Monday, July 26, 2010

The Shrinking Obama Presidency, Extending Tax Cuts -- Really???

What a Bad Trend Line Looks Like
What do tanking poll numbers look like? Check out the averages below. For the first time in his Presidency, Barack Obama faces some sustained negative numbers...his disapproval rating is now clearly higher than his approval rating. The trend in the past month is unmistakable, a 6 point deterioration in his numbers over the course of the past month, the worst fall of his Presidency since his first couple of months (where a big drop-off is normal.) Shirley Sharrod, continued unemployment woes and lingering concerns over the administrations handling of the deficit and the BP oil spill are all dragging on his numbers.

The monthly numbers show a similar, but less dramatic trend. After one good month in May, the President had a sharp decline in June and now has a negative average for July.

So can he turn it around?

Of course. Lots of Presidents who have been unpopular two years into office have gone on to resounding re-election victories, most notably in recent history, Ronald Reagan and Bill Clinton. In fact, popularity two years in has very little predictive power in terms of ultimate re-election chances.

But these numbers definitely show that the President is struggling. And it will hurt his party in November, undoubtedly. It puts races that shouldn't be competitive, like California, Wisconsin and Washington into place. It makes made-to-order toss-ups like Pennsylvania, Ohio and Missouri lean Republican. It makes a Rand Paul or a Sharron Angle candidacy even possible (they'd be jokes in most years, and may still be this year.)

The Democrats are going to have to hope for some quick turnaround in poll numbers or for a few of the Pauls and Angles to crazy it up enough to keep them in power. But it's going to be a tough road to hoe in November for the Dems.

More Tax Cuts for the Rich?
Sen. Kent Conrad (D-ND) and Sen. Evan Bayh (D-IN) have come out in support of extending all of the Bush tax cuts for at least 18 to 24 more months. Conrad is not up for re-election this year and Bayh is retiring. All of which causes me to go say: huh?

Democrats have spent the better part of the last decade explaining why we a. couldn't afford the Bush tax cuts, b. they were bad anyway since they disproportionately favored the well-to-do and c. that they would repeal them at their first chance. Now, in the critical hour when the cuts are set to expire, two Democrats who aren't even at risk of losing anything are suddenly in favor of tax cuts that they never voted for? I just don't get it. Do they really think that having a top marginal rate of 39.6% versus 35.0% will sink the nascent recovery? Did they sleep through the 90s? Did they stop worrying about the deficit?

I don't favor extending ANY of the Bush tax cuts, but I accept that the President has committed to extending them for the middle class (a nice giveaway that we certainly can't afford at the moment.) I certainly hope that he has the courage to veto any bill that goes further and that he makes those intentions clear.

Incidentally, does anybody understand the GOP position that we can't afford unemployment benefits but we CAN afford to extend tax cuts for those making over $250K? My next post will address myths about supply side economics and the famous Laffer Curve, including some wisdom from Laffer himself.

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