Senate The Fourth Year of the Obama Administration: Facts, Opinions and Discussions

Tomorrow officially begins the 4th year of the Obama administration. Will it be the last?

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The payroll tax cut, unemployment benefits, and funding for the federal government have been extended for a couple months. The debt ceiling shouldn't have to be lifted again until after the election.

The Supreme Court is set to have its most influential year in decades.

Three free-trade deals have passed, and there's the potential that 2012 will see an agreement on the mega free-trade deal that is the Trans-Pacific Partnership. Progress on restoring ties between the United States and Myanmar/Burma will likely continue, while restoring ties with Cuba and Venezuela has stalled.

Brutal drug violence continues inside our neighbor and ally, Mexico.

Military withdrawal from Iraq and Libya is complete, withdrawal from Afghanistan is continuing. Osama bin Laden has been killed, as well as several other terrorists, but relations with nuclear and unstable Pakistan are at an all-time low.

2011 was a bad year for dictators, the Muslim world is still undergoing a transition, as is North Korea. Syria looks like it's in a civil war, and rumors of war with Iran are still floating around. Israeli-Palestinian negotiations seem to be going nowhere under Prime Minister Netanyahu, and Saudi Arabia seems to have stalled the Arab Spring in its neighborhood.

Russia is experiencing protests, and although Putin will likely return to the presidency, he will be much weaker.

The economy will probably remain the top story of 2012, with the outlook appearing a little brighter than a few months ago, but still very fragile. Recession could return if Europe crashes as a result of its debt crisis, if the growth of emerging powers like China begins to lose steam, or if turmoil in the Persian Gulf disrupts the flow of oil. But there could always be good news too, even if it's by sheer luck.

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The biggest remaining chunk of Obama's "American Jobs" act concerns infrastructure projects. The President has also announced plans to begin streamlining the bureaucracy. "Made in America" manufacturing and research, which is also tied to exports (as well as clean energy), all fall under Obama's theme of innovation. Along with tax reform (with a focus on corporations and the rich), and defending financial reform, these will probably be the main themes of the 2012 campaign.

Social issues like gay equality and immigration will have their place, but the focus will be on these economic issues.

President Obama will also be defending his healthcare reform, the long-standing programs of Social Security and Medicare/Medicaid, as well as a century's worth of regulation in the areas of labor, the environment, and consumer protection.

When addressing the budget deficit, which Obama can rightfully claim progress on, I think he'll continue his theme of how "we must set priorities... government funding that helps innovation/education/infrastructure, or tax cuts for the ultra-wealthy, the simple math is that we can't do both."

Republicans are beating themselves up, but will be able to campaign non-stop. Obama will have the difficulty of trying to campaign for re-election and win back voters while also governing the United States. Sometimes those coincide, like recess-appointing the head of the new Consumer Protection Bureau, but Obama will be forced to prioritize and make difficult choices.

As for SuperPACS in this election, which have already been featured in the GOP primaries, I think they're just getting warmed up.

Congressional approval is at an all-time low, both chambers could swing either way in the 2012 elections, and the balance of the Supreme Court likely depends on the 2012 election outcome too. Luckily for Obama, potential swing-states (Ohio, Florida, Wisconsin) have very unpopular governors, who happen to be R

 

As it is barely February, this is basically a wild guess, but I don't believe this will be President Obama's final year. In my view, he's settling into that good, but not great, category that most Presidents do. He's no FDR, but he's not Jimmy Carter, either. The economy is gradually improving, the war against terrorism has been quite successful, he got his health-care package passed, he hasn't (and probably will not) had any genuine scandals. The opposition is quite vicious, but they're also hugely unpopular (I'm speaking in terms of Congress in general, not specific candidates) and he's generally come out the victor in the major clashes (deficit ceiling, payroll tax) we've seen. There's really no hugely compelling reason not to vote for him and that's what most people will think about.

Perhaps a bit of comparison with President Clinton is in order?

 

Did anyone else watch the State of the Union address?

Here's a transcript.

I'll post a more detailed response tomorrow, but I thought it was very good.

Obama framed the speech by using the military as an example that should be followed by Congress, both starting and ending with asking Congress to watch each others' backs and fulfill their mission like they were one team. Like how the Navy SEALS stepped into danger and eliminated the threat of Osama bin Laden; they were driven to achieve their mission, and confident that they were all watching out for each other. How can anyone attack that?

On a more political note, there was also the line "Anyone who tells you that America is in decline, or that our influence has waned, doesn't know what they're talking about." Optimism vs pessimism. Obama said the state of our union was getting stronger, while Daniels (in the GOP response) said the state of our union was "grave." That's part of Obama's re-election strategy: the Republicans think America is in decline, the Democrats believe America is still rising.

I also liked how Obama was defending regulations like safe food, clean water, etc, but then effortlessly and seamlessly threw in the new regulations that result from "ObamaCare." Just found the quote: "I will not back down from protecting our kids from mercury poisoning or making sure that our food is safe and our water is clean. I will not go back to the days when health insurance companies had unchecked power to cancel your policy, deny your coverage, or charge women differently from men." That is the way to defend the healthcare law. Show how it is just common sense, like the other regulations that we once fought over but now cherish.

I'll have a more detailed response tomorrow, on exactly what policy proposals the President called for in this address.

It was very nice to see Congresswoman Gabrielle Giffords. I hope we all see her back there, some day. And I hope we see Senator Mark Kirk back in Congress soon too.

 

It was a very good speech. I liked "who benefited from that fiasco?"

I'm glad the president stepped up and took some credit for the expansion of oil and gas production during his administration, while reminding people that it was the oil industry, not Obama, that caused the oil spill in the Gulf. It was unfortunate that he found himself unable to use the words "solar power" although he did make an indirect reference to the inevitability of some new energy companies failing.

I don't think it was a run of the mill SotU speech at all. I'm hopeful that people will look back at this speech and Obama's presentation of fundamental tax fairness in our country (it's about ******* time that a president made this a priority) as a major turning point.

We are heavily subsidizing the rich at the expense of the middle class. That's an honest way to frame this issue and I think it's going to play well in an Obama vs. Romney contest in the fall, if that's what we end up with.

 

I don't think the president will sign on to a flat tax rate. That kind of reform would not be veto proof, and the president knows better.

 

Not necessarily. It all depends on how you structure it.

What would you say to a system that instituted a 10-15% flat tax with a generous standard deduction, but also eliminated the payroll taxes (Social Security, Medicare, etc)? After all, SS is basically used as a source for the general fund as it is, so if we just admitted that and made it paid from the general fund as well, we could make your federal tax withholdings a single line on your pay stub.

As an added bonus, it would reduce the national debt, as we would wind up rolling the "Social Security Trust Fund" (consisting only of US Treasury bonds) into the general fund, and could immediately pay them all off to ourselves (on paper).

Such a system would actually reduce the burden on the poor by virtually eliminating payroll taxes. Social Security benefits could still be determined based on your taxable income (or even gross income) without having to pay a specific tax to get those benefits.

Kimball Kinnison

 

Don't kid yourself. Obama is a Republican.

But all this is moot I fear. Greece is going to default on its debt this year and the president's attention will be focused for the remainder of his administration first on saving the Euro then on saving the U.S. economy from another financial collapse.

You can already see it happening. Emerging market growth is stalling. European banks are dumping assets in those markets to boost their capital reserve ratios. Emerging market currencies were growing steadily in 2009-2010 but have gone off a cliff as of mid-2011 (e.g. Brazil, India and Turkey). Similarly export growth is slowing in India, Turkey, China and Brazil. The problems in Europe are going to devastate everyone in the developing world, then come back to haunt the U.S., and then our problems will send everyone else into yet another downward cycle.

Despite Obama's talk on infrastructure spending, I believe the U.S. missed the boat. We had an opportunity in 2008-2009 to spend like crazy on direct infrastructure renewal, but instead we bailed out the financial sector. Our major banks should have been taken over by the FDIC, reorganized, had their management sacked and debt restructured, and then they should have been released back into the wild with clean books. But it wasn't done. And now it may be too late. The next economic shock is going to be worse than the last one.

 

I'm not worried. Ronald Reagan will save us. Ronald Reagan will always save us.

Wait a sec; I'm Canadian.

OH, ****.....

 

Europe is looking more and more like a full on recession.

Year on year, 11 EU countries have seen a downturn in industrial orders, ranging from a 1-4% downturn in France, Netherlands, Belgium, Italy, Germany and Spain, to double digit downturns in Greece and Portugal.

I don't think anyone really believes the European and U.S. economies are strongly decoupled. Things started going sour for Europe in mid 2011, followed by a corresponding slowdown in developing economies. I'd say at the latest things will start looking bleaker for the U.S. by the second quarter of this year.

The best Obama can hope for is that unemployment remains a lagging indicator, that it continues to improve somewhat in the 1st and 2nd quarters before it starts getting hammered by the overseas slowdown.

 

Neat graph

 

Bond yields in Greece, Portugal, Italy and Ireland!

Whether or not the Greek crisis destroys the Euro, it's not going to be a fun year for the Eurozone.

This while the U.S. Fed says it will keep interest rates around zero until at least 2014. Bernanke already knows that the U.S. economic recovery is going nowhere.

 

Aside from Europe (which I'm not as pessimistic about as some of you guys), what other factors could upset the economic recovery in the United States?

Also, what can the Obama administration actually do to contain the European debt crisis, and any other factors that you can think of?

 

Germany has already had a negative quarter. One more and it's in a formal recession. What kind of additional evidence do you need for a legitimate crisis, D-G?

If things go south, the U.S. will have an important role to play in negotiating agreements with U.S. creditors of European debt. The U.S. Treasury would be actively involved in any effort to support the Euro through currency intervention. Obama will be involved in working to shore up the trade relationship between the U.S. and Europe in the event of a European wide recession.

Also, there's evidence of the Chinese real estate and infrastructure investment bubble bursting. That will have an effect on U.S.-China trade.

On a macro scale, the narrative of a slow U.S. economic recovery just doesn't make much sense. We have too far to go in re-employment and the U.S. mortgage and consumer debt crisis for there to be any kind of consumer-driven recovery. Europe and emerging markets are having too many problems for us to have any kind of faith in an export-driven recovery. So...what else is there? What's the real foundation for an economic recovery? Low energy prices? It's true that electricity prices have been driven down by the natural gas boom, but oil prices remain well above their five year average.

And don't forget that Congress will continue to obstruct any serious effort at economic stimulus through the end of this year. We can expect no help from the federal government.

 

Natural gas is my guess. Shale oil will be a close second.

Once things get worse again, calls for environmental studies will be drowned out by "Jobs Now!" and "Drill baby drill!".

Supposedly, a recent insider memo by Goldman Sachs states that the economic data is not as rosy as it appears, and this will begin to show up come April.

Not good news for Obama.

To answer the question, Jabba, I think it will come down to energy, in the end. A Chinese slowdown will put downward pressure on commodity prices, but ultimately, the United States needs to shift from a consumer economy to an innovation and human-capital based one, or else we will be sunk.

Peace,

V-03

 

Would it raise the same amount of revenue, though, and if not, what would one do to make up for that loss? Would you still have the loopholes & deductions that benefit the wealthy? How would you tax capital gains that serve as income?

I also believe in a progressive tax system, rather than a regressive one, so I'll be blatant that I strongly disagree with a flat tax system. Moreso, I think it sounds great on paper until it is put into practice.

 

My example was mostly to show that it could be possible. With a framework like that, you could easily adjust the numbers (both of the standard deduction and of the tax rate) to make it revenue neutral. (Not only that, but my proposed framework would actually eliminate the two most regressive federal taxes - Social Security and Medicare.)

As for deductions, I have long said that I would support a flat tax with very limited deductions (specifically, education, housing, and medical, with a possibility for self-employed business expenses), and a generous standard deduction. That would make the tax functionally progressive, but greatly simplified and harder to cheat on.

The fact is that it is possible to have a simplified flat tax that acts in a progressive fashion. Several countries and states have done that already. A progressive tax structure doesn't require varying tiers of tax rates.

Kimball Kinnison

 

The last year of Obama's first term began with a very positive Non farm payroll report. Unemployment is now down .8 points since August 2011. The only underlying sobering parts of this news are long term unemployment, long term underemployment and teen unemployment.

Obama is looking at a clear trend, and if it continues through the fall, it will likely spell doom for Romney's chances of election. That combined with Obama's amazing successes in increasing U.S. energy production (drilling rigs in operation have hit a multi-decade high in the U.S. - capacity of drilling rigs is more or less maxed out in the U.S. in the short term) suggest that we could potentially avoid a major gas price spike between now and election day as well, barring of course unavoidable geopolitical effects like tension over the Persian Gulf.

On the other side of the Atlantic, however, retail sales are down Europe-wide and a major European post-Great Recession recession is brewing. There is no reason to predict a serious decoupling of the U.S. and European economies, but the question now will be how severe the impact will be on the U.S. and the timing of when it starts to drag on U.S. economy.

 

Europe is already in a recession. I don't think it will have much affect on the recovery since it seems like it is strong enough to withstand the shocks.

 

This seems like a "strong" recovery to you? I've never heard it described as anything other than "tepid" "weak" and "slow".

 

I didn't say it was a strong recovery, just strong enough to withstand shocks that could tip us back into a recession.