THE ECONOMICS OF DEFEAT
When an Election is entirely About Economic Recovery,
Then it is time for a Change in Leadership
The Bi-partisan case for Obama’s Early Retirement
By Jay B Gaskill
“It’s the economy, stupid.”
The Bill Clinton Campaign, 1992
To my fellow centrist & conservative democrats, my republican and independent friends, and to reasonable minds wherever you are hiding in the political bestiary:
Obama represents the most painful combination of amateurishness and arrogance ever to be manifest in a single modern presidency…and this has taken place at a time when much better leadership is needed.
President Obama does not seem to have learned from his experience. Neither Hillary nor Bill Clinton would have squandered Obama’s opportunity.
There is a bipartisan case for Mr. Obama’s retirement now, before he does any more harm to the country or his party. Most elected democrats, naked in the public square, remain unwilling to acknowledge this reality except anonymously. But wait for the postmortem discussions that follow this president’s rejection by the voters.
In the wake of the 2008 crash, there really was only one option for Obama: Turn the US economy around within his first three years. All the rest is spin.
It is too late for a redo.
The Obama campaign is left with personality bashing, an exercise like brandishing a torch while standing on a pile of gasoline-soaked straw.
What of all those other policy questions in this election? Unless the economy is clearly back on the right track, these issues do not matter.
…& Do take note of the most important sleeper issue of the election – it’s an economic issue (in this cycle the economy is the only issue that matters): We are mired in an economic slump like no other, so… Why is it not over?
It is telling that the current Federal Reserve head, Ben Bernanke, cut his doctoral teeth as a graduate student analyzing the Great Depression, but he never definitively figured out why it took the country so long to get out of it. By his own admission, Bernanke still has not quite figured that part out yet. Nor has any member of the administration’s economic team.
Nor has this president.
This is an economic recession like no other because, at the beginning of FDR’s first administration, the national debt was effectively zero by modern standards, allowing a lot of room for borrowing; but after WWII the same debt exceeded GDP, as it does right now.
We are out of borrowing room. The cupboard is bare. Our country’s staggering debt overhang is a serious constraint on any fiscally-driven attempt to “stimulate” the private sector economy.
For this and several other reasons Keynesian economics is no longer working; nor will it be feasible in the international economy for a single nation – even the USA – to force Keynesian countercyclical measures to work except under unusual circumstances that are not operative.
Recall that FDR was a problem-solver, a not-very-charismatic politician who initially campaigned on getting to a balanced budget. His famed charisma was a post-campaign development, earned after he confidently addressed the challenges that faced the nation.
For better or worse (depending on your political and economic bent), Governor Mitt Romney is very likely to be our next FDR; and President Barack Obama will be our next…Herbert Hoover.
… PS —
No, I’m not predicting the election outcome. There are too many variables (including a rumored war). But if you are following these things, I recommend the Rasmussen Poll over the others. His methodology is more accurate because his estimates of likely-actual voters are more realistic. Watch Colorado, a bellwether state. If the president is within half a point of losing Colorado, his reelection is in doubt. If he is ever seriously behind in that state within 10 day of the election, he is a very likely one-termer.
Copyright © 2012 by Jay B Gaskill, Attorney at Law
Forwards, links, quotations with attribution are welcome and encouraged. For everything else, please contact the author via email at < email@example.com >.
 The Amateur, by Edward Klein (Regnery 2012), in which the former foreign editor of NEWSWEEK and former editor-in-chief of NEW YORK TIMES (1977 to 1987) makes a compelling case for this assessment.
 Time’s Mark Halperin has written that, “With the exception of core Obama administration loyalists, most politically engaged elites have reached the same conclusion: The White House is in over its head, isolated, insular, arrogant and clueless about how to get along with or persuade members of Congress, the media, the business community or working-class voters.”
 Ben Bernanke received his doctorate in economics from MIT at the age of 26. His dissertation, Long-Term Commitments, Dynamic Optimization, and the Business Cycle addressed the Great Depression. Has Dr. Bernanke solved the problem yet? Probably not. As Fed Chair, Bernanke declared in a recent speech that, “To put the question simply, we know that both the economy and the money stock contracted rapidly during the early 1930s, but was the monetary dog wagging the economic tail, or vice versa?” Bernanke then answered his own question– “…declines in the money supply induced by adherence to the gold standard were a principal reason for economic depression. […] With the gold standard constraint removed and the banking system stabilized, the money supply and the price level began to rise. Between Roosevelt’s coming to power in 1933 and the recession of 1937-38, the economy grew strongly.” End of speech. But the Great Depression did not end in 1938, 1939 or 1940. Actually, it lasted from roughly 1929 until about 1945, a period of at least fifteen years.
 Keynes believed that Government should act as a “counter-cyclical force”, meaning that good times, government should raise taxes to build a surplus. In recessions, government should spend the surplus and lower taxes. This is why JFK was the last responsible Keynesian president. Keynes’ theory required politicians to behave responsibly. When was the last time that happened? The political class can not be counted on to raise taxes during prosperous times to pay down the deficit; they can’t even be relied on to curb deficit spending at any time. Harvard economist Robert Barro has demonstrated that the so called Keynesian multiplier effect, which must more than one-to-one to stimulate the economy, was “insignificantly different from zero”, when administration economists assumed a multiplier of 1.57 that never materialized. Economists John Cogan and John Taylor of Stanford and Tobias Cwik and Volker Wieland of Goethe University have discovered that the Obama administration’s falsely projected stimulus growth was six times as large as they could ever generate under realistic conditions.