Pessimism

A friend of mine thinks I am overly pessimistic about the eco-political situation. That is because I fear that the election of 2012 may be won by a Republican “conservative,” the quotes because I don’t believe the Glenn Becks and Sarah Palins are conservative. They are fascistic wingnuts. Perhaps I AM over the top. But in general, I don’t consider myself a pessimist by nature, unless one believes that someone who doesn’t believe in heaven is ipso facto a pessimist.

Here are the main reasons for my pessimism.

1. The economy will continue to be in bad shape when the election takes place in November 2012. Either the unemployment will be coming down slowly, but too slowly, and still be (being optimistic) at about 7% or there will be a double dip (a W), a recession within the Great Recession (just as in 1937-38, there was a recession within the Great Depression. Both Roubini and Krugman believe there is more than a remote chance of this happening–say one chance in five (my judgment of their odds). If it happens, it will be an economic disaster, not to speak of a political disaster for the Democrats and Obama (notwithstanding the fact that a second stimulus which could prevent this is being blocked by Republicans).

None of this need have happened if Obama had listened to his own chairwoman of the Council of Economic Advisers, Christina Romer. She was advocating at the beginning of the year a stimulus of $1.2 trillion. Instead, we got $787 billion. In other words, she was advocating 50% more than what passed. Obama was probably influenced by Geithner and Summers (and there was recently a story in the New Yorker that makes one think that Summers hid Romer’s suggested amount from Obama). These two apparently thought that with a stimulus of $787 billion unemployment would only rise to 8 ½ %. Without it, unemployment would rise to about 9 ½ %. [As everyone knows, it has reached 10% and may or may not go higher (even if there is no W). Krugman has asked how these advisers could be so off base. Stiglitz, at the time, called for a billion dollars and Krugman called for more, although I’m sure he specified the amount.]

2. It is likely that the war in Afghanistan will be politically hurtful. There is about one chance in a million that significant improvements will have taken place by 2011, not to speak of 2012. Most, if not all of the troops will still be there. The casualties will be coming in, at higher rates, and even if they in no way approach the levels they reached in Vietnam, it is likely the war will become increasing unpopular. I think this inevitably undercuts the popularity of President in power.

3. The medical bill, if it passes, whatever its final shape (and one that will likely be highly flawed) may also hurt Obama. People will fear higher costs as well as less coverage, but there will be little to counter this by the limited positives of what will pass since the program doesn’t go into effect until 2013. Thus it hangs as an uncertainty, in an area already plagued by fears.

To their credit, the people of the US, who are not I believe known for their political acumen, do not blame Obama for the economic crisis. (Only a few percent do.) But about 50% believe (correctly in my view) that he hasn’t done enough to end it. I suspect that percentage will increase for the reasons previously stated.

The question is whether the rogue, if she is nominated, can overcome her negatives. Obama is an excellent campaigner, but it is harder to be so as an incumbent if things are not going well. Of course there are others the Republicans can nominate, who are not I suppose “rogues,” but who are extremely threatening. Get one as aggressive and undemocratic as Dick Chaney (if not Chaney himself) and there may be no limit to the democratic rights we will lose. Among the possibilities are many I find Cheney-like threatening.

So is my pessimism justified?