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WHAT'S KEEPING OBAMA UP?
By DICK MORRIS
Published on TheHill.com on June 2, 2009
The Rasmussen poll conducted over the weekend of May 30-31 asked a key question
designed to give us perspective on Obama's current popularity. The question was
whether the current problems "are due to the recession that began under the Bush
administration or to the policies Obama has put in place since taking office."
In other words, who's to blame, Bush or Obama?
By 62-27, voters say Bush is still the culprit.
As long as this opinion remains prevalent, Obama will continue to enjoy high
popularity. But when it changes, as it inevitably must, we will see him begin a
long, long fall.
And this is the key measurement to watch.
The real recession -- dating from the stock market collapse -- began four months
before Bush left office. And it is now four months since Obama was inaugurated.
From this vantage, it still looks to voters like Bush's recession.
But it will become increasingly obvious that the large deficit Obama has
incurred while pursuing his cure for the recession is, on its own, causing more
problems than it solves. As high interest rates and, most likely, inflation,
begin to set in -- with no relief in unemployment -- it will be obvious that
Obamanomics isn't working and is, in fact, aggravating the economic trouble.
Obama, recognizing the danger, has recently begun to speak out -- without even
cracking a guilty smile -- against the huge budget deficit he created. He is
trying to blame the deficit, too, on Bush. But voters will not overlook the huge
spending sprees of January and February, when Obama quadrupled the 2009 deficit.
They will come to see that spending as a huge mistake and will shift their blame
to the new president who proposed it.
Obama now faces a choice of poisons.
He can leave taxes as they are and take the poison of high interest rates, rapid
inflation and a new recession, all caused by the massive borrowing he has forced
on the Treasury. If the Treasury cannot sell enough bonds at a reasonable
interest rate, it will, of course "monetize the deficit" -- economics-speak for
printing money so that there will be enough to buy the Treasury debt at moderate
interest rates. But the process of so vastly expanding the money supply (or even
just leaving the current expansion in place without trying to soak up the extra
money) will cause its own runaway inflation.
Or Obama can break his pledge and raise taxes on everybody. His soak-the-rich
approach will not be enough to cover the deficit. Especially when one factors in
his healthcare proposals, big tax increases on the middle class become an
increasing likelihood. And when we consider his cap-and-trade legislation, huge
increases in utility rates also loom.
Either poison will make it clear that the economy is suffering from the medicine
Obama administered, rather than the original disease that started under Bush.
And, of course, while we cannot predict precisely the start date of the
Obama-generated misery, it's pretty clear that it will be a long-lasting pain.
Neither inflation nor the pain of higher taxes is going to go away soon. And
either approach will probably kindle a new recession.
Some economists think we will have an L-shaped recession from which we do not
emerge for years and years. Others think it will be a W-shaped recession (not
Bush's W) in which we emerge briefly and then go back down again. But a U-shaped
recession, in which we go down and then come bouncing back, probably cannot
happen with Obama's deficits now firmly in place. Then it will become clear that
the cure was worse than the disease.
Go to DickMorris.com to read all of Dick's columns!