Final thoughts on today’s vote
John Podhoretz mentions something we’ve been talking about for a while:
If Mitt Romney wins tonight, it’ll likely be because of something revealed by a little-noticed statistic released yesterday by the polling firm Rasmussen — following a similar statistic last week from Gallup.
Rasmussen revealed that for the month of October, its data showed that among likely voters, the electorate is 39 percent Republican and 33 percent Democratic.
This comes from a survey of 15,000 people taken over the course of a month. Yes, 15,000 people —15 times the number in a statistically significant poll.
This number might be discounted, since Rasmussen has a reputation as leaning Republican. Except that last week, Gallup — the oldest and most reputable national pollster — released its party ID survey of 9,424 likely voters. And it came out 36 percent Republican, 35 percent Democrat.
I’m not at all comfy with R+6 from Rasmussen. But what should be taken away from this is the fact that two major polling firms have surveyed likely voters extensively and come up with similar results about the mix of self-identified Republicans and Democrats. And what they’ve found is a profound shift from 2008.
Why does this matter? Check history:
Because never in the history of polling, dating back to 1936, have self-identified Republicans outnumbered Democrats on Election Day. Never. Ever.
Hmmm. So indies are breaking for Romney by 7 points, 13% of those who voted for Obama last time say they’re not going to vote for him this time and for the first time since 1936 we’re pretty sure that it is R+something, but Obama is going to win?
Excuse us for being skeptical again, but sometimes the “numbers” just don’t add up. And, then, as we’ve mentioned, there are the atmospherics, something polling companies really don’t plug into at all. Sometimes, as in 2010, the gut comes through because the brain has assimilated a lot more than the numbers provided and ends up with a conclusion that is contrary to the conventional wisdom.
I still believe this is one of those times.
~McQ
Observations: The QandO Podcast for 04 Nov 12
This week, Bruce, Michael, and Dale make their final election calls.
The direct link to the podcast can be found here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.
Prediction time (Update)
If you haven’t read Karl Rove’s analysis of the election, you ought too. Yeah, I know, Rove is partisan and all of that, but, like Michael Barone (who, by the way, has predicted a Romney win), he knows election demographics.
Rove makes a point that seems to be missed by a lot of people or, perhaps, ignored instead:
He maintains a small but persistent polling edge. As of yesterday afternoon, there had been 31 national surveys in the previous seven days. Mr. Romney led in 19, President Obama in seven, and five were tied. Mr. Romney averaged 48.4%; Mr. Obama, 47.2%. The GOP challenger was at or above 50% in 10 polls, Mr. Obama in none.
The number that may matter the most is Mr. Obama’s 47.2% share. As the incumbent, he’s likely to find that number going into Election Day is a percentage point or so below what he gets.
Why is that significant?
For example, in 2004 President George W. Bush had 49% in the final Gallup likely-voter track; he received 50.7% on Election Day. In 1996, President Clinton was at 48% in the last Gallup; he got 49.2% at the polls. And in 1992, President George H.W. Bush was at 37% in the closing Gallup; he collected 37.5% in the balloting.
If you can’t get above 47%, and your challenger is running above that number, chances are you aren’t going to win.
Then there are the polling demographics. Remember when I said that if a poll has D+ anything, it is likely wrong? I stand by that:
One potentially dispositive question is what mix of Republicans and Democrats will show up this election. On Friday last week, Gallup hinted at the partisan makeup of the 2012 electorate with a small chart buried at the end of its daily tracking report. Based on all its October polling, Gallup suggested that this year’s turnout might be 36% Republican to 35% Democratic, compared with 39% Democratic and 29% Republican in 2008, and 39% Republican and 37% Democratic in 2004. If accurate, this would be real trouble for Mr. Obama, since Mr. Romney has consistently led among independents in most October surveys.
So, assuming Gallup is right, and it is R+1 as we’ve been saying is likely here, what does that mean for the polling that’s going on?
Take a look at this handy little chart from RCP:
The chart makes the point about how important it is for the polling company to get the mix correct and the probability that many of them haven’t. If they’re not properly skewed, you aren’t going to get valid results. We know there are still polls being run out there with D+5 and up to D+8. Those were legitimate in 2008.
This ain’t 2008 (and you have to ignore 2010 to believe it is) by a long shot.
Then there’s this:
Gallup delivered some additional bad news to Mr. Obama on early voting. Through Sunday, 15% of those surveyed said they had already cast a ballot either in person or absentee. They broke for Mr. Romney, 52% to 46%. The 63% who said they planned to vote on Election Day similarly supported Mr. Romney, 51% to 45%.
So, what is happening is the Democrats are getting their most motivated voters to the polls early and they’re still running behind the GOP. If, in fact, that’s the case, then who will the Dems be trying to turn out on Tuesday and how successful will they be? It all comes down to enthusiasm, doesn’t it? And as measured, that too resides on the side of the GOP (well, except for the NYT poll, unsurprisingly):
Finally, while looking that that chart, remember that independents have been breaking large toward Romney. More than for any GOP candidate in recent history. Add all the other demographics that have shifted significant support from Obama in the last election to Romney in this one, not to mention the atmospherics that simply aren’t there for the incumbent and it is difficult to believe that Obama will win.
So, all that said, I’ll predict a Romney win with slightly over 50% and around 279 electoral votes. I’ll also predict that Nate Silver will be donating $1,000 to charity and David Axlerod’s mustache will be absent Wednesday of next week.
UPDATE: A reminder for all the doubters out there who want to dismiss Rove – In 2008 Karl Rove predicted an Obama win with 338 EVs (actual: 365)
~McQ
Michael Barone: Slow-motion 1980?
Michael Barone is one of the few poll watchers I respect. I’ve watched him in any number of elections and he’s objectively called it the way he saw it, usually spot on, for whomever the facts indicated was in the lead. No spin, just good analysis.
Well, in this season of polling chaos, Barone is out with his look at some of the key indicators that help him analyze election trends and he seems to think we are seeing a preference cascade begin ala 1980 … just slower:
My other alternative scenario was based on the 1980 election, when vast numbers of voters switched from Jimmy Carter to Ronald Reagan after their single debate one week before the election. In that debate, the challenger showed he had presidential stature and the incumbent president seemed petulant and small-minded.
We saw an even more vivid contrast between challenger and incumbent in the Oct. 3 debate. In the next two debates, Obama was definitely more focused and aggressive. But Romney held his own, and post-Oct. 16 polling showed him improving his standing even though many debate watchers thought Obama won on points.
What we may be seeing, as we drink from the firehose of multiple poll results pouring in, is a slow-motion 1980.
That reinforces my point about the first debate and something we’ve been saying since Oct. 3. That is the debate that mattered. And note also that in debates 2 and 3, Obama pulled a Carter. His stature was diminished by his actions. He, as Barone and many others have observed, came across as “petulant and small-minded”. Add arrogant and condescending, and you’ve captured it. Oh, and by the way, his record, like Carter’s, is dismal.
Romney, on the other hand, came across exactly as he had to come across – competent, presidential, confident and, believe it or not, likable. He did what Ronald Reagan did – unfiltered by the media, he was able to convince Americans who tuned in that he was Presidential material. That he was a more than acceptable alternative to Obama.
All of that said, Barone isn’t claiming that this is a done deal by any stretch (“don’t get cocky kid”):
The usual caveats are in order. Exogenous events could affect opinion (Libya seems to have hurt Obama). The Obama ground game is formidable. Voters who switched to Romney could switch back again.
And if there is a larger reservoir of potentially changeable voters than in 2004, there was an even larger reservoir back in 1980, when Carter attracted white Southerners who now are firmly in Romney’s column.
Mechanical analogies can be misleading. Just because Romney has gained ground since Oct. 3 does not guarantee that he will gain more.
But also keep in mind that Romney gained not just from style but from fundamentals. Most voters dislike Obama’s domestic policies and are dissatisfied with the sluggish economy. And now they seem to believe have an alternative with presidential stature.
So, while we apparently have a preference cascade beginning, is it enough? And will it peak at the right time. Will it be a slow steady climb to election day? Will it plateau? Will it stop short of the majority Romney needs? Obviously we won’t know that until election night (or, perhaps, the next day). But suffice it to say, the upward trend is obvious.
How it will play out, however, remains to be seen.
~McQ
Debate: If it had been a prize fight, they’d have called it in the 9th round (update)
Or, as Michael Moore said, “that’s what you get for having John Kerry as a debate coach”.
It appears the debate went pretty much in Mitt Romney’s favor last night, and, as you would see if you watched MSNBC’s Morning Joe, they’ve suddenly “discovered” MItt Romney. I know it must be a shock that their made up Romney didn’t show up last night.
Interesting.
More interesting? There appears to have been a clear winner last night:
According to a CNN/ORC International survey conducted right after the debate, 67% of debate watchers questioned said that the Republican nominee won the faceoff, with one in four saying that President Barack Obama was victorious.
“No presidential candidate has topped 60% in that question since it was first asked in 1984,” says CNN Polling Director Keating Holland.
And:
While nearly half of debate watchers said the showdown didn’t make them more likely to vote for either candidate, 35% said the debate made them more likely to vote for Romney while only 18% said the faceoff made them more likely to vote to re-elect the president.
More than six in ten said that president did worse than expected, with one in five saying that Obama performed better than expected. Compare that to the 82% who said that Romney performed better than expected. Only one in ten felt that the former Massachusetts governor performed worse than expected.
Now the poll only reflects debate watchers and not all Americans, but then the debates are aimed at, well, debate watchers, aren’t they?
One of the things I take away from the numbers is the 82% that say Romney performed better than expected actually got to see and judge Mitt Romney for themselves last night and not through the filter of the media.
We talked about that sort of thing on the podcast. How America watched the debate between Ronald Reagan and Jimmy Carter, when Reagan was lagging in the polls, and apparently decided that night that Reagan was acceptable as President.
Did that happen last night for those that tuned in?
Did Romney get a check-mark beside “acceptable” for the job?
Probably so. As for Obama’s performance? Well, here are a few words from his supporters:
- Commentator and blogger Andrew Sullivan might have captured the collective reaction best with this tweet, “Look, you know how much I love the guy, and how much of a high-info viewer I am, but this was a disaster for Obama.”
- On MSNBC, talk show host Chris Matthews asked incredulously, “Where was Obama tonight?” He suggested that the president take some cues from the liberal voices on the cable channel. “There’s a hot debate going on in this country. Do you know where it’s being held? Here on this network is where we’re having the debate. We have our knives out. We go after the people and the facts. What was he doing tonight? He went in there disarmed.” Obama failed to put any points on the board by not bringing up Romney’s controversial “47 percent” remark or his work at Bain Capital, Matthews complained, while Romney “did it just right,” keeping a direct gaze on Obama as he spoke, ignoring moderator Jim Lehrer’s mild-mannered attempts to cut him off and treating he president like “prey.” Matthews said, “What was Romney doing? He was winning.”
- Comedian Bill Maher, who takes regular hard jabs at conservatives on his television show and who gave $1 million to a super PAC supporting Obama’s reelection, tweeted, “I can’t believe I’m saying this, but Obama looks like he DOES need a teleprompter” — a reference to Obama’s critics who say he relies too heavily on teleprompters.
Not pretty. Not pretty at all.
Now we’ll go through the obligatory fact checks that no one will pay attention too. But the impression has been made. The only question is, was it enough to tip the election to the Romney side.
And here’s another point to ponder. If Americans were waiting on the first debate to determine whether Mitt Romney was acceptable, will they bother tuning in to any of the other debates. Or said another way, was this first debate performance enough to convince them that he can do the job and would probably be better than the incumbent.
If I had to guess, I’d say yes.
And if last night made the undecided comfortable with a Romney presidency, that should worry Democrats.
Update: From CNN of all places:
It was the biggest question coming into this first showdown: Could Romney seem presidential standing next to the Obama?
The answer appears to be yes.
Wow.
Also from CNN:
“I don’t think anyone’s ever spoken to him like that over the last four years. I think he found that not only surprising but offensive. It looked like he was angry at times,” added CNN Senior Political Analyst David Gergen, who has advised both Democratic and Republican presidents.
Heh … what, no Nobel Peace Prize for just showing up?!
~McQ
Twitter: @McQandO
Facebook: QandO
Libertarians break for Romney
CATO has the news:
The Reason-Rupe September 2012 poll includes our favorite ideological questions to differentiate libertarians from liberals and conservatives. Using three questions, we can define libertarians as respondents who believe “the less government the better,” who prefer the “free market” to handle problems, and who want government to “favor no particular set of values.” These fiscally conservative, socially liberal voters represent 20% of the public in the Reason-Rupe poll, in line with previous estimates.
Among these likely libertarian voters, the presidential horserace currently stands:
Romney 77%
Obama 20%
Other 3%Romney’s share of the libertarian vote represents a high water mark for Republican presidential candidates in recent elections.
I find it difficult to believe 20% of the “libertarian” vote would go to Obama, but whatever.
Bush pulled 70% of the libertarian vote in 2000. But that percentage dropped to 59 in 2004.
So what if Gary Johnson is included?
Romney 70%
Obama 13%
Johnson 14%
Other 3%
A pretty even split between libertarians voting for Romney and Obama (7% each).
This is all interesting for a number of reasons. One is that many libertarians like to argue that “true” libertarians would never vote for any Republican or Democrat. Yet when you look at the numbers, and unless you’re willing to exclude about 97% of self-identified libertarians, that’s just not at all the case. In fact, in the last two presidential elections (2004 and 2008), third party candidates have pulled a whopping 3% of the libertarian vote. Yeah big “L” libertarian party types, it’s not selling. A lot of that has to do with “principles” which simply aren’t realistic (you know, like isolationism and open borders? Both have been overcome by events in case you haven’t noticed.). Once the Libertarian party begins dealing with the problems and realities of the here and now, and not how they’d like it to be, you may see those numbers change.
Until then, the lesser of two evils prevails. The reason for the record break this year? Probably because most libertarians understand that Obama and the Democrats pose the biggest internal danger to freedom and liberty this country has faced in quite some time. Is Romney/Ryan the panacea? Are you kidding? But first you have to remove the danger. Then you can work on repairing the damage.
And it won’t be quickly done as all of us know. I look for many “ones step forward, two steps back” days even after Obama is sent into retirement.
But one thing is for sure – this nation cannot afford another 4 years of Barack Obama.
~McQ
Twitter: McQandO
Facebook: QandO
Romeney’s “secret video”: Much ado about nothing
So, heaven forbid, there’s a “secret video” out of Romney (provided, reportedly, by James Earl Carter IV, who, ironically, is out of work) saying things that show what he really feels about Americans, (insert gasp here) etc., etc., – que the liberal outrage of the week and the latest in the left’s distract and disrupt campaign.
As to the remarks videoed by someone at this event, here’s how Mother Jones characterized what it saw as the big 3 quotes (that, one assumes, hurts Romney).
On the 47 percent of Americans “who will vote for the president no matter what.”
On the dividends of his anticipated November 6 victory: “we’ll see—without actually doing anything—we’ll actually get a boost in the economy.”
On the “almost unthinkable prospects” for Mideast peace: “I look at the Palestinians not wanting to see peace anyway…and I say there’s just no way.”
Oh my. Romney thinks that are “47% ” of Americans who will vote for Obama, “no matter what”.
Well here’s a shocker — so do I. Are they the same 47% who pay not income taxes (and save your breath, all those who beam in with payroll and sales taxes – “income” is before “taxes” because we’re talking about a specific tax, thankyouverymuch). No. But that’s sort of irrelevant. I do indeed believe that around 47% will indeed vote for Obama “no matter what”. Just as I believe there is about 45% who will vote for Romney, “no matter what”. Shock! The political term “yellow dog” is applied to both sides, folks, for a very good reason. They exist – in large quantities.
Of course the war is for the final 8% isn’t it? It always is. Why anyone is outraged by this number and his point is beyond me … or anyone who has any freaking idea of how politics have worked in this country for ages. It’s always been about wooing the final 8-10%. Obama’s problem is, since being elected, he’s rarely if ever been beyond 49%.
As to the damage? Well I think James Taranto sums that up pretty darn well:
Romney’s comment has been compared with Obama’s infamous 2008 remark, also at a private meeting with donors, about Pennsylvania voters who get bitter and cling to guns and religion. To our mind the difference is that those people, traditionally Democratic voters, could easily tell that Obama was referring to them. Most of the 47% will not see themselves in Romney’s description–and those who do, would probably not have considered voting for him anyway.
Bingo. Not that the Democratic dog isn’t going to worry this bone as much as it can.
Quote two about the economy. Context is always nice:
Audience member: When the [unintelligible] in September, the markets are going to be looking—marginal tax rates going up, overheads going, fine, but sequestration under the debt ceiling deal—what do they call it?
Romney: Taxageddon?
Audience member: Yeah, they call it that. The Obamacare, taxes on dividends and capital gains—I mean, the markets are going to be speaking very wildly in October on all of those issues.
Romney: They’ll probably be looking at what the polls are saying. If it looks like I’m going to win, the markets will be happy. If it looks like the president’s going to win, the markets should not be terribly happy. It depends, of course, which markets you’re talking about, which types of commodities and so forth, but my own view is, if we win on November 6th there will be a great deal of optimism about the future of this country. We’ll see capital come back, and we’ll see—without actually doing anything—we’ll actually get a boost in the economy. If the president gets reelected, I don’t know what will happen. I can never predict what the markets will do. Sometimes it does the exact opposite of what I would have expected. But my own view is that if we get the—the “Taxageddon,” as they call it, January 1st, with this president, and with a Congress that can’t work together, it really is frightening, really frightening in my view.
Again, an “oh, my … wait, what?” You mean he wasn’t talking about the economy improving and him being able to take credit “without actually doing something” as implied by the out of context quote?
Context – what a concept. He’s talking about how the markets will react to his election, that’s all. And, as in the previous quote – he’s right.
Finally, the Palestinian question. He’s three for three – they don’t want peace, they want the destruction of Israel and always have. And when offered a 95% deal, their leader (another Nobel Peace Prize winner) Yassir Arafat, turned it down. These are the people who parade their children around in fake suicide vests and launch rockets, weekly, into Israel.
As to what he said in full:
And I look at the Palestinians not wanting to see peace anyway, for political purposes, committed to the destruction and elimination of Israel, and these thorny issues, and I say there’s just no way. And so what you do is you say you move things along the best way you can. You hope for some degree of stability, but you recognize that it’s going to remain an unsolved problem. I mean, we look at that in China and Taiwan. All right, we have a potentially volatile situation, but we sort of live with it. And we kick the ball down the field and hope that ultimately, somehow, something will happen and resolve. We don’t go to war to try and resolve it.
On the other hand, I got a call from a former secretary of state—and I won’t mention which one it was—but this individual said to me, “You know, I think there’s a prospect for a settlement between the Palestinians and the Israelis after the Palestinian elections.” I said, “Really?” And his answer was, “Yes, I think there’s some prospect.” And I didn’t delve into it but you know, I always keep open the idea of, I have to tell ya, the idea of pushing on the Israelis?—to give something up, to get the Palestinians to act, is the worst idea in the world. We have done that time and time and time again. It does not work. So, the only answer is show your strength. Again, American strength, American resolve, as the Palestinians someday reach the point where they want peace more than we’re trying to push peace on them—and then it’s worth having the discussion. Until then, it’s just wishful thinking.
Can’t disagree. Won’t disagree. It’s essentially true. When, and only when, the Palestinians get serious about real peace can such a process go forward. They’re still not there. In fact, they’re not even close.
Anyway, there you go. The outrage is just nonsense as usual, but certainly helpful in the disrupt and distract campagin. Not reported on? This part of the conversation:
Audience member: The debates are gonna be coming, and I hope at the right moment you can turn to President Obama, look at the American people, and say, “If you vote to reelect President Obama, you’re voting to bankrupt the United States.” I hope you keep that in your quiver because that’s what gonna happen. And I think it’s going to be very effective. Just wanted to give you that.
Romney: Yeah, it’s interesting…the former head of Goldman Sachs, John Whitehead, was also the former head of the New York Federal Reserve. And I met with him, and he said as soon as the Fed stops buying all the debt that we’re issuing—which they’ve been doing, the Fed’s buying like three-quarters of the debt that America issues. He said, once that’s over, he said we’re going to have a failed Treasury auction, interest rates are going to have to go up. We’re living in this borrowed fantasy world, where the government keeps on borrowing money. You know, we borrow this extra trillion a year, we wonder who’s loaning us the trillion? The Chinese aren’t loaning us anymore. The Russians aren’t loaning it to us anymore. So who’s giving us the trillion? And the answer is we’re just making it up. The Federal Reserve is just taking it and saying, “Here, we’re giving it.’ It’s just made up money, and this does not augur well for our economic future.
You know, some of these things are complex enough it’s not easy for people to understand, but your point of saying, bankruptcy usually concentrates the mind. Yeah, George.
Audience member, “George”: Governor, to your point on complexity. How is—you’ve traveled around America and talked to people in larger groups and perhaps people with different backgrounds, and people in this room: To what extent do people really understand that we’re hurtling toward a cliff, and to what extent do people understand the severity of the fiscal situation we’re in. Do people get it?
Romney: They don’t. By and large people don’t get it. People in our party, and part of—it’s our fault because we’ve been talking about deficits and debt for about 25 or 30 years as a party, and so they’ve heard us say it and say it and say it. The fact that Greece is going what it’s going through, and they read about France and Italy and Spain, has finally made this issue topical for the American people. And so when you do polls, and you ask people what is the biggest issue in the 2012 election, No. 1 is the economy and jobs by a wide margin. But No. 2 is the deficit. But debt, that doesn’t calculate for folks, but the deficit does. They recognize you can’t go on forever like this. Although the people who recognize that tend to be Republicans, and the people who don’t recognize that tend to be Democrats. And what we have to get is that 5 or 10 percent in the middle who sometimes vote Republican, sometimes vote Democrat, and have them understand how important this is. It’s a challenge. I did the calculation for folks today, and USA Today publishes this every year. It’s a front-page story: the headline once a year, it somehow escapes people’s attention, and that is, if you take the total national debt and the unfunded liabilities of Medicare, Social Security, and Medicaid, the amount of debt plus unfunded liabilities per household in America is $520,000. Per household.
Audience member: It’s like 12 times their income, right?
Romney: At least. 10, 12 times their income. Even though we’re not going to be writing the check for that amount per household, they’re going to be paying the interest on that. You’ll be paying the interest on that. [Audience laughs.] Because we—my generation will be long gone, and you’ll be paying the interest. And so you’ll be paying taxes, not only for the things you want in your generation, but for all the things we spent money on, which is just—it’s extraordinary to think the tax rates, someone calculated what would happen. If we don’t change Medicare or Social Security, the tax rate—you know what the payroll tax is now, it’s 15.3 percent—if we don’t change those programs, that tax rate will have to ultimately rise to 44 percent. The payroll tax. Then there’s the income tax on top, which the president wants to take to 40 percent. Then there’s state tax in most states. And sales tax. So you end up having to take 100 percent of people’s income. And yet the president, three and a half years in, won’t talk about reforming Social Security or Medicare. And when the Republicans do, it’s “Oh, you’re throwing granny off the cliff.” It’s like you’re killing the kids. The biggest surprise that I have is that young people will vote for Democrats. They look at this and say, “Holy cow! The only guys who are worried about the future of our country and our future are Republicans.” But the Democrats, they talk about social issues, draw in the young people, and they vote on that issue. It’s like, I mean, there won’t be any houses like this if we stay on the road we’re on.
Now that is important stuff. That is what this elections should be about.
Not this other crap that MJ and the left chose to quote out of context. But then, what choice do they have but to resort to that given their candidate of choice’s record.
By the way, there’s now a controversy brewing about the possibility that the secret video might have been edited. Or, perhaps the gap is more like the Nixon tapes. Regardless, charges are flying back and forth. David Corn at MJ says they’re complete. But a bunch aren’t buying that. By the way, MJ blasted James O’Keefe for “edited” ACORN tapes if you’ll remember.
So, it’s politics in the media as usual. Wonderful stuff, no?
Aren’t we being well served?
~McQ
Twitter: McQandO
Facebook: QandO
Observations: The QandO Podcast for 16 Sep 12
This week, Bruce, Michael, and Dale talk about the week’s events.
The direct link to the podcast can be found here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.
Observations: The QandO Podcast for 02 Sep 12
This week, Bruce, Michael, and Dale talk about the Conventions and whether any of it will matter in the end.
The direct link to the podcast can be found here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.
Is America’s economy stronger than reported?
That’s the argument Ruchir Sharma makes in the Atlantic this week. It is one of those contextual or perspective arguments that says, “of course it’s bad, but look at the rest of the world”. He also, heaven forbid, makes the American “exceptionalism” argument, saying":
Evidence of an American revival, against both developed and emerging world competition, is mounting, driven by the traditional strengths of the American economy–its ability to innovate and adapt quickly.
But … there’s always a “but”:
America’s worst worries — heavy debt, slow growth, the fall of the dollar and the decline of manufacturing — will look much less troubling when compared to its direct rivals. While US growth has slowed by a full point so has growth in Japan and Europe, leaving the United States on top of the league of rich nations.
Sharma says manufacturing is looking up and slowly growing. As for debt? Well, private debt is being shed in record numbers:
Consider the key challenge of "deleveraging" or digging out from debt. A new study from the McKinsey Global Institute shows that the United States is the only major developed economy that is even loosely following the path of countries that successfully negotiated similar debt-induced recessions, like Sweden and Finland in the 1990s. Total debt as a share of GDP has fallen since 2008 by 16 percent in the United States, while rising in Germany and rising sharply in Japan, the United Kingdom, France, Italy and Spain. As in Sweden during the 90s, the fall in total US debt is due entirely to sharp cuts in the private sector, particularly the finance industry and private households.
Note the emphasized points in the last sentence – “private sector”, “private households.”
So what’s our biggest problem, our biggest worry, in fact our biggest economic drag that is likely keeping us bouncing along the bottom of this recession/depression?
Well Sharma doesn’t hesitate in identifying it:
The weak link in the U.S. response to the debt crisis is the government. The Scandinavian cases show that government needs to start cutting spending and debt roughly four years after the downturn — exactly the stage where the US is today. Washington has so far failed to put in place a plan for long-term debt reduction, in part because some politicians and pundits are still pushing for more borrowing to ward off "depression." The Scandinavian cases suggest this is exactly the wrong worry right now. The public debt is a big reason that long-term US growth is likely to slow, but even then, it is important to keep America’s debt problem in perspective. China is arguably worse off, with total debt equal to 180 percent of GDP. The more wealthy you are, the more debt you can carry, so America’s total debt (350 percent) is actually less of a challenge.
Don’t worry, be happy … our debt problems is less of a challenge? No, that’s not the point. It means, relatively speaking, we’ve been somewhat lucky because the strength of our economy and its size has helped ameliorate the drag increased government debt has placed upon our economic recovery.
Note what Sharma says, given the evidence of the “Scandinavian cases” – we should be cutting spending and debt “four years after the downturn”.
That would mean what? No QE3. No trillion dollar budget deficits as far as the eye can see.
However, that’s the plan right now.
President Obama has a campaign ad out talking about how we don’t need to repeat the “Republican plan” because, in his words, we’ve tried that and it didn’t work.
Well I hate to break it to you but what he has planned for the next four years, if he’s re-elected, is a reprise of his first term. Spend, spend, spend and expand government programs and services (to the tune of $46 trillion over 10 years, much of it debt).
And the Fed? It’s easing its way toward another quantitative easing (QE3), essentially ignoring the fact that the first two pushed about $10 trillion in cash out there which it is going to have too wring out of the economy at some future date. Adding even more doesn’t hit many as a very sound move.
One of those is Mitt Romney:
"I am sure the Fed is watching and will try to encourage the economy. But I don’t think a massive new QE3 will help the economy," Romney said, referring to a program called quantitative easing.
[…]
"I can absolutely make the case that now is the time for something dramatic and it is not to grow government,” he said. “It is the time to create the incentives and the opportunities for entrepreneurs – businesses big and small – to hire more people and that is going to happen.
Key takeaway? Romney gets the proper role of government in the economy – “create the incentives and the opportunities for entrepreneurs – businesses big and small – to hire more people…”.
If government did that – became an enabler – then what should follow? You should see employment begin to rise.
We should be seeing 200, 300, 400,000 jobs a month to regain much of what has been lost. That is what normally happens after a recession, but under this president we have not seen that kind of pattern. We have just been bumping along with barely enough jobs to just hold the unemployment rate about the same – above 8% – 42 months like that. You have to have the Steve Jobs of the world beginning businesses, making products that want to be purchased around the world. That gets Americans back to work."
He’s right. Exactly right. And the current president is clueless. It isn’t about pumping more money into the economy and creating more debt and bigger government. If you want to see policies that continue to cripple what Sharma dubs the “traditional strengths of the American economy”, give the guy in charge 4 more years.
Government’s don’t produce wealth. The private sector does. Government spends that wealth.
(Oh, wait, the private sector “is doing fine”. Never mind.)
Romney gets that part and it is indeed the most important issue of this upcoming election. Getting government out of the way and into the enabler role of providing incentives and opportunities for businesses to grow and expand (while curtailing government spending and expansion) is what will get this nation on the road to recovery.
The current administration doesn’t understand that – at all.
And, for all practical purposes, that’s all you need to know to decide who should be sitting in the Oval Office next January 20th.
Hint: In case you somehow missed it, it isn’t the guy in there now.
~McQ
Twitter: @McQandO