Felicia Muftic " So what if Rush Limbaugh is right?
March 8, 2009
What if Rush Limbaugh got his wish and Obama’s domestic economic programs get savaged in the Senate to the point of ineffectiveness or if they do not work in the next four years?
Let us assume public anger erupts and we are in the middle of the 2012 presidential election. Go back to the future, close your eyes and imagine where you are in early November 2012.
I do not mean for this to be a doomsday scenario, but reality is the Democrats will be in control at least to some extent for the next four years. It is not a question of Republicans having their way now, beginning in 2009. They don’t. They may have a chance to gridlock Washington if they pick up enough Senate and House seats in the mid-terms of November 2010. But 2012 is their first opportunity to control both the White House and Congress and have their way, just as Obama mostly had his during the first six months of 2009.
So, here we are in 2012. Hope and confidence died in 2011. Obama’s stimulus had failed to generate consumer spending and subsequent job creation, just as Rush wished. Joblessness is near 20 percent. The bailouts could not staunch the bleeding of the stock market and the banking and financial sectors were still not functioning or lending. While the wealthy had seen their investments decline by half in 2009, that was better than the near total wipeout in 2012. Instead of 75 percent of the population being homeowners, home ownership had fallen below 50 percent due to foreclosures, and we had become a renter society, for those who still had income and jobs, that is. For those who were living on unemployment and food stamps, it was either tent and camper city, or shelters. Demand for rental apartments and resulting increase in rents had put even that alternative beyond the reach of many.
The ugly head of deflation was rising because the Obama stimulus failed to generate enough economic activity to increase gross domestic product or generate tax revenue. Cuts in government and military spending were thwarted by Congress after heavy lobbying by vested interests. The ratio of debt to gross domestic product was now seriously out of whack.
Enter the Republican Party. Their message: “I told you so. Let us have a crack at it. We will lower your taxes so you will want to spend.” “What,” the unemployed say,
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“We are not paying taxes now anyway. How will that help?”
“What?” the few wealthy left say. “Our wealth has declined so much thanks to the market crash, we are already paying less taxes and we dropped to a lower tax bracket. Capital gains taxes? What a joke. No gains.”
What does the vast middle say? “Tax cuts to the rich did not work before. Do you really think that trickle down stuff will work again? In truth, neither Obama’s worked, nor did yours. Been there, done that.”
The Republicans reply: “Our answer to you is tough it out. Do not look to the feds to give you a hand. That is not the Conservative Way. We have full faith that the American spirit and the market economy will pull you out.” It is going to be a tough sell to claim doing what caused it will fix it or doing nothing will fix it, either, but right now that is the conservative message.
OK. Enough of fantasy time. I do not know for sure if Obama’s economic plans will entirely succeed by 2012 elections. He does not have to succeed 100 percent. He just has to succeed to the extent that enough voters see the light at the end of the tunnel that they want to continue the course he is on.
Maybe, too, middle class voters who voted for Obama in 2008 will remember that trickle down did not work. Deregulation did not work. An unfunded war did not work. If Republicans continue on their nihilistic course with platforms in their plank built by those who led the crash, they will not be able to offer a credible alternative for middle class voters who just may get disillusioned with Obama. Republicans are going to have to do better than dusting off failed economic theories delivered by Bush era voices of Gingrich, Rove, and Rush if they are to stand a prayer in 2012.
What are the odds Obama will fail? Economists are all over the map in second-guessing the degree of effectiveness of the stimulus and its methodology. I had the privilege of sitting in on a discussion led by economics and finance professors at the University of Denver Daniels School of Business just before Congress voted. What I heard was that without the stimulus, it would take 11 years for the economy to recover; with the stimulus, it would take three. I vote for three and I’ll bet Obama is counting on it, too … just in time for 2012.