President Obama : A One Term President?

The health care issue seems to be in the process of destroying President Obama’s approval ratings. Still, considering the magnitude of the difficulties confronting the new president in his first year of office, a present 56% approval rating indicates that overall the man is still well liked and respected. For now.

There is a risk that the manner in which every important issue seems to be going the remainder of the President’s political capital may be expended fast. There are just too many things, important things like the Afghanistan War, health care reform, and the big one, the economy, that can go wrong to expect smooth sailing for President Obama during his first term.

A potentially huge issue is the growing unease among US voters and important centers of interest elsewhere, such as with our Chinese creditors, about the massive deficits and debts being racked up by the US. Under Obama the increase in US Treasury borrowings is truly unprecedented.

The following is from the Financial Times.
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Mega-deficits as far as the eye can see are bad politics. They could be even worse economics. The nightmare scenario is that mounting fears over US creditworthiness push up long-term interest rates, thereby choking off the nascent recovery. After all, the great deleveraging still has a very long way to go. In relation to GDP, household net worth has slumped back to where it was 20 years ago. But household debt is still close to record highs at about 130 per cent of disposable income. Anyone expecting private consumption to bounce back is dreaming; real personal spending actually fell in June. Moreover, the property crisis is far from over. The number of prime borrowers behind on mortgage payments rose 13.8 per cent between March and June. The business default rate is already above 11 per cent and is heading towards 13 per cent. The contribution of the stimulus to growth (monthly spending as a proportion of GDP) has now passed its peak and by January 2010 will be zero. The public-private partnership to buy toxic bank assets has flopped. The official jobless rate conceals a surge in long-term unemployment to a postwar record.

Remember: this remains a global crisis. Any big external shock (for example, a European banking crisis) could abort economic stabilisation just as surely as the 1931 failure of Creditanstalt gave the world two more years of depression.

The president’s foreign policy could come unstuck, too. Iraq is likely to become more unstable as US troop levels are reduced. Mr Obama has committed himself to an escalating military effort in Afghanistan, the toughest country in the world to pacify. The administration seems to be overestimating the patience of the Chinese, who are deeply concerned about their vast dollar holdings.

Six months in, Mr Obama still has the look of a lucky, two-term president. But that could change if voters become even more disenchanted with the legislative branch and start blaming the president for the looming fiscal train-wreck. The scariest possibility for Mr Obama is that the runaway deficit could leave him with the worst of both worlds: exploding debt and flat-lining growth.
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To read the complete story go to the Financial Times.

While it is the economy, stupid, that will truly set the tone and agenda for the 2012 election the wars in Iraq and in Afghanistan could alone spoil President Obama’s chances of being reelected. While no one can accurately predict the future in such a volatile world, if present trends continue President Barack Obama will no doubt have a difficult time in the 2012 election. By then the multitude of problems confronted by the US will be his problems. He is apt to be facing a confused and angry mob of unhappy voters as performance falls far short of his campaign promises.

In fact, judging from the raising anger and concerns being expressed at recent town hall meetings President Obama’s luck will probably run out well before 2012. The real problem for America is that neither party is providing any evidence of workable crisis management capabilities. If continued, this failure to effectively solve problems by established parties may pave the way for some populist third party candidate who will promise Americans a return to the “American Way of Life” if only he/she is elected.

The danger of a democracy fueled by mob rule was feared by our founding fathers. That is why they wisely founded an American Republic rather than a democracy. The reasons for their fear have never been more evident than in present day America. Should severe problems persist into 2012 a skilled orator could play upon the voting public’s fears to lead a fearful and angry majority irrational mob into a very un-American like future.