Nearly a year ago, Vice President Joe Biden notoriously asked, “Why are we focusing on health care when the economy is the problem?” Apparently Obama didn’t get the memo.
In the Scott heard around the world, previously unknown Massachusetts state Rep. Scott Brown (R-Mass.) drove his dusty, old pickup truck to victory in knocking off the Democratic nominee for the U.S. Senate seat previously held by Ted Kennedy. Elected in the bluest of the blue states, Brown is the first Republican elected to the U.S. Senate from Massachusetts in 38 years. German news source Der Spiegel pronounced: “The World Bids Farewell to Obama.” Elected just a year ago in a stunning victory, President Barack Obama now finds himself facing declining approval ratings and upheaval. He promised change, but voters did not like what they perceived as European style socialism. With the nation suffering through the worst economic conditions since the Great Depression, exit polls from his presidential election showed that two-thirds of the voters cited the economy as their number one concern, and fewer than 10 percent mentioned health care. Since taking office, Obama has focused on health care. Obama, in his first year in office, gave 158 interviews and 411 speeches – more than any other U.S. president; perhaps more than all of them put together. Yet the Democrats have now lost the governorships of Virginia and New Jersey, and a Senate seat in Massachusetts.
In the meantime, the Brookings Institution says the largest and fastest growing population of poor people in the U.S. is in the suburbs. Furthermore, between 2000 and 2008 the number of poor people (defined as receiving income that falls below two times the poverty level) in the U.S. grew by 5.2 million, representing an increase of 15.4 percent – more than twice the rate of growth of the U.S. population during that time. By 2008, 91.6 million people, more than 30 percent of the entire U.S. population, earned less than $42,600 a year for a family of four. These numbers did not even include 2009, when the recession gained intensity.
The Center for Labor Market Studies at Northeastern University in Boston said that labor market conditions in Chicago for people age 16-24 are equivalent to those from the Great Depression, especially for black men. Eighty percent of the jobs lost in the downturn were held by men, leading to the term mancession.
When President Clinton lost his health care battle in his first term in office, his party took a beating in the midterm elections in 1994. Obama might want to call Bill Clinton, who, after his losses, engaged in “triangulation” in moving to the center and leaving the fringes of the left and the right out in the cold. Clinton even backed a balanced budget. Obama instead took the populist route and bashed the banks. His State of the Union address meant to recapture the magic seemed more defiant than contrite. President Obama now finds himself in a position similar to Clinton, but with the left side of his own party disappointed in his leadership. Paul Krugman (author of The Conscience of a Liberal) said in the New York Times of Obama, “He wasn’t the one we have been waiting for.” On the right is the “Angry Mob.” But Obama, failing to sense the mood of the electorate, promises more “change.” He called his former presidential campaign team back to Washington and prepared for battle.
The markets, wary of Obama’s plans, plunged. It didn’t help that China put a lending moratorium on its banks. And, according to Jon Greenlee, associate director for bank supervision and regulation at the Fed, U.S. Banks still are not lending. Democratic senators looking for someone to blame found a ready target in Ben Bernanke. Obama then had to fight a rear guard campaign and bolster his nominee for Federal Reserve Chairman. The Democrats had no real plan or alternative for Bernanke, but that did not stop the movement. The U.S. dollar dropped as investors around the world became concerned about the attack on the independence of the Fed, and Obama’s proposed banking regulations. If Bernanke were to go, would Treasury Secretary Timothy Geithner be next? Obama’s administration starts to look hollow. Geithner is relegated to the back room and is under investigation for his role in the AIG bailout. Geithner wasn’t even present at the press conference when Obama announced his banking proposals, signaling that the proposals did not come from the Treasury, but were political in nature. A year ago, the Republicans looked ready to go out of business, and certainly have offered nothing to aid the economy. But one thing Obama has accomplished during his first year was to resurrect the Republicans from the ashes.
Nearly a year ago, Vice President Joe Biden notoriously asked, “Why are we focusing on health care when the economy is the problem?” Apparently Obama didn’t get the memo. Earth to Obama: the U.S. economy needs to add more than 125,000 jobs per month just to keep up with population growth. At the moment, approximately 11 percent of the U.S. labor force is unemployed. There is a lot of work to do. It’s time for Obama to roll up the sleeves and get at it. He must decide whether he wants to be a transformational president or an effective president. Maybe he should buy himself a pickup truck; it worked for Scott Brown.
William Rutherford is the founder and president of the Portland company Rutherford Investment Management LLC, listed in Barron’s as one of the nation’s leading separate account managers. He is also the author of a critical appraisal of Alan Greenspan’s term as Fed chief, “Who Shot Goldilocks?” Contact him at 888-755-6546 or firstname.lastname@example.org.