GOP Losing Touch With Economic Reality
President Obama’s news conference this morning confirmed the age-old truth: a President has the bully pulpit.
More people saw, or will see in some format, the President’s remarks today than will see all of the comments by all Republicans combined over the weekend.
As a public relations/political matter, the GOP is getting its clock cleaned.
Three major specifics struck us as the President spoke:
First, he made explicit the fact that no revenues being discussed among the negotiators would take effect until 2013 at the earliest.
Second, he intends to request formally an extension of the present 2 per cent FICA holiday for employees.
Third, the approximate ratio of spending restraint to new revenues in the “grand plan” he and Speaker John Boehner discussed would have been 4 to 1.
Beyond the new policies revealed, the tone of the President’s opening statement continued the White House effort to show Obama as the patient, calm parent dealing with a beleaguered John Boehner, who cannot control his own unruly brood.
Parent Obama acknowledged that the deal he wants to conclude with Boehner would cause pain to his fellow Democrats. That is the price of dealing with the looming fiscal crisis, he said. By implying that he is willing to deal with his own children, Obama implies that no one can control the GOP children.
We wrote in this space some time ago that a deal would emerge. It would be trivial. It would be less than required to even start stabilizing the debt trends of the nation. It would occur only after maximum expenditure of time, political capital, and citizens’ patience. More than ever, events of the past two weeks confirm that forecast.
Much has been made of the miserable jobs report last Friday. Professional economic forecasters have been so wrong, so often, on their predictions that past two years that we recommend group therapy to help them adjust to reality. Very few analysts who have read how nations emerge from financial meltdowns have ever believed that the recovery would be anything other than , painful, jobless, frustrating, and slow. I don’t believe that the jobs data had as much impact on the debt negotiations as others contend. It does give the President a chance to connect a “deal” with “job creation.” In the short run, of course, the two things exist in parallel universes. Getting the debt limit passed will, in and of itself, create no new jobs anytime soon. But, the ability of the President to show that the “irresponsibility” of the Republican House will not only threaten the nation’s world standing, but will cost jobs, gives him double-barreled communications ammunition.
Here are the hard facts: we will get a debt extension, maybe as short as six months, maybe as long as 18 months; the savings from the debt ceiling deal will be small compared to the vast debt accumulation for the United States the next 10 years; Republicans have embarked on perhaps the only political course that could impair their ability to win the Senate, expand their House majority, and win the Presidency in 2012.
As an aside, the uncertainties in the global economy (slowing China, moribund Japan, inscrutable Europe, fragile South America) virtually assure a continuing flight to relative safety by world investors. With no growth in the United States to crowd out, I believe that “the best house in a terrible neighborhood” theme that has kept interest rates very low in America will continue.
Until it won’t. That will happen and we will have little warning.
The GOP should hope for a debt deal as soon as possible, so it can change the subject to national defense, international economics, anything other than the present subject. The longer the nonsense continues, the more Republicans risk looking out of touch with economic reality.