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OPINION

Tighten Your Seat Belts, We're in for a Bumpy Ride

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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WASHINGTON - This is shaping up as the month that Barack Obama and the Democrats began to slip further into political decline and irrelevance.

Obamacare, unpopular as ever, is sinking into financial trouble.

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The Great American Jobs Machine has stopped working. Democrats fear they will lose seats in the House and control of the Senate. And there's a forecast of yet another housing bubble that could wreak havoc with our economy.

Obama's agenda is going nowhere, especially if the Republicans make political gains in the midterm elections in November, as they are expected to do.

Speaker John Boehner has tightened his reins on the House to keep the GOP's focus on the multiple troubles undermining Obamacare that threaten the insurance policies of every American.

Gallup pollsters asked Americans last week what they thought of the president's health insurance program, and 48 percent said it will make health care worse, 35 percent it will make "no difference," and only 12 percent said it will be "better."

A rash of news stories in the last two weeks uncovered one nightmare scenario after another in the new health care law.

The latest development threatening its financial stability is that not enough younger adults are signing up, and that means higher premiums for everyone else that the health insurance industry says would make the law unworkable.

Another bombshell story in the Washington Post warns of many more cancellations of insurance policies among small employers just before the elections that "could be difficult for Democrats."

From now until November, the GOP's focus will be on Obamacare, a jobless economy, and a budget that is out of control. That means no legislative distractions from the issues that are among the voters' top concerns: No more government shutdowns and keeping the debt ceiling on a tight leash.

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The big battles will begin anew when Republicans have the votes in the Senate to make their spending cuts stick.

It's hard to remember any recent president who entered his second term as politically weak as Obama is right now. His job approval polls have sunk to near 40 percent, with 51 percent disapproving of his performance, according to Tuesday's Gallup survey.

Only 23 percent of Americans say they're "satisfied with the way things are going in the U.S. at this time," Gallup reported last week.

There are an awful lot of reasons to be dissatisfied.

The White House was hit by a huge political body blow last week when the Labor Department said the economy added only 74,000 jobs last month. That was the slowest job creation number in three years, suggesting that hiring in the Obama economy remains far too weak to make a serious dent in the unemployment rate.

The jobless rate did fall to 6.7 percent in December, but that's because thousands of long-term jobless Americans said they were no longer looking for work, and thus are no longer counted among the unemployed.

Administration officials said the continuing decline in the adult labor force participation rate to historically low levels was due to baby boomer retirements.

But "anemic adult participation cannot be explained by an aging labor force, especially with so many seniors working part-time" to make ends meet, writes University of Maryland business economist Peter Morici.

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"Were the [labor force] participation rate the same today as when Obama took office, unemployment would be about 10.8 percent," he said.

There were close to four million long term unemployed Americans last month who have been out of work for six months or more -- a figure that was unchanged from the previous month. They make up one- third of the 11 million unemployed.

"The nation is in a jobs crisis," says Morici. Expect to hear that refrain repeated by the Republicans throughout the rest of this year.

Meantime, another financial time bomb may be looming on the horizon that could have disastrous consequences for our so-called economic recovery.

Economist Peter Wallison, a member of the Financial Crisis Inquiry Commission, is sounding the alarm on another housing mortgage bubble he sees ahead of us.

Wallison is remembered as the sole voice on the panel who filed a blistering dissenting opinion on its report that the financial collapse was largely caused by the big banks and Wall Street. He argued that lawmakers were to a large degree responsible for the crisis by enacting "affordable housing" laws that slashed down payment rules that led to millions of foreclosures and huge financial losses.

In an op-ed column in The New York Times, Wallison -- a senior fellow at the American Enterprise Institute -- said that another bubble "is beginning to grow again" and the chief culprit is the government.

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"The Federal Housing Administration is requiring down payments of just 3.5 percent," and the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) "are requiring a mere 5 percent," he said.

According to the AEI's National Mortgage Risk Index data, "about half of those getting mortgages -- not to refinance -- put 5 percent or less down."

When critics of this policy suggest that down payments should be the once traditional 10 or 20 percent, "the outcry in Congress and from brokers and homebuilders is deafening," Wallison wrote.

"If we expect to prevent the next crisis, we have to prevent the next bubble," he says.

To paraphrase a memorable movie line delivered by Bette Davis, fasten your seat belts, we're in for a bumpy ride.

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