President Obama's Scorecard - After 3 Years, The End of Stimulus

President Obama - Center-Left Leader

Lost in the fervor of the primary season is the quiet passing of the 3 year anniversary of President Barack Obama's inauguration.

There is a lot of rhetoric on both sides around the President's performance.  Is he a European Socialist?  A moderate pragmatist?  A shrinking violet or a badass Commander-in-Chief who kills terrorists?  An ineffective President or a victim of Republican obstructionism?

I've made no secret over the past few years about how valuable fact-checking sites like Politifact are.  It's been a long time since we've reviewed the President's 2008 campaign promises, but his 3 year anniversary seems like as good a time as any.

Whether what the President stands for is a debate for those of us of varying political philosophies to have.  But whether he did what he said he would do is more or less fact.

Politifact kept meticulous track of the President's promises and were able to document 508 specific things that then-candidate Barack Obama said he would do if elected to office.  Of those 508, 2 were specific to how he would respond to a national disaster, so they can only be evaluated if one occurs, therefore we will focus on the other 506 promises.

Of those 506, Politifact rates him as follows:
162 Promises Kept
50 Compromise (partially implemented based on a deal he cut with Republicans or others)
56 Broken (he had a chance to execute them but did not)
64 Stalled (the President still advocates for this position but has been unable to secure action on it)
172 "In The Works" (basically have not been acted on, but he seems to still advocate for)

If you give the President a 1 point for Promises Kept and half a point for Compromises, he's effectively implemented 190 out of 506 things he said or 38% of his promises.

There is a fair argument to be made to exclude the "In The Works" promises from the calculation.  President Obama never said he would do everything in the first 3 years and it is fair to say that there are some issues he simply hasn't gotten to yet.

Excluding those 172, he gets 190 points out of a possible 334 or a completion rate of 57%.

Since "Stalled" promises for the most part represent things that Congress has blocked the President's preferred path, it would also be fair to say that of the things he has been able to influence, he gets 190 points out of a possible 270 or 70%.

So, basically, on the things the President has been able to control to some extent, he has been 70% consistent with what he's said on the campaign trail.

Frankly, that's not a bad record.  By and large, we got what we were promised from President Obama. 

Of the promises that he has broken, it is instructive to see that in most cases, they are basically he leaned further right than what he campaigned on.  Some of the key promises he broke include:
* Increasing taxes on high income earners including repealing the Bush Tax cuts
* Signing card check
* Greater worker rights including guaranteed sick days and expanded FMLA
* Closing GITMO / trying terrorists in civilian courts
* Increasing the minimum wage to $9.50/hour
* Implementing Cap and Trade
* Introducing comprehensive immigration reform

So, ironically, the left has a whole lot more to complain about than the right.  The things President Obama has done have largely either been in line with how he campaigned, or meaningfully to the right of how he campaigned. 

You will hear some pretty crazy rhetoric about President Obama in the coming season.  But President Obama has not acted as a liberal, he's operated as a left-center progressive, far more similar to Bill Clinton than Jimmy Carter.

The American Recovery and Reinvestment Act - Did It Work?
Not surprisingly, all of the most significant legislation that President Obama has signed into law over his term occurred during the first two years of his term, when Democrats at least nominally controlled both houses of Congress.  Clearly, in my mind, the most significant pieces of legislation were:
* The American Recovery and Reinvesment Act (aka The Stimulus)
* The Patient Protection and Affordable Care Act (aka Obamacare)
* Dodd-Frank Wall Street Reform and Consumer Protection Act

Of these, the stimulus package really set economic policy for the first three years of his administration.  As of today, the $741B of the $799B in tax cuts and spending set out in the bill has been spent or 93%.  So, the effect of the bill is almost complete.

Republicans will rightly complain that the President projected that unemployment would remain under 8.5% with the bill, a marker that it didn't even come close to meeting.  The President will argue that things would have been far worse without the bill.

The problem is, we don't have an alternative universe under which to gauge how things would have been different without the bill.  Definitely aspects of the tax incentives clearly worked, such as Cash for Clunkers revitalizing the auto industry or clean energy tax credits creating a boom in the installation of energy efficient windows and solar panels.  But the large quantities of transfer payments to states and enhanced entitlement spending are a lot more grey.  Did they simply shift the problems of states and individuals to problems of federal debt?  And how will we ultimately pay for all of this?

These are all issues to debate in the coming election.  It would help in that debate if either side had a real opinion about how to rein in the deficit.  President Obama seems content to talk about letting tax cuts expire while continuing to extend them.  Republicans seem to want even lower taxes without a real plan to cut the kind of spending that would be required.

Third party candidate, anyone?

A Civil Rights Victory in New York, Huntsman Gets in the Game, Miserable Money Malaise

New York Makes it Six
Despite weak national leadership on the subject by President Obama, a courageous New York State Senate voted Friday night to legalize gay marriage in the State of New York. The bill had previously cleared the Democratically controlled state House and passed on a final vote through the GOP-controlled body 33-29, which included the votes of 29 of the 30 Democrats in the body and 4 Republicans who were bold enough to buck their party base and their leadership to do the right thing. An enthusiastic Governor Andrew Cuomo quickly signed the bill and it is now law.

It is worth appreciating just how far we have come on this issue in a short period of time. In 2004, Massachusetts became the first state in the United States to legalize same-sex marriage, but did so through a state court order. This court order set off a fire-storm which, along with some clever politicking by Karl Rove, led to a slew of ballot initiatives in 2004 and beyond which explicitly banned same-sex marriage in 28 states. It wasn't until 2009 that the first legislative legalization of same-sex marriage occurred, with most of New England acting the same year - Vermont, New Hampshire and Maine all legalized through the legislative process although Maine's legalization was overturned by a 53%-47% ballot vote on a proposition to repeal in 2009. Iowa and Connecticut also legalized same-sex marriage by court order. The District of Columbia has also legalized same-sex marriage by city ordinance.

The New York law is significant in several ways. First of all, it is the largest state that currently allows same-sex marriage (California allowed same-sex marriage for a brief period before the now-infamous Prop 8 passed by a narrow 52-48% vote in 2008.) Secondly, it is the first time ever that a Republican-controlled state body has passed a gay marriage bill. The 4 Republicans who crossed over deserve all the credit in the world for their courage, credit I withhold from President Obama, who has been decidedly weak on this issue.

So, here is where things stand as of the New York change:
States/Localities Where Gay Marriage is Legal and Performed: Massachusetts, Vermont, New Hampshire, Connecticut, Iowa, New York, District of Columbia -- 35.1 million people live in these states or 11.4% of the population

States/Localities Where Gay Marriage is Legal But Not Performed (out-of-state gay marriages recognized): Maryland, New Mexico -- 7.8 million people live in these states or 2.5% of the population

States/Localities Without Gay Marriage but With Civil Unions with Equivalent Rights: New Jersey, Delaware, Illinois, Nevada, California, Oregon, Washington, Hawaii -- 74.4 million people live in these states or 24.1% of the population

States/Localities Without Gay Marriage but With Civil Unions with Limited Rights: Colorado, Wisconsin, Maine -- 12.0 million people live in these states or 3.9% of the population

So, cumulatively,
11.4% of the population can get a gay marriage in their home state
13.9% of the population can get a gay marriage and have it recognized in their home state
38.0% of the population has access to either gay marriage or equivalent rights through a civil union
41.9% of the population has access to at least some form of civil union rights

So, we've made a lot of progress but still have a lot to do.

So where are the next fronts in this debate?
(1) The Potential Gay Marriage States
California - a Prop 8 repeal seems likely eventually. The vote was very close in 2008, attitudes have shifted to be somewhat more pro-gay marriage since then and the 2008 vote was ironically hampered by a very high African-American turnout in 2008 (African-Americans are overwhelmingly opposed to gay marriage but tend to break liberal other than that.) 2012 wouldn't be the ideal time to try, but 2014 might be.
Maine - the last vote in 2009 was only 53%-47%, a new vote might yield a victory for gay rights advocates at the ballot box.
Rhode Island - recent polling indicates strong support (60%+) among the voting population there, although the actual avenue would likely be by legislation through the state house.
Illinois, Washington, Oregon - all states with full civil unions where there is public support for gay marriage (I exclude New Jersey from this list as gay marriage likely has no chance as long as Chris Christie is Governor)

(2) Next Frontiers for Civil Unions
States where civil unions would likely have public support but are probably not ready for gay marriage include a lot of traditional swing states:
Pennsylvania, Ohio, Michigan

(3) The Constitutionality of the Defense of Marriage Act
This act, cowardly signed by President Bill Clinton in 1996 permitted states not to recognize gay marriages performed elsewhere. I've been amazed that this issue has not made it to the Supreme Court, as it seems, on face, to be flagrantly unconstitutional. Article 4, Section 1 of the constitution states:
"Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof."

The so called "Full Faith and Credit" clause is crystal-clear to the average person. States must honor contracts, legal proceedings and public acts performed in all the other states. It is the basis of our system of rights and property laws. And gay marriage is clearly all three (a contract, a legal proceeding and a public act.)
The Defense of Marriage Act itself quotes the Full Faith and Credit clause and claims constitutionality on the basis that the constitution provides congress the right to the Congress to make determinations about what qualifies under Article 4, Section 1. The constitution contains no such language. I've quoted Article 4, Section 1 in its entirety above.

Conservative support for this highly dubious constitutional argument flies in the face of alleged "strict constructionism". The truth is, conservatives seem fine with judicial activism as long as it supports their agenda.

Much more to come on this key civil rights fight.

Jon Huntsman, The Moderate Long Shot
Speaking of gay rights supporters, former Utah Governor and former Obama Administration Ambassador to China Jon Huntsman got in the race this week. Huntsman is a long shot, for several reason. The first is that his pragmatic, moderate politics don't play well to Republican primary crowds. Huntsman favors civil unions (the same position, as best I can tell, as President Obama), recognizes man-made global warming and has a history of working across the aisle, great general election qualities but poison pills to the tea party. He also suffers from very low name recognition and crowded space among mainstream establishment Republicans (he looks and sounds a lot like both Mitt Romney and Tim Pawlenty.) I don't expect Huntsman to win, but he is going to be an interesting voice in the debate.

The Rotten Economy
Unemployment still stands at 9.1%. US Economic growth for the first quarter was only 1.9% and expected to be only modestly better in the second quarter (to give you a feel, 3% growth is generally required just to maintain the unemployment rate, 4 or 5% to significantly dent it.)

President Obama is stuck. New stimulus is a non-starter in the GOP House. Tax cuts only pile on to an already untenable deficit and debt load. He's stuck riding this one out. And as we've often discussed, economics are the single most important factor in Presidential elections.

The approximately 3-year stimulus plan that was already passed continues but is almost out of juice. As of now:
Tax Cut Paid Out: $259.9 billion out of $288 billion (90.2% complete)
Spending: $395.0 billion of $499 billion (79.2% complete)
Overall: $654.9 billion out of $787 billion (83.2% complete)

Of course, the GOP and President Obama agreed to a stimulus bill of sorts at the end of 2010 as part of the deal to extend the Bush Tax Cuts for all. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 provided for many measures intended to stimulate the economy:
* Extension of Bush-era income and capital gains tax reductions through 2012 as well as a compromise on the estate tax rate
* A "fix" to the alternative minimum tax, which raised exemptions to prevent middle-class families from falling under the tax
* Extensions of the American Recovery and Reinvestment Act's Child Tax Credit, Earned Income Tax Credit, and American Opportunity Tax Credit
* Job Creation Tax Credits, Ethanol Tax Credits and Accelerated Depreciation Tax Credits for businesses
* A 13-month extension in unemployment benefits
* A brand-new, 1 year payroll tax reduction

This was clearly a much more Republican bill than the original stimulus. The original stimulus was 62% spending and 38% tax cuts and totaled $787B in cost.

The 2010 bill was almost as large, costing approximately $671B, but was only 8% taxing and 92% tax cuts. Spending in the bill broke down as follows:
* Provisions extending Bush-era tax cuts -- 46%
* New Middle Class and Working Class tax cuts -- 37%
* New spending provisions - 8%
* Provisions extending Obama stimulus tax cuts -- 6%
* Other business tax cuts - 3%

Arguably, for all the talk of President Obama being a socialist, he has been the most tax-cutting President in US history. The problem is, he also likes to spend. There is some argument for this as a short-term measure to jump-start the economy. But we are way past short-term. We need to solve the structural deficit, not pass another set of tax gimmicks. Any ideas on how to get to a compromise on that one?

Elena Kagan and a Reminder of the Consequences of Elections, A Checkin on Obama's Scorecard, Still Stimulating?, My Apologies to Arthur Laffer

What Elena Kagan's Confirmation Reminds Me Of
This afternoon, the Senate confirmed Elena Kagan to serve on the Supreme Court by an unambiguous vote of 63-37, with 56 of 57 Democrats voting in favor (moderate Ben Nelson voted "no"), both Independents (the sometimes liberal Joe Lieberman and the always liberal Bernie Sanders) voting in favor and 5 of 41 Republicans voting in favor (moderates Collins, Snowe, Graham and conservatives Lugar and Gregg.) It was not a particularly close vote, even by the defacto 60 vote threshold that we have come to know and hate in the US Senate.

Her joining of the court will not much change the ideological make-up, given that she replaces the most liberal member of the court, John Paul Stevens.

In Kagan, the country gets a great legal mind, but one with limited judicial experience. Depending on your perspective and the year, that is either a good thing or a bad thing.

I was reminded by a liberal friend of mine the other day just how much Supreme Court seats punctuate how much consequence each Presidential election holds. He reminded me of the closeness of the 2004 Presidential race (3 points nationally, less than a hundred thousand deciding votes in Ohio) and the fact that the seat, in effect, decided two Supreme Court seats, those now held by Samuel Alito and John Roberts, probably for at least a generation.

How different would the nature of court decisions be if there were a solid 6-vote liberal majority versus a moderate/conservative 5-4 majority?

Is He Keeping His Promises?
There's been a lot of discussion in the space lately about President Obama's declining approval ratings, but I haven't updated in a while how he is tracking on actually doing what he said he would do, that is, keeping his campaign promises.

From our friends at politifact, here is their latest accounting:
Promises Kept: 120
Promises Partially Kept (aka compromises): 38
Promises Broken: 20
All other promises (ones in the works, not yet rated or "stalled" - meaning that they are not progressing at the moment): 327

So, of the 505 things that President promised to do in the 2008 campaign, if I give him full credit for kept promises and half-credit for partially-kept promises, he has completed 27.5% of his promises, or given that his term is 38.5% completed, he would be on pace to fulfill 71% of his promises. Not a bad average, except that the promises get harder the further you get along, since early on you generally get all the early stuff done.

In terms of the promises in which he has taken definite action (the 178 rated), he has been 78% true to his word.

All of this leads me to conclude...we largely got what Obama said he would be. If we are disappointed, it is largely because we took it upon ourselves to believe he might be something he never said. I included myself in the deluded.

How About That Stimulus?
Quietly, having faded from public attention long ago, the American Recovery and Reinvestment Act continues to return tax dollars and spend money on infrastructure and entitlements. This is the problem with 3-year economic programs, like the stimulus bill -- people forget they are working long before their full effects are known.

By the latest government accounts,
Tax Cuts: $223B out of $288B spent (77% complete)
Spending: $268B out of $499B spent (54% complete)

The tax cuts largely expire at the end of this year, so those will be 100% complete by December. The infrastructure spending will certainly extend into 2011.

The ARRA, combined with the balance-sheet actions of the fed, have largely shaped economic policy in this country for the first Obama term. The results in 2012 will largely reflect whether these policies ultimately succeed or fail.

There have been some great pieces published of late that show just how closely Presidential results track to election-year income growth. I'll publish a recap of this work in my next blog, but suffice it say, it shows the Clinton campaign of 1992 was right, "it's the economy, stupid"

I Was Wrong on Laffer
In a recent blog about the history of the Laffer curve, I stated that Arthur Laffer now supported raising taxes as he believe that we were not past the optimal revenue point for taxation. My remarks were based on my recollection of a Newsweek article from several months ago. As I have been unable to locate the original source, and Mr. Laffer has made it clear in a subsequent Wall Street Journal commentary piece that he does not support raising top marginal tax rates, I apologize for misconstruing his views on present taxation.

I stand by my belief that tax rates need to be increased, but did not mean to misrepresent Mr. Laffer's view as being supportive of mine.

The Great Recession Ends with Great Damage, Headwinds and Tailwinds, Is the Stimulus Enough?

The Recession is Over, But What Has it Left Us With?
While the "official" declaration of the start and end of a recession comes months later after economic analysts have poured over reams of data on economic performance, the 3.5% growth in Real Gross Domestic Product in the 3rd quarter of this year is sufficient to declare with a very high probability that the so-called "great recession" has ended in the United States.

As a reminder, Gross Domestic Product is a measure of the value of all goods and services produced in the United States in a given time period. It is the most comprehensive measure of the health of the economy essentially because the value of everything produced equates to the value of goods and services that Americans will receive in that quarter -- in other words, we get something for the value that we generate. You can see the last 3 years of GDP growth in the chart below, with the negative quarters, where the economy was actually shrinking, in red.


With a total economic contraction of 3.8%, this ranks right up there with the worst recessions of the Post-World War II era, trailing only the Great Depression, but trailing it by a massive margin (we are talking greater than a 5:1 ratio.) There is a legitimate debate about whether this recession was worse than the double-dipper in 1981-1982 that saw unemployment surge above 10% and mass inflation to go with the economic stagnation (something that we fortunately do not see today, at least yet.)

So if the recession is over, when do things get back to normal? Depends what normal is and what happens going forward.

Keep in mind that the chart above talks about TOTAL GDP. The wealth-generation that people feel in their wallets relates to PER CAPITA GDP, or the total GDP divided by the number of people in this country.

Our population grows by about 1% per year. Therefore, just to keep the same standard of living, the total GDP has to grow by 1%. Any less and our standard of living is slipping. Any more and it is improving, as it historically has.

Think of it this way: if there were 2 people in the country and we made 2 cars in a year, that's 1 new car per person per year. If the population grows to 3 people, we now have to make 3 cars in a year for those 3 people to maintain the same standard of living that the 2 people previously had.

The recession, with all its quarters of negative growth have driven a significant gap in per capita GDP versus its high in the 4th quarter of 2007, when the recession began. The chart below shows the trend in Per Capita GDP.


If we were to maintain the 3.5% annual GDP growth rate that we had last quarter (which is a tall order in and of itself -- more on that later), it would take until the 3rd quarter of 2011 just for per capita GDP to get back to where it was before the recession.

That's a long time to suffer through high unemployment and declining wages. And there is no assurance that this growth rate will continue. The economy faces significant short-term headwinds, although also some long-term reasons to be optimistic.

Head and Tail Winds
There are many reasons to be concerned in the short-term:

• A large portion of the growth in the third quarter was created by government stimulus. Cash for clunkers is now gone, the first-time home buyer tax credit may or may not get extended and other stimulus spending and tax cuts will end eventually. Essentially we've grown through government leverage, but that can't last forever
• Unemployment is still very high, at 9.8% and predicted to rise further (although it feels like we are nearing the peak.) High unemployment squashes consumer spending, which in terms impacts growth in the near-term.
• Consumer confidence is still sagging. After recovering from downright scary levels in the winter, when it was 20% of the 1985 benchmark it is measured against, it rose throughout the spring, but still now stands at just 47.7% of its 1985 level, having declined each of the past two months. If consumers aren't confident, they aren't likely to spend.

Tailwinds

• Productivity is surging -- worker productivity rose 6.6% in the 2nd quarter of 2009. Productivity is the single best indicator of long-term economic growth, because the more an individual outputs per hour of work, the more that there is to go around, once you get people working.
• Stimulus is not over -- we have a lot of stimulus money left to spend -- more on that later
• History is on our side -- double-dip recessions are actually very rare -- 1981/1982 was the exception not the rule. In the modern era, Americans have shown the capability to buckle down and grow the economy after a recession. Consider the boom that followed the 1990/1991 recession, where we saw some of the best economic growth in the countries history.
• Innovation could be the key -- just as the internet unlocked productivity and output in the past decade, new technology will be the key if we are going to launch into a new era of prosperity. We have still not fully leveraged the internet. Green energy could be a whole new economic boom segment. Upgrading and rebuilding the nation's infrastructure could be a growth industry.

In total, I admit I underestimated the severity and the impact of this recession from the output. I'm still very optimistic about the long-term economic prospects in this country. We still have a highly educated, talented, productive workforce, we still have a spirit of innovation and experimentation and we still have natural resources and infrastructure to benefit us long term.

The short-term is a little more dicey and harder to call. Will the economy sink back down as stimulus pulls out? Will consumer confidence drag on the economy for some time to come? Economists are split. I think we will continue to grow, but the question is how fast -- will it be enough to solve massive unemployment and consumer confidence or just enough to maintain our now-reduced standard of living?

More Stimulus? Too Much Stimulus?
The second quarter growth numbers have ended debate among serious economists about whether the stimulus had an impact on the US economy -- every credible financial news source cites stimulus funding as one of the major factors behind the return to growth in the second quarter. Clearly, programs like Cash for Clunkers and the Home Buyer Credit helped spur spending and growth.

Critics on the right argue that this a short-term bump up and that we will face negative longer-term consequences as government debt rises and the stimulus abates. They say that any benefit from the stimulus is not worth the long-term cost.

Critics on the left, on the other hand, argue that this simply proves that we didn't do enough stimulus, that the original bill should have been larger, that we probably need a second stimulus shot in the arm.

The White House won't dare to propose that we do something called a second "stimulus" bill, but as I noted a few weeks ago, has been quietly moving to make some small moves, such as extending unemployment benefits and the first-time home-buyer credit.

But there is still a lot of juice left in the first stimulus bill too. As of the latest reports:
Spending -- $123.5 billion of the $499 billion allocated has been paid out as of last week or 24.7%
Tax Cuts -- $83.8 billion of the $288 billion in tax cuts have been paid out or 29.1%
In total of the $787 billion stimulus package, about $207.3 billion has been paid out or 26.3% of the bill's total.

While I had argued that the money needed to go out faster to give the economy a quick shot in the arm, the good news in these numbers is that there are a lot of legs left in the existing stimulus package. If we spent about 26.3% of the bill's allocation and we managed to achieve 3.5% GDP growth for a quarter, it stands to reason that if that money is spent appropriately, we should be able to maintain that growth rate for several more quarters as the balance of the funds are paid out of the course of this year and next year.

The risk is that the most "stimulative" programs, such as Cash for Clunkers may have past and whether the bill continues to drive economic progress will depend on the effectiveness of the remaining programs.

All in all, not only would it be political suicide, it would seem to me to be fool-hardy to propose another stimulus when there is so much left to go on the existing bill.

The economy is a complex beast and if anyone understood all the twists and turns that it takes, that person would probably be able to get very wealthy and might not share that information with the rest of us.

However, the recent news is, on balance encouraging. We aren't on the verge of financial collapse anymore, the economy is growing and unemployment will eventually peak. But there will be more pain along the way.

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Stimulus Ends Fiscal Year at 21.4% with Surging Unemployment, Presidential Approval Holds Ground, 47% Tax Free?

Stimulus Is Spending, But Is It Stimulating?
The American Recovery and Reinvestment Act ended the 2009 Fiscal Year for the Federal Government with $106.9B in money spent (21.4% of the $499B total in the bill) and $250.6B authorized (50.2% of the bill's total.)

This is more or less on track with the projections from when the bill passed -- a sizable, but not overwhelming chunk spent in Fiscal 2009, the bulk of the money spent in Fiscal 2010 and some trailing expenses in Fiscal 2011. This structure, as you will recall, was the subject of a lot of debate while the bill was moving through congress, with Republicans claiming the impact wasn't nearly fast enough to be truly stimulative.

So the bigger question for this large investment is, is it working?

It's a tough question to answer, since we will never know what the economy would have looked like without the bill. On the one hand, we have obviously seen a stabilization in the economy. The GDP shrunk at only a 0.7% in the second quarter (after crashing around 6% in the prior two quarters), and is expected to have grown in the third quarter "officially" ending the recession. However, unemployment (as it often does in a recession), continues to raise, climbing to 9.8% in September, a new high-water mark for the past 25 years. And wasn't this supposed to be a jobs bill, after all?

I don't know the ultimate verdict on the stimulus, but when I look back to where we were earlier this year, I know action was necessary. And I know a lot of the structural projects funded were very necessary. While I would have liked to see less temporary tax cuts, which are of marginal effectiveness at stimulating the economy in my experience, and more of the programs that seemed to work very effectively, like cash for clunkers and infrastructure spending, on balance, I still believe the stimulus as it happened is far superior to having done nothing.

But it will be all for naught if employment doesn't improve eventually. People are still suffering a lot and not too many feel a lot of "recovery" yet.

President Obama -- A Narrative by the Numbers
Looking at President Obama's monthly averages for his approve minus disapprove.
I. The Honeymoon Wears Off
Almost all Presidents are very popular when they start. It's a natural thing -- we want to root for the new guy to be successful. But, generally in the first few months of the Presidency, as the new President starts to take action, those on the opposite side of the aisle remember why they voted against him. This happened to President Obama as he dropped from +48% his first month in office to +33% in March. Still very popular, but not the near-unanimous support he enjoyed upon taking office.

II. The Stable Spring
President Obama appeared to be holding his own. His numbers slipped slightly during this time period that saw the economy bottom out, but largely people continued to like the new President and believe that he was doing the right and necessary things to fix the economy and country for the long term. He averaged +31% from March-May.

III. Wheel Come Off Health Care
Tea parties, town hall protests and a White House under fire. President Obama had a very bad summer. His numbers went into free-fall, crashing all the way to +12% in August.

IV. Back to November 2008
In a theme, I've been following, President Obama's numbers appear to have stabilized at near his November vote margin. He was +12.3% in August, an identical +12.3% in September. He is showing better in October at +15.0%, but this is a very small data set, based upon two days (although all of the averaging and weighting techniques give that number some credence.)

These phases are illustrated on the chart below.

The President's daily average as of today stands at +14.8%, still comfortably ahead of his margin in November. In fact, at this margin, if an election where held today, he would win all the states that he won then, plus Georgia and Montana.

Of course, the election is not being held today or anytime soon. But the point is simply that the President's political capital has stabilized.

Where it goes from here depends a whole lot on the economy and the fate of health care reform.

47% Pay No Taxes?
CNN / Fortune report recently showed that 47% of American households will have either a zero or negative (due to refundable tax credits) total income tax liability in 2009. That is a staggering number on face and has led many conservatives to question a tax system that does not require contribution from almost half the population.

There is some merit to the conservative argument, but let's first heavily caveat the situation. Saying that 47% of Americans pay no taxes is not an accurate statement. Everyone who has made a dollar of income will pay payroll taxes. Social Security taxes stand at 6.2%, Medicare taxes at just over 1% and both of those have an equal "employer side" tax, which effectively means that a workers pay is reduced by twice that amount. So, let's start by agreeing that everyone who is working, is actually being taxed at close to 15% right off the bat.

In addition, we all pay federal taxes on all sorts of federally taxed goods, from gasoline to alocohol to cigrettes (okay, non-smokers and non-drinkers that don't own cars don't pay these, but you get the point.)

Having said this, I find this trend disturbing. Income taxes are still the federal government's largest source of revenue. The middle and upper middle class are the ones who are most scorched by our tax burden -- people rich enough to pay a 28% marginal income tax rate, but not rich enough to hit the caps on Social Security taxes. In total taxation terms, the bottom quarter pays the smallest percentage of their income, then the top quarter the next smallest and the middle half the greatest.

I propose we fix both problems. Let's establish a good, progressive tax structure that is all encompassing. There are several ways to do this. One would be to reform income and payroll taxes so that we have one all-encompassing income tax that has fewer write-offs and a clear structure (say 0% of poverty-level income, 25% of income above poverty level and 40% of income about $250K.) Another alternative would be to use a VAT or National Sales Tax as a substitute for the income/payroll tax structure, but exempt essentials such as food and clothing from the tax to prevent if from being regressive.

Neither of these options are politically likely, so let me propose one that might actually fly:
(1) Eliminate the cap on social security and roll back the Bush tax cuts on upper-income individuals (fixes the upper-income problem)
(2) Slowly unwind the refundable tax credits for those making more than poverty level income
(3) Raise the minimum wage so that fewer people operate below the poverty level

I realize raising the minimum wage while unemployment is still high is dicey. But there is no credible emperical evidence that minimum wage hikes in the past have led to conservatives' worst fears, increased unemployment and lower hiring. I'd actually argue that a deflationary cycle such as the one we are in now is the IDEAL time to raise the minimum wage, since the primary risk of rising wages is inflation.

At any rate, whether these options or others are taken up, eventually congress will have to tackle the mess of our tax code. President Bush appointed a blue-ribbon commission, whose findings where promptly ignored. Perhaps President Obama can do better. Although recent experience with Health Care doesn't inspire much confidence.

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