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January 08, 2009

Obama Prepares the Electorate for 2010

There's a fascinating post by James Pethokoukis over at U.S. News & World Report's "Capital Commerce" blog titled Why Obama Will 'Own' the Recession. Pethokoukis shows the extent that Obama (and the media, for that matter) has been going to "Hooverize" the outgoing President Bush - laying the entire blame for this recession at his feet. By doing so, and by prepping the American public for a lengthy and painful recession, the author feels that the President-elect is laying the foundation for the Democrats' platform in 2010 - namely, that Bush left this country in such a mess that the Dems can't be held liable for failing to fix it in 2 years:

For eight decades, Democrats have successfully blamed Republican Herbert Hoover for the decade-long Great Depression. That, even though Franklin Roosevelt's New Deal failed to restore prosperity or dramatically lower unemployment, and his tax increases in 1937 snuffed out a nascent recovery.

Now today's Obamacrats are apparently going to try and Hooverize President Bush in an effort to shield themselves from the potential political fallout of a prolonged recession. It will take years to fix the American economy, Obama says, and years of trillion-dollar budget deficits to do it. And everyday it seems that Team Obama tries to lower economic expectations, such as bearishly predicting that unemployment would hit double-digits.

The not-so-subtle message in the middle of all these pessimistic prognostications: When ya'll go to vote in 2010 and 2012 and a) unemployment is still as high as it's been in decades, b) income growth is sluggish at best, c) the budget deficit is running at a trillion bucks a year, and d) stock prices remain stubbornly low -- hey, don't blame us, you can't rebuild Rome in a day or even in a first term. Remember, Bush really left us a mess.

The incoming administration has apparently learned the  lesson of Bush's big mistake when arguing for the Iraq War, that when embarking on a decision that will define your presidency, it's better to underpromise and overdeliver. Of course, Obama has every reason to honestly believe the economy is going to stay on the mat for a good long time. According to the just-released minutes from the Federal Reserve's December meeting, the central bank now thinks the economy will "decline for 2009 as a whole" and that the jobless rate is "likely to rise significantly into 2010." And in its new forecast, the Congressional Budget Office said the U.S. economy is now in a recession that "will probably be the longest and the deepest since World War II." What's more, the CBO says, the economy will shrink 2.2. percent this year and grow a wimpy 1.5 percent next year as unemployment exceeds 9 percent. Finally, respected Harvard University economist Kenneth Rogoff just released a paper demonstrating that the aftermaths of financial crises are usually marked by "deep and lasting effects on asset prices, output and employment. Unemployment rises and housing price declines extend out for five and six years, respectively." So the consenus is gloomy.

Pethokoukis, however, doesn't think that this will be successful, even with the help of the drive-by media. He feels, correctly, that Obama and the Democrats will be tampering with the economy so much, especially in the next few months, that if immediate results aren't apparent, voters will start to blame the Dems - if not Obama himself.

For the record, I don't blame Bush for the recession - I blame Congress, especially the Democrats, for meddling in housing and lending practices. This whole mess was created by the housing collapse. Well documented efforts to stave off that collapse by the Bush Administration, which was caused by too easy credit to unqualified borrowers, was stopped in its tracks by the Democrats in Congress, along with more than a few cowardly Republicans - all afraid of being called "racists".

If the housing market had remained healthy, or if it had followed the normal cyclic nature of housing booms and busts of the past, none of the present mess would have occurred.

I do blame the Bush Administration for abandoning free market economics from September 2008 until now, something that the Obama Administration seems intent on continuing.