The Bad News Keeps On Coming. . . For Obama

Yesterday, we talked about some of the problems Obama faces getting re-elected. That made me happy. So let’s do it again. Today, let’s talk about the economic problems Obama faces.

The economy is a mess. We’ve technically been out of recession since May 2009, but growth has been anemic (slightly below the long-term average) and job growth has been nonexistent. This will hurt Obama come re-election time. But “top line” economic numbers don’t bother people. What bothers people are the things that hit them personally. And that is where Obama is really hurting:

● Unemployment: The unemployment rate in February was 8.3%. That means 12.8 million people are unemployed. The actual rate is closer to 16%, which means 25 million people are unemployed. Talk all you want about growth, but as long as most people in the country know one or more of these 25 million people personally, they won’t believe things are getting better.

● Inflation: The official inflation rate is 2.9% in the US. But unofficially, people are recording a 12% rate. That means everyone is taking a 12% pay cut each year right now, and that’s the worst it’s been since Jimmy Carter’s era.

● Home Values: It may not be fair to blame Obama for the housing collapse, but he will still feel the heat because Americans have used their homes as a form of retirement savings. And that means people are hurting. According to Case-Shiller, which provides housing price data to the stock market, home values are at their lowest level since 2003 AND they now suspect that suburban home prices may not recover in our lifetimes. Shiller says the shift toward renting and city living could mean “that we will never in our lifetime see a rebound in these prices in the suburbs.” That’s disastrous for Obama because it means that until things change, people will feel insecure and will spend less, which depresses the economy.

● Gas Price: The biggie is gas prices. Gas currently sits at a national average of $3.90 and is expected to hit $4.25 by mid-May. Some analysts think this will go as high as $4.50 to $4.70 during the summer. Indeed, everyone is now warning that gas will keep going up until the summer is over. And while the MSM has studiously avoided letting anyone blame Obama for this, a Reuters poll shows that 68% of Americans disapprove of Obama’s handling of the issue.

What “handling” could they be upset about? Well, people overwhelmingly favor the Keystone Pipeline, they overwhelmingly favor offshore drilling, and they overwhelmingly favor fracking for natural gas. Obama has stood in the way of each.

● Utility Costs: Obama’s EPA just issued rules forcing power plants to cut their carbon emissions. This means energy costs are about to go up again, just in time for air conditioning season.

Beyond this, seniors are worried the pension system keeps getting closer and closer to bankruptcy and Medicare barely works anymore because it's broke, the budget is out of control which is crushing consumer purchasing power and causing massive inflation, and civil servants have transformed themselves into a permanent elite class of rich, protected jerks living high on the amounts stolen from poor and middle class taxpayers. . . who aren't happy about it.

All of this is disastrous for Obama. That’s the good news.

The better news is that all of this can be fixed. . . just not by Obama. Getting spending under control will solve the budget and inflation problems. Extending the retirement age and capping benefits or running them lower than the rate of inflation will fix the pensions and Medicare issue. Gas prices can be fixed by approving more drilling and switching to natural gas. Republican attempts to break public sector unions are changing the bureaucratic landscape, and Republicans are getting the credit for things like school reform -- an area that once belonged exclusively to Democrats in voter’s minds.

Moreover, one of the biggest imbalances in our economy, the “collapse” of manufacturing is starting to right itself. First, manufacturing never collapsed. The US is still the largest or second largest manufacturer in the world depending on how you count it. Secondly, with wage inflation in China, it is now more cost efficient to open a new plant in the United States than it is to open the plant in China. And with wage growth showing no signs of stopping in China, you will soon see manufacturing return to the US.

The moral here is simple. The Democrats are doing everything wrong and are causing people genuine pain. That will ruin their election chances. And the Republicans have a chance, after the election, to set all of this right and win over the American people probably permanently. Good times will be here again!