Obama Divided Against Himself

John Ransom
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Posted: Aug 02, 2011 12:01 AM

On the debt ceiling some conservatives need to take a deep breath. Because, excuse me, but I really like it when conservatives win elections that change policy.   

If anyone thought that by winning the House in 2012 that the GOP would have the political power to balance the budget and make real cuts in spending, they don’t understand quite how the Constitution that they like to quote really operates.

The Democrats started winning elections in 2004. In 2008, with the election of Obama, we saw liberals reach their high water mark. They were able to barely pass Obamacare because they barely controlled the U.S. Senate in addition to the House and the Presidency.  

In 2010 conservatives helped a great deal in getting the GOP to take back some of the states and the U.S. House. But the budget we have now reflects the divided government we have.

Funny how that works.

In order to get anything like the budget deal that conservatives really want, we’re going to have to wage a long war that will include winning multiple elections. The GOP will have to win the House and the Senate by super majorities or control a super majority of state legislatures.  

While some conservatives have said that we should have shut down the government to force real cuts, the downside was that conservatives would end up on the losing side of a debate that they are currently winning by a big, safe margin.

Voters, especially independent voters, continue to think that federal spending is out of control. And they’re right. It’s our job to make them understand that they need to support candidates who will get spending under control. That’s what elections are for.

Conservaties will continue to win elections as long as we don’t make big mistakes.

They'll win mostly because the economy will continue to be dominated by Obamanomics. The economic policies of Obama have been such a failure that his coalition is fraying.                  

The general relief that the markets felt in wake of an apparent debt ceiling deal was short-lived on Monday.

While the downward market action over the past week has generally been attributed to the lack of a deal on the debt ceiling, the real story was of profit-taking on the economy, we now know. The GOP has denied Obama the excuse that a shutdown killed the economy and others can see the economy for what it's worth.  

Despite the dip in unemployment numbers last week, the economy is generally pounding along the bottom the stream bed. While some economists think that the second half of the year will see more robust activity, I'm doubtful.

In fact, I think it's more likely to see a contraction. 

Here are the top ten reasons:

1) China is slowing down rapidly after a series of interest rates hikes and general mal-investment, especially in real estate.

2) Europe is a mess. Europe has also raised interest rates to combat inflation despite ongoing financial panics in Greece, Italy, Ireland, Spain and Portugal.

3) The regulatory overhang of Obamanomics is accelerating, not slowing. “More specifically, the total cost of federal regulations has increased to $1.75 trillion,” writes the federal government’s own Small Business Administration. In other words, the deficits aren't even financing the cost of regulation. Or to put it another way, the $800 billion stimulus program was only a down payment on financing regulations that stifle the economy- to the tune of $1.75 trillion per year. Wait until the full force of Dodd-Frank and Obamacare come on line.

4) Wall Street is warning of a second-half slow down. Hey, if they see it coming, the blind can finally see.

5) A weak dollar will contribute to inflation and inflation is ultimately the enemy of the economy.  

6) Election year uncertainty. Usually I would bet that the feds would pull out all the stops to get the economy going. But they've used up all their magic tricks, with possible exception of another round of bond-buying. It might happen, but it won't have much effect. Consider this: When things were really robust in the spring and the government was cashing private investors out of Treasuries and inflation was cruising along at a torrid pace and the economy was apparently adding jobs, and "Hurray for Recovery!", we were only growing at .04 percent not the 1.9% we were told at the time. 

7) There have been a lot of downward revisions in government forecasts  recently. I go with the trend until the trend changes.

8) Even if the government doesn't have the sense to stop spending, consumers have. They are keeping their cash in their wallet because they don't trust the government. That's why the prices of things like gold and oil and food are going up. 

9) Obama's financial team is out of ideas. They'll get more reckless as time goes on.

10) Business is going on strike. They'll stay on strike until Obama gets the boot.

The number one factor in all of this- debt ceiling, inflation, reckless spending- is Obama. Voters know this.   

And when a politician is in the process of destroying himself, the best policy is to get out the way and let him.   


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