Five Possible Summer Surprises from Obama
It’s been quite a month so far for President Obama. A weak economy getting weaker. Government unions routed in blue-state Wisconsin. Romney rallying in the polls. At this rate, not only will the Supreme Court throw out Obamacare, they’ll rule Dodd-Frank unconstitutional just for the heck of it.
How can Obama prevent his Mensis Horribilis from becoming an Annus Horribilis — and avoid becoming a one-term president? Forget about an October Surprise, Obama may not have that long to turn things around. Here are some potential game changers that might help him recover from his summer swoon:
1. Embrace Simpson-Bowles. Why Obama might do it: Lots of talk about this in Washington these days. In one fell swoop, Obama would have a ready-made and reasonable economic agenda — one already praised by some top Republicans — that cuts tax rates, raises tax revenue, reforms Social Security, and slashes debt. Obama the Centrist Technocrat returns! Budget wonks and editorial pages would sing his praises. And the move would help make the election a choice about the economic direction of the next four years rather than a referendum about the previous four.
Why he won’t: So the candidate who’s been talking about how business and the wealthy don’t pay their fair share is suddenly going to sign up for a plan that sharply cuts tax rates for both? The S-B plan also limits spending to 21% of GDP, a level far below what liberal economists think American needs to spend for entitlements and new public investment. Hardcore Dems would go nuts. Simpson-Bowles is, in key ways, an utter rejection of Obamanomics. Bill Clinton, of course, would triangulate this deal in a heartbeat, which suggests Obama won’t.
2. Extend all the Bush tax cuts. Why Obama might do it: A weakening economy makes any plan to raise any taxes look off point. No wonder both Bill Clinton and Larry Summers have suggested at least temporarily extending the Bush tax cuts. A weak economy created the rationale for Obama doing it in 2010, and things are worse now than they were then. GDP growth was 3.0% that year vs. 1.9% in the first quarter of this year. A temporary extension also would provide Obama with an opportunity to show he can put his ideology aside — unlike with the Keystone pipeline — and do what’s best to create jobs.
Why he won’t: Again, it cuts against Obama’s neo-populist, “people vs. the powerful” campaign theme. Even after the weak jobs report came out, Obama was still talking about tax increases on wealthier Americans.
3. Propose a major new stimulus plan. Why Obama might do it: Obama almost certainly believes the $800 billion American Recovery and Reinvestment Act helped prevent a second Great Depression. And liberal economists like Summers are saying the U.S. could borrow a lot more money right now without alarming financial markets. So maybe Obama proposes another $800 billion stimulus plan, $600 billion in new infrastructure spending and other “public investment” and $200 billion for a two-year extension of the payroll tax cut. He could portray it as a way of helping the struggling middle-class “right now” as well as creating an economy “built to last.”
Why he won’t: Voters are dubious about the effectiveness of Stimulus 1.0, and such a move would again open Obama up to further criticism that he is a big spender who doesn’t care about deficits. And Obama might worry that markets aren’t as copacetic with bigger U.S. deficits as Summers believes.
4. Call for a homeowner bailout. Why Obama might do it: It’s the slow-healing, oozing sore of the U.S. economy. Home prices are still drifting lower with nearly a quarter of mortgages underwater. The Great Recession may be over, but the Great Housing Depression is most certainly not. Obama could do what many liberal groups are asking him to: a) replace Fannie and Freddie overseer Ed DeMarco with someone who will authorize mass principal writedowns of underwater mortgages; b) call for banks to reset their deeply underwater mortgages; and c) get moving on his mortgage-backed securities fraud task force. Big, bold, and populist – and a sharp contrast with Romney whose housing plan merely calls for speeding up foreclosures so the market can clear.
Why he won’t: The base would love it, but what a turnoff for independents who might view the plan as rewarding people who bought too much house at the expense of those who were frugal and played by the rules. And recall it was the whiff of a homeowner bailout that birthed the tea party movement. The potential cost might also spook fragile financial markets.
5. Endorse a break up of the big banks. Why Obama might do it: It’s the missing ingredient from Obama’s Occupy-lite campaign that has already called for sharply higher taxes on wealthier Americans. It’s also an idea with support both on the left and right that would put Romney — who has already dismissed the idea — in the position of defending financial giganticism. Maybe Obama could endorse a financial transaction tax to cut down on speculative trading, too.
Why he won’t: It would further estrange Obama from his Wall Street backers, pushing them and their wallets further into the Romney camp. It would also make Dodd-Frank seem like a waste of time that failed to solve the Too Big To Fail problem. And Romney could counter by saying the move would cost high paying jobs and make America a second-class financial center. Also, many voters are already worried that Obama is too fond of government intervention. It would be McGovern to China instead of Nixon to China.
Of all those game changers, endorsing Simpson-Bowles — which, after all, was a commission Obama created — might be the most likely given the president’s need to appeal to independents who thought they were voting for Clinton 2.0 in 2008, not Carter 2.0. But if the economy slips back into recession — or even has a single negative quarter — even doing all five might not be enough to get Obama another four years.
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Comments:
Jun '12
Re: Five Possible Summer Surprises from Obama
My personal prediction: None of the above.
Instead, Obama will continue to try to paint Romney as the son of the devil himself, because he has no intention of doing anything that might work -- because to do so now would be to indicate that his original plans were flawed. The Narcissist-in-Chief will never do that.
Nov '11
Re: Five Possible Summer Surprises from Obama
6. What McCain suggested.
Edited on June 6, 2012 at 8:03pmJun '10
Re: Five Possible Summer Surprises from Obama
The rational thing would be to embrace Simpson-Bowles. For a guy who goes only where "the facts lead him," I doubt he would do it. It simply is too far outside his ideological frame of reference, and Paul Krugman might say something bad about him.
Clinton would have done it two years ago.
Re: Five Possible Summer Surprises from Obama
To me, it's ideology vs. wanting four more years. Another bad round of econ reports and the panic will turn to desparation ...
Jun '12
Re: Five Possible Summer Surprises from Obama
Ideology will win it.
He's really not happy with all the restrictions placed on the Presidency, so he'd probably be happier being able to golf anytime except for the occasional speaking engagement where he can explain how much better he was than whoever the incumbent is at the time.
Maybe after a few years of golf he'd go for Secretary General of the UN, where he can continue to lecture all us rubes about how lucky we are to have people like him to save us from all that freedom and liberty stuff.
Edited to add: Ideology will also win because if he slips on ideology, he loses the grip on his base, and he's been concentrating all his energies on shoring up support from his base. That makes it seem to me that he's got internal polling showing that his base support is slipping and it has them worried.
Edited on June 6, 2012 at 9:37pmMay '12
Re: Five Possible Summer Surprises from Obama
I am wondering why the author didn't consider the possibility of Obama approving the Keystone Pipeline.
May '11
Re: Five Possible Summer Surprises from Obama
Bomb Iran.
May '11
Re: Five Possible Summer Surprises from Obama
My guess is that he's going to propose a massive student loan forgiveness program to galvanize and mobilize the youth vote.
Aug '11
Re: Five Possible Summer Surprises from Obama
Nice post. I think Obama is a guy who does nothing without the Chicago playbook and this time everybody has seen all the plays. But knowing his team, he'll try a Hail Mary late in the game to try to pull up the base. Question is...will it be student loans or some other domestic program (bad) or Iran (worse)?
Dec '10
Re: Five Possible Summer Surprises from Obama
1 and 2 are out. Obama doesn't see economic sense the same way we do, so he thinks that tax increases on "the rich" will improve the economy's health (everyone will be more optimistic and will work harder and spend more when they experience more "fairness" and "justice" in the economy, he believes).3 is just technically impossible to achieve. While some economists like Krugman would try to give him cover for that move, most voices would cry out in warning, and the House would kill the proposal in the cradle.He's already moving toward 4 and he might do 5 as a desperation move to win back and mobilize his Progressive base - some of whom are so disillusioned with him that they are running to Ron Paul.
Aug '10
Re: Five Possible Summer Surprises from Obama
Wow, all of those things require some tangible effort or that thing known to the rest of us as 'work'.
When he has to choose between 'work' and the 'big three' (golf, vacations and fundraisers) he chooses the big three every time.
Re: Five Possible Summer Surprises from Obama
I decided to stick to economic policy instead of "bomb Iran" or "fire the entire cabinet" but I will tell you that the buzz around Option 1, while not deafening, is persistent and loud
Apr '11
Re: Five Possible Summer Surprises from Obama
The news turned pretty sharply against our side this afternoon. Economy growing steadily, and the Fed probably will see that we have a big market rally. I have gone from elation to depression in one day.
Dec '11
Re: Five Possible Summer Surprises from Obama
I believe he will TALK about Simpson-Bowles, but nothing will actually be enacted. Sen. Reid won't allow it to come up for a vote, which will enable Obama to appear reasonable while blaming Republicans for "obstructionism."
Dec '10
Re: Five Possible Summer Surprises from Obama
Save the razor my friend, the EU is fixin' to open its own veins any day now, which will turn whatever fake "rally" that Teh Ber-Nake can engineer into a nose dive in very short order.
As Mrs Thatcher would say, "Don't go wobbly on me now, George."
Or, as Bender would say, "Buck up, Meatbag."
We conservatives need to get over being such sad sacks all the time.
Even when things look bleak, we gotta suck it up and keep going.
If you can muster a smile, the slog doesn't seem so bad.
Mar '12
Re: Five Possible Summer Surprises from Obama
Economic policy makes sense, and is most vitally important. It never occurred to me, as I would imagine it didn't to you, that Mr. Obama would use double entendre concerning his wife's sexual style (Drudge 06-07 am). This from the president who respects and values women. Wonder how his daughters would feel about this. I'm dumbfounded -- but then, I'm a middle-aged white woman who clings to her Bible and guns. No bitterness, just dismay.
Feb '12
Re: Five Possible Summer Surprises from Obama
Cliff, above, beat me to it. I am convinced the Obama administration will take military action against Iran and/or Syria this Autumn. I don't think the President will opt for any of James' 5 above points, because I don't think the President's objective is to improve the economy, and any of James' 5 points would help the economy. Rather, President Obama's objective is to get re-elected, so that he can finish the job he has started in the first term. Military action, if he makes a good case for it, would result in an upswing of popular support for the President, within a group that currently doesn't support him for re-election.
Re: Five Possible Summer Surprises from Obama
he already talks about it, Geithner, too, saying how their proposals embody the spirit of S-B.
May '10
Re: Five Possible Summer Surprises from Obama
What we need to figure out is: what does Valerie Jarrett believe? It's the only thing that matters...to him. What does she think is his ticket to four more years?