Obama's to-do list can't wait
After a hard-fought campaign, the president must turn immediately to the fiscal cliff and the nation's debt limit. Already, a credit-rating agency is warning of a possible downgrade.
In the wake of the bare-knuckled brawl with GOP contender Mitt Romney, President Barack Obama's emotions likely ran from aching exhaustion to ebullience and excitement last night as he took the stage with his family to celebrate his re-election.
But soon after, no doubt, a creeping worry set in as he took stock of what lies ahead. While he won't have to win the approval of voters again, if he wants to protect his legacy, Obama must get to work. Fast.
While he's no rookie when it comes to facing tough choices as a just-elected president -- he faced a financial crisis and economic catastrophe when inaugurated back in January 2009 -- the current list of fiscal and foreign-policy needs is nothing to sneeze at.
On the overseas front, he faces the rise of terrorism in Africa, Iran vs. Israel, Iran's growing influence in Iraq, the Taliban resurgent in Afghanistan via Pakistan, Iran's nuclear ambitions, China's increasing power and growing military might, Russia's growing assertiveness, the Eurozone crisis, territorial battles in the Pacific over the various island groups, and the ongoing drug war in Mexico.
Here at home, the problems are more immediate and will require compromise with the House of Representatives, which America has once again given to the Republicans. While the country said it's tired of the gridlock in Washington, and watched in horror as politicians torpedoed the economy and the financial markets in the summer of 2011 over the debt-ceiling battle, they also reelected the status quo.
This time, status quo won't be good enough. Here's what's on the to-do list.
The fiscal cliff and debt ceiling
Job one is addressing the fiscal cliff of tax hikes and spending cuts worth some 5% of GDP set to hit on Jan. 1. Also, the U.S. Treasury is quickly moving towards its $16.4 trillion debt ceiling. This challenge, which I wrote about in "How to avoid the fiscal cliff," is the focus of Wall Street's attention. Expectations are that Obama and the Republicans cobble together a smaller, $300 billion deficit package worth around 2% of GDP.
But even this will require tough choices on issues like payroll tax cuts, extended unemployment benefits and the Bush tax cuts. Failure to act, or to dig up a big-minded, structural solution like the one proposed by the Simpson-Bowles deficit commission, would rattle markets and once again threaten America's credit rating. As I've said before, the real long-term deficit problem is tied to an overpriced and inefficient health care system.
Wasting no time, the analysts at Fitch have already warned that Obama will get no fiscal honeymoon as he faces a 2013 credit downgrade if the fiscal cliff isn't avoided. And failure to act on the debt ceiling, which they believe will be hit in early 2013, would undermine confidence in the United States as a reliable borrower and thus its "AAA" status. (Standard & Poor's cut our AAA rating last summer.)
CEOs' lack of confidence
My immediate reaction to last night's result was "Will Atlas shrug?" -- alluding to the recent drop in CEO confidence and the slashing of hiring intentions and capital expenditures by executives. If those in the corner office fear more regulation, more taxation and more market-shaking fiscal chaos, they may very well continue to pull back. This, as Ayn Rand warned, could suck the wind out of the sails of the economy at a time when GDP growth is struggling to stay at 2% despite massive and increasingly inflationary monetary policy support.
I'll be watching measures of CEO confidence as well as capital spending closely.
The jobs deficit
While Obama and Romney touted dueling gauges of the job market (Romney taking about the jobs deficit, Obama talking about string of monthly job creation) the fact remains that there are still far too many people out of work. We are 6.4 million full-time jobs below where we were in late 2007 before the recession hit; despite an 11 million increase in the population over that period.
So to get the employment to population ratio back to its pre-recession level, we need to create 17.4 million jobs.
At the current rate of monthly job creation, we'll never get there. Year-to-date, we're creating 169,000 jobs per month on average, while the population is growing an average of 190,000 per month.
The final problem Obama must address is the stagnation of middle-class wages. You see, many of the jobs created over the last few months have been part-time, low-wage, no-benefit positions. And those with full-time positions are seeing employers increase their benefit contributions, not their take home pay. Until workers see a real, meaningful increase in their paychecks, the economy will continue to struggle.
Last month, the annual growth rate of average hourly earnings for non-supervisory employees fell to just 1.1% -- a record low. Adding to the problem is that inflation is pushing higher again, which will result in a higher cost of living for families.
If President Obama wants to improve his favorability and approval ratings, he needs to extend a hand across the aisle and find a way to cobble together a solution to these problems with the Republicans in Congress. A repeat of the political blood feud we've seen over the last two years, between the Tea Party Republicans in Congress and Obama's White House would be a nightmare.
You know, in retrospect, maybe Mitt Romney should've been the one celebrating last night.
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There will be no going over the fiscal cliff. That is too politically threatening to politicians reelection. There will be some temporary band aid to extend a so called fix into 2013. There will not be a fix then but a game of semantics and accounting gimmicks that will dupe most americans into believing there is progress.
Democrats will tout spending reductions, not fess up to only a slowing of the rate of defecit spending Republicans will declare gaining cocessions that preserve middle class tax tax cuts and status.
Behind the veil, joblessness will remain high, companies will continue to downsize and move production overseas, capital spending will remain anemic except for foreign investments, the dollar will remain weak, energy prices will climb as well as food and staples but the feds will continue to declare low or no inflaction, people will believe free health care is forthcoming, regulations will farther stall small medium and large employers chances for expansion, high paying technical and manufacturing jobs will continue to be replaced by low skill and low paying service jobs.
The Obama admin will still be largely comprised of academics and idealogues with no clue as to how to bring real growth to an economy but instead will throw money at phony, scientifically unfeasible clean energy, reward unions by crowding out more effiecent contractors for government work,disguise pork as infrastructure and on and on. For you doubters, check out how many times he met with his jobs council after it was formed and how quickly he dismissed Simpson Bowles sine it advocated re3ductions in government spending. He only liked the tax hike part of their plan.
Their is no indication of doing anything differently going forward than the past 4 years. Not that a republican admin would do any better. They both enact political solutions for problems requiring pragmatism and sound science, math and accounting, and oh yea, honest and somtimes painful solutions, of which they are incapable.
You need not be a genius to realize the long and growing list of companies announcing layoffs and reductions in revenue and capital spending for 2013 is a preview of things to come. Large multinationals like Johnson Controls, Siemens, Boeing etc are doing this which tells you they expect the economic anemia to be global.
Interesting that the Obama admin reccommended 68 new regulations a day for the last 60 days.
Who asked Americans if they wanted their communities "transformed" and their government "reinvented?" Who asked parents if they wanted their children to learn with their feelings instead of learning facts? Who asked your local police officers if they wanted their beliefs and attitudes manipulated? No one asked because if someone did, they would have been run out of town.
Liberals. youth, and many new Hispanic Immigrants have abandoned individual liberty and inalienable rights. In the final analysis, we are destined for Totalitarian rule and worse.
The terms "communism", "socialism", "Marxism", "New World Order" etc., may be worn out and abandoned. The names change, because deception is one of the rules of the game. Thanks a lot Hillary!
1. We didn't trust Romney who did 180 degree flip-flops from his campaign into the Presidential debates.
2. We didn't like or trust Paul Ryan.
3. Romney showed us he cared more about the very wealthy than the middle class and poor.
4. Many of us think we are wasting too much on wars in the middle east. It's time to bring the troops home as quickly and safely as possible.
5. We PAID into Social Security and Medicare.
6. Many of us don't want new FREE trade agreements that Romney detailed on his website.
7. We don't need another Fascist Supreme Court judge.
8. We need a viable plan and path to citizenship for immigrants who are living in the USA, not self-deportation.
9. We like Obama's math better than Romney's.
10. Many want Single Payer heath care to be the next phase of ObamaRomneycare.
11. We know the states need to take responsibility, but we also know the Federal gov can do things that the states can't do.
12. Women voted for their rights and rejected those who wanted to regulate their bodies.
13. We know that the economy, still has a way to go, but it's much better than it was 4 years ago.
14. We rejected those who said NO to Americans and NO to recovery in the name of partisan politics.
15. We think every child in America, no matter their economic status, deserves a good education.
16. We know that many of Romney's policies were too close to Bush Jr.'s policies which didn't work out too well for the economy or in the middle east.
17. We believe in democracy - not voter suppression
18. Many of us think gays, lesbians, and transgenders deserve the same legal rights as heterosexuals.
19. We want to address climate change with sustainable solutions, and become energy independent through better, more planet friendly ways than "drill baby drill".
20. We reject how many Republicans like Scott Walker are doing whatever they can to crush worker rights by crushing the unions and taking away collective bargaining.
21. We need leadership, not pandering to special interest groups. The Koch brothers can self-deport now and create their own Fascism on an island somewhere else.
Let's hope it's a balanced approach that spreads the burden fairly, not one that the working poor and middle class have to bear the brunt. We've been waiting for Congress to get their act together for years!
You know that kid you see throwing a tantrum in the toy store at the mall because he's not getting the toy he wants while he's got a whole room full of other ones back at home? Yeah. Gonna grow up (oops, I meant "turn into") a Republican...
The people of the US need to see who is on their side and who is against them.
Also, I think the expiration of the Bush tax cuts could be done a little differently and on a sliding scale. Maybe the $250K / household income only goes up 1%. Maybe the full expiration happens on $500K + households.... or maybe these increases happen more slowly over the next few years.
Despite what indicators show us, we are still in a recession and have been for several years.
Obama doesn't have to blame but just take action. He will never get support of Gridlockers.GOP
dosen't want to work for people and our great country.Stupide question;where to and how
to invest if fiscal cliff goes through.Before tax breaks given during president Bush's era
how did everybody invest?There was greatest ecconom.y during president Clinton era
inspite of higher taxes.
We had 2 useless wars which cost the nation 4 trillion dollars started based on lies by the Republican party. Lehman brothers had collapsed and the economy was in free-fall under the Republicans. That is what Obama inherited. Then the Republican congress blocked everything with the sole purpose of defeating Obama. Their goal was not to help the American people or our nation.
Seems like the Republicans are still in denial. Anybody who analyzed their behaviour would conclude that they are against America. People saw through the lies spewed by Romney during the debates and remember the biggest lie Bush told the nation. He sacrificed thousands of American lives and destroyed miilions of American lives - all the disabled soldiers coming home. That is what the Republican party stands for.
the "rural" voter mentality is what sunk the election for Romney. The backwards deep south and stale mid west mentality sent his rhetoric to the wingnut right. Most if not all of this group identifies as a tea party republican and because of this identity has severly hurt the republican brand. This support has created in fighting amounst republicans and may kick off a republican civil war. Look at the statement a tea party representative made after the election about Romney. She basically said he's not one of us, a conservative. She skofted at his moderate republican stances. Romney was forced to go to the wingnut right in the primaries in order to heard the cats in the tea party. Romney then had to turn back to the middle where his comfort zone is and it was awkward. Look at how many wingnuts got pink slips in the Senate races. Mitt Romney would have WON the election if not for the tea party hardline-rural voters. Rural voters have a 20th century view of the world: they still make racial remarks trying to tie minorities in with welfare and hand outs. this is 90's race talk from almost 20 years ago. They rail about socialism and communism. They don't trust any level of government and vote against their own interests. Not to mention their post WW2 views on women. This is an angry group with very old gripes. Brand republicans and moderates will have a tough time trying to wrap their arms around this group and can thank them for delivering a loss in both the 2008 and 2012 elections. Romney would have easily won many of the swing states with a moderate messege and cruised into the white house.
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Breaking up big banks is an untested solution to the too big to fail problem that attempts to isolate and dismantle large, troubled institutions while protecting the rest of the economy.
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[BRIEFING.COM] The S&P 500 trades lower by 0.1% with one hour remaining in today's forgettable session.
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