the Republicans in line to be committee chairmen are not prepared to be potted plants.

Another important difference between 1994 and today is that presidents George H.W. Bush and Bill Clinton and Democrats in Congress had already done the heavy lifting of getting the federal budget onto a sustainable path.  … Under these circumstances, gridlock was just what the doctor ordered.

It should be remembered also that Republicans had the very good fortune to take power right on the brink of the 1990s technology boom, which raised the real gross domestic product 4.7 percent in 1995, 5.7 percent in 1996 and 6.3 percent in 1997 — which sent  tax revenues cascading into the Treasury. But today the situation is quite different.  … I hope I am wrong, but I don’t see any prospect of meaningful action by a Republican Congress that would reduce the deficit, and much reason to think it will get worse if they have their way by enacting massive new tax cuts while protecting Medicare from cuts.

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