As dismal as the polls have been for Mr. Obama it’s not too late for a turn-around. The President’s problem is that what it would take to stem the inevitable descent into a double-dip recession is so foreign to his way of thinking that to embrace it would be an epiphany of biblical proportions. Can Mr. Obama make the transition to market-based economic solutions from his government-based philosophy? We will know Thursday evening.
Though Conservatives might be loathe to help out the president while he’s committing political suicide, there’s a greater need than the 2012 campaign to consider. Millions of Americans are without jobs and getting the economy headed in the right direction is more important than what the political landscape will look like in 2013 and many people can’t wait for a political resolution.
You don’t need to be an economist to ascertain what is wrong in America; in fact it’s probably better if you’re not. Many large companies are flush with cash, yet they are holding on to their money. Why? The answer, for any one company, can only be ascertained by asking them directly. No one answer is universal to all companies; however there are a number of common themes.
Publically held companies answer to their shareholders. Executives are judged by the performance of their stock and choices are dictated by economic forces. If management doesn’t produce profits for stockholders they are swiftly replaced. Most companies are financially cautious and preserve earnings in dreary economic times. When companies cling to their funds it’s a sign that the economic outlook is negative.
Another issue companies deal with in both good and bad times is the cost of doing business. Imagine a company that must ship its products all over the country facing huge increases in costs due to fuel prices. While passing the cost along to customers in a healthy economy might be acceptable, when customers are scarce price increases only serves to further thin the heard. When sales are down companies tighten up on expenses, hold off on hiring and hunker down. We find ourselves in the worst case scenario: a soft economy in concert with a federal government perceived as anti-business. Businesses faced with an expanding government wielding profit-guzzling regulations will take their toys and go home; this is how the private sector sees the Obama administration.
The president’s hope for re-election is firmly rooted in the unemployment rate. While there are many who would not vote for Mr. Obama even if unemployment was only 2 or 3 percent, it’s the broader middle of the electorate that’s been slipping away because they are out of work, under-employed, in fear of losing their jobs or discouraged because of the fate of friends or family. Mr. Obama is a bright man. He certainly understands that the American people are fed up as evidenced by his planned joint address to Congress this week. Obama is a strong orator, but should he sing the same old song he will have squandered his last chance for political redemption.
The president must be the cheerleader-in-chief. When consumer attitudes are sour he must be able to raise hopes by projecting a positive vision. Unfortunately Mr. Obama and his administration have allowed their performance to speak for them and the American people are very close to giving him the hook. It may already be beyond the point that anything he says can have a significant impact.
Obama started his administration by asserting that the sky was falling, pushed through an ineffectual stimulus, gave bail-outs to his union cronies and a rammed through a multi-trillion dollar health care bill when the immediate crisis was the broader economy. His poll ratings have plummeted and a majority of the American public doesn’t have confidence in his ability to manage the economy. Thursday he will get one last opportunity to depart from his academia-based Keynesian economics and embrace the only philosophy that has ever produced a robust economy: a private sector-centric view where capital markets and consumer demand drive growth. Can he make this leap? We shall know in 3 days, but don’t hold your breath.