The day after Barack Obama was re-elected, the Dow Jones lost 312.96 points. It wasn’t just that investors were hoping for the lower taxes and further deregulation that would have come with a Romney win. The news from Europe was bad, and pundits were obsessively focused on the “fiscal cliff” of mandatory budget cuts that will drive the economy into a new recession unless Congress jumps off its own budgetary cliff first.
For once, the markets are right. But the news from Europe entirely contradicts conventional assumptions about the fiscal cliff.
It would not be an exaggeration to say that Elizabeth Warren instantly becomes the national leader of the progressive wing of the Democratic Party (Disclosure: Warren's daughter serves on The American Prospect's governing board).
She has plenty of company among newly elected Senate Democrats. Tammy Baldwin in Wisconsin, Joe Donnelly in Indiana, and Chris Murphy in Connecticut are well to the left of the people they succeeded. Conservatives who pulled the Democrats to the right on budget issues—Kent Conrad in North Dakota and Joe Lieberman in Connecticut—are mercifully in retirement.
For all the speculation about the effect of Hurricane Sandy and its aftermath on the election, one important aspect has gotten surprisingly little attention: How many people will be unable to vote because of power outages, floods, and impaired transportation systems? How many will be deterred from voting because they are dealing with serious dislocations in their lives? And what new forms of Republican mischief will all this invite?
Other things being equal, President Obama seems to have been the winner so far because of his impressive handling of the crisis. Chris Christie surely helped on the image front.
One of the casualties of Hurricane Sandy is the premise that America’s biggest economic problem is deficit reduction. That’s because the United States just became a much larger version of the Netherlands.
Once we get through the election, official Washington may be willing to talk about this. President Obama’s leadership in helping flooded communities cope with the damage nicely positions him to lead an effort to prevent future super-storm damage.
Once again, Barack Obama has proven to be the luckiest politician alive.
Just when the race was tightening to a dead heat in the election’s closing days, one spectacular betrayal and one rank miscalculation on the Republican side have turned the contest back in Obama’s favor.
New Jersey Governor Chris Christie, who will tour his storm-ravaged state today with President Obama, was all over the networks Tuesday telling what a wonderful leader his president was.
“I spoke to the president three times yesterday,” Christie boasted, calling Obama “outstanding.” When Fox co-host Steve Doocy meekly asked Christie if he planned any events with Romney, Christie snarkily replied, “I have no idea nor am I the least bit concerned or interested.”
David Walker announced his endorsement of Mitt Romney this week. The name might not ring a bell, but Walker was head of the Peter G. Peterson Foundation, the number one funder of deficit-hawkery in the United States. Walker, a former Comptroller General, has described himself and his crusade as bipartisan, and it is actually helpful that he has come out of the closet as a Republican.
One part of the dreaded fiscal cliff actually presents an opportunity that could be good politics and good economics. The temporary two-point cut in the payroll tax expires January 1 (along with the Bush tax cuts). The $1.2 billion sequester also kicks in.
Deficit hawks of both parties have been saying that it’s irresponsible to extend the payroll tax cut, while defenders of Social Security such as the AARP are opposed to an extension for fear of diverting revenue from the Social Security trust funds and adding ammo to the crusade for cutting back the system’s benefits.
Obama did very well in the foreign-policy debate, but it remains to be seen if his success will change the trajectory of the race, which has been trending toward Romney.
Several things about this debate were a surprise. The most surprising thing was the emergence of Mild Mitt. Romney sounded almost as if he were on downers. His campaign must have decided that he was coming across as too ferocious or two bellicose. But his performance tonight was underwhelming.
Obama, by contrast, took the debate to Romney right from the first exchange. He was almost too aggressive, calling the former Massachusetts governor on his inconsistencies and policy recommendations that would have backfired. “Every time you’ve offered an opinion, you’ve been wrong,” the president said.
This was supposed to be about a six-point race in Obama's favor. That's sure how it looked on the eve of the first debate. But now it's dead even.
First, of course, Romney cleaned Obama's clock in the first debate. Obama came back strong in debate number two, but evidently a lot of swing voters formed their impressions in that deadly first encounter.
But there is a more fundamental problem here. The narrative of the past four years should have revolved around free-market ideology, Wall Street plunder, Republican rule, and the fact that Republicans first crashed the economy and then blocked a recovery.
President Obama did what he needed to do tonight. He took the debate to Mitt Romney. He was relaxed, even jaunty, as he scored one point after another. He seemed to be enjoying himself at Romney’s expense. He looked more comfortable and commanding as the debate wore on, while Romney looked more stiff, edgy, and salesman-like.
Obama needed to remind voters that Romney is a very rich man out of touch with regular people, and he did that well. He got in Romney’s face and he got under Romney’s skin, but stopped just short of being overly aggressive.
The most bizarre thing about the deficit and the campaign is the fact that the risk of a fiscal cliff—which everyone agrees will crash the economy—is being used to justify a slightly smaller fiscal cliff. There are several players here, so the arguments are worth sorting out. Herewith, some Cliffs Notes:
Biden did a lot better than his president did in the first debate. But Obama still needs to hammer home all of the inconsistencies and evasions in the Romney-Ryan positions on such key issues as Social Security, Medicare, and taxation.
Between moderator Martha Raddatz’s questioning and the vice-president’s persistence, the viewer just about grasped that the Romney-Ryan arithmetic was entirely bogus when the Republicans claim that there were $5 trillion worth of loopholes that can be closed to pay for new tax cuts without cutting programs, giving further breaks to the rich, or increasing the deficit.
President Obama gets a lift from a relatively positive employment report for September. The nation gained 114,000 jobs, and the unemployment rate declined to 7.8 percent, the lowest since Obama took office. Earlier disappointing figures were revised upwards, by 40,000 for July and 45,000 for August.
All this gives Obama some bragging rights, and heads off what would have been a withering attack had the news been bad.
But Obama makes a mistake by emphasizing what the progress the economy is making. Median household incomes are down, young people face rough going as they enter the job market, and the elderly have dwindling pension coverage and almost no returns on their savings in a zero interest rate environment.
Robert Kuttner is co-founder and co-editor of The American Prospect as well as a Demos Distinguished Senior Fellow. He was a longtime columnist for Business Week, and continues to write columns in the Boston Globe. He co-founded the Economic Policy Institute in Washington and serves on its executive committee.