Auguest 1, 2012
NO "WIN-WIN" SITUATION FOR EITHER PARTY IN 2012 PRESIDENTIAL ELECTION

ANALYSIS & OPINION BY RUSS STEWART

For both the Republicans and the Democrats, the outcome of the 2012 presidential election will be either a win-lose or a lose-win situation. There will be no win-win.

Whichever party wins the White House in November will suffer electoral retribution in 2014 and lose the presidency in 2016. That's because the economic, fiscal and international problems confronting America are so intractably insoluble that the president elected in 2012 is doomed to fail.

Throughout U.S. history, there have been so-called "realigning" elections. They occur when the majority party so alienates the electorate that the opposition assumes long-term dominance. That occurred in 1800, 1832, 1860, 1896, 1932 and 1980. The 2008 election was not a realigning election; it was a reaction to and a rejection of the George Bush presidency. Likewise for November: It will be a reaction to (and possible rejection of) the Barack Obama presidency.

The U.S. political environment is fluid. Each party has a base of about 40 percent, and neither party posits plausible solutions for the nation's ills. If the Republicans win in November, it will be because Bush's "failed economic policies" were not sufficiently remedied by Obama's "failed economic policies," and if Mitt Romney wins and doesn't solve the problem, he'll be ousted in 2016.

Here, with the election just 100 days away, are three possible scenarios:

Obama Wins, Republican House, Democratic Senate

An absolute recipe for disaster, with gridlock ensuing. Unlike Bill Clinton, who governed as a liberal during the first 2 years of his presidency but who then evolved into a "triangulating" centrist when the Republicans won Congress, Obama is devoid of evolutionary instincts. Whereas Clinton took a middle position between the left and the right, Obama governs as a liberal, and in a second and final term he would have no incentive to compromise or be bipartisan. His legacy is to be the "Great Progressive President," and he would perpetuate his "class warfare," castigating the Republicans as pawns of "millionaires and billionaires," offering more spending and borrowing initiatives, and blaming the Republican House for the country's economic malaise.

The national debt is now $15.783 trillion. Last autumn it was $14.2 trillion. In 2008 it was $8 trillion. The annual interest is $1 trillion in a federal budget of $3.8 trillion. The national debt is now 74.2 percent of America's gross domestic product, which is the value of all goods and services produced and which amounted to roughly $20.2 trillion in 2011.

Failing countries in Europe, such as Greece and Italy, have national debts which exceed their GDP.

In the first 3 years of Obama's term, coming off the "Bush recession" of 2007-08, the GDP grew at an anemic 1.5 percent. In the first 3 years of Ronald Reagan's presidency, coming off the "Carter recession" of 1978-81, the GDP exploded at a 9 percent growth rate. It takes an annual GDP growth rate of 4 percent to winnow unemployment to under 5 percent.

Reagan's approach was to maintain government spending while enacting tax cuts for businesses and individuals, paid for by borrowing. He presumed that individuals would spend more, causing businesses to expand and hire more, creating an optimistic environment, with the tax revenues generated more than enough to offset the debt hike. He was right. Employment rose from 99.1 million in 1980 to 108 million in 1983, and the recession was over.

Obama's approach is to increase government spending, paid for by borrowing almost $7 trillion in 3 years. That money went for bank and auto industry bailouts, "stimulus" handouts to local governments to create permanent or temporary public-sector jobs, and the $1 trillion "Obamacare" health package, which the Supreme Court has ruled to be a tax and which will impose a 3.8 percent "surcharge" on unearned income, meaning income derived from sources other than employment, beginning in 2013. The jobs Obama created do not generate enough tax revenue to offset the cost of their creation. Employment rose from 140 million in 2008 to 142.4 million in 2011. The recession is not over.

Thus far, Romney has not articulated a vision of how he will solve the economic crisis. Obama offers more of the same. Unless Romney offers more specifics than "I can fix it," Obama's more of the same will be the only package on the table. If Obama wins, the national debt will be $20 trillion by 2016, which will be necessary, as Obama's budget projection through 2022 is for $5.8 trillion in annual spending.

Obama Wins, Republican House and Senate

Now the demonization would explode. Would the re-elected Obama even consider working with the Republican congressional majorities to pare back spending, introduce some baby-step reforms to social security, Medicare and Medicaid, and limit debt? Of course not. As a lame duck president, Obama would be in a perfect position to join in the making of painful budget decisions, ensure that neither party suffers the brunt of voter anger, and rein in entitlement eligibility and spending. Would he do it? Of course not.

The Republicans will be compelled to enact some entitlement reforms, resist lifting the debt ceiling, and cut non-defense spending, and you can expect Obama to be front and center, with righteous indignation, accusing the Republicans of pushing seniors over the cliff. Obama's every effort during 2013-14 would be to aid the Democrats in taking back Congress in 2014 -- not governing in a manner designed to solve the country's problems.

Romney Wins, Republican House and Senate

Now the proverbial stuff would really hit the fan. By defeating Obama, Romney will have enraged vast numbers of minorities and liberals, all of whom will be ever so eager for Romney to fail. The Republicans would have a 2-year window of opportunity to enact a budget and economic recovery program that will bear fruit by 2016. The public and media abuse will be intense. Disinformation and misinformation will be epidemic. Paranoia about reduced Medicare and social security benefits -- to aid the "millionaires and billionaires" -- will be rampant. The repeal of "Obamacare" will be job number one.

Leadership means making difficult long-term decisions and accepting painful short-term disappointments. If Romney has guts, like Reagan and Margaret Thatcher, he will know that the Republicans will suffer in 2014 but that he (and they) will recover smartly by 2016 if his policies succeed. That means spending caps and tax cuts. If Romney dissembles, produces more of the same, and simply perpetuates Obama's "failed economic policies," then he'll be shown the door in 2016 and Hillary Clinton will be the next president.

So which of these scenarios is most plausible?

Dick Morris, Bill Clinton's chief strategist and the architect of "triangulation," is convinced that Romney is a certain winner. In tracking polls over the past 6 months, Obama's job approval has hovered in the 45 to 50 percent range, and he's consistently leading Romney nationally by 5 or 6 points but he never cracks 50 percent. According to Morris, an incumbent president needs to be in the 53 to 55 percent approve/re-elect range to win. Other polls show 55 to 60 percent of respondents think the country is on the "wrong track," and 55 percent-plus oppose "Obamacare."

If more than half the voters are either anti-Obama or undecided 3 months from the election, then, argues Morris, there's minimal likelihood that they will suddenly become pro-Obama. That's why the president's campaign has gone negative on Romney, casting aspersions on his business history. The November election is a referendum on Obama's performance, not a "choice" between Obama and Romney. But "Team Obama" wants to persuade 4 to 6 percent of the undecided voters that Romney is an unacceptable choice.

Daily tracking polls, which are published at the Real Clear Politics Web site, show Obama with a lead of 3 to 10 percent over Romney in all the key battleground states. According to the site, Obama is assured of 179 electoral votes from 14 states (California, New York, the District of Columbia, Illinois, Massachusetts, Rhode Island, Maryland, Hawaii, Delaware, Vermont, Connecticut, Maine, New Jersey and Washington) and he likely will get 52 more (Minnesota, New Mexico, Oregon, Pennsylvania and Wisconsin), for a base of 231 electoral votes, 39 short of the 270 needed for victory. He got 365 electoral votes in 2008.

Romney is ahead in and likely to win 23 states, with 191 electoral votes, or 79 short of the total needed.

That leaves nine "battleground" states containing 116 electoral votes, where the outcome is a toss-up (and which all were won by Obama in 2008): Ohio (18 electoral votes), Florida (29), Michigan (16), North Carolina (15), Virginia (13), Nevada (6), Colorado (8), Iowa (6) and New Hampshire (4).

To win, Romney needs to carry Florida, North Carolina, Virginia, New Hampshire and either Michigan or Ohio, while Obama needs to carry Nevada, Colorado, Iowa, Virginia and either Michigan or Ohio.

An interesting point: Obama is ahead in tracking polls in every "battleground" state except North Carolina, and he is tied with Romney in Virginia, but in no state does Obama's polling exceed 50 percent (nor does Romney's), and in every state the dismal economy looms as a deciding issue.

Weighing the possibilities, it is more plausible that current undecided voters who were pro-Obama in 2008 will swing to Romney than it is that they will suddenly rekindle their old Obama fervor. My prediction: A Republican win-lose, and a Democratic lose-win.