The US Election Will Depend on the Economy

In 2008, Obama was elected president of the United States with the economic crisis. It is now 2012, time for another election, and there is very little change in the economy. The economy is no longer shrinking, but it cannot seem to shift into third gear. This economy, which is traveling in second gear, is not able to reduce long-term unemployment. The housing market is still sunk. Debt owed on homes exceeds the values of the homes themselves. Households were in debt up to their throats. Now the percentage of debt has possibly decreased to chest level, but if care is not taken it could increase again. This year the United States will be in a to-do about the election. The electorate was hit hard by unemployment and the housing market crisis.

The biggest question of the campaign will be the economy. Eighty-five percent of the electorate said that the economy is a priority for them. In other words, the state of the economy will determine a large percentage of the election. In this environment, we are focused on the Republicans who are searching for a candidate to oppose Obama. Lately, former Governor of Massachusetts Mitt Romney’s chances of becoming the candidate are increasing. The Republicans will choose their candidate in June, with the general election occurring in November.

The electorate’s priority is the economy; however, looking at the campaign thus far the Republicans have presented no economic plan apart from criticizing Obama and fighting amongst themselves. They seemed to have forgotten that they contributed to the conditions that caused the crisis. Furthermore, the percentage of those who dislike the current direction of the country is quite large. Currently, the electorate is divided 30 percent Republican, 30 percent Democrat, with 40 percent undecided. For quite some time there has not been this sizable a population of undecided voters.

The electorate is first going to look at Obama’s economic record for the year. In general, the economy is stable despite being in second gear. And Obama has the advantage of being in power; thus, he can improve economic conditions slightly. He is probably thinking of a favor for the housing markets. It is false to assume that the Fed will hand out goodies during election time. If the European Union disbands and there is a panic, of course the Fed will spring into action. However, in that environment, the bailout will be the exception. Because in that case, the USA will be in a crisis position and it will become defensive. It is doubtful that during a time of global turmoil the market would see the maximum benefit of that money. If the Fed sees the U.S. economy weaken, it will distribute something, but an economic breakdown serious enough to require the intervention of the Fed during an election year won’t be helpful to Obama. Any type of harm to stability will have negative implications for Obama.

Work or Give Money Rather than Talking Nonsense

We described how one of America’s richest men, Warren Buffett, did not even lose his optimism during the crisis (“Turkey Is Searching for Their Warren Buffetts,” Nov. 25, 2011). The businessman said that you cannot bet against the U.S., and that he continues to trust his country. Recently he recommended that, in order to close the U.S.’ budget deficit, the rich should shoulder more of the tax burden. He said “I pay a lower tax rate than probably the cleaning lady that comes in.”

Those who own more wealth are being taxed at a lower rate. Those with money should invest more and create more jobs and wealth — there is logic there. However, this rule doesn’t always work.

Republicans who know Buffett’s fondness for Obama scolded him, saying that “If he [Buffett] really wants, he should send a check to the Treasury.” Buffett increased the stakes, saying that “If we go to a contribution system, I’ll match the total contribution made by all Republican members of Congress.”

Buffett’s personal worth is $50 billion. His companies are worth several times this amount. The American national debt is $15 trillion. The annual yield of the United States is $14-14.5 trillion. There are rich Republicans in Congress. Even if you combined their wealth, they would not be able to pay off this debt. That is not the issue anyway. The issue is to find the right way politically and using personal sacrifice to balance the budget. Buffett knows that the political climate in America is not headed in the right direction. That is why he bravely offered up his fortune. He is so sure of himself that in response to a senator who has persistently pursued him, he said, “I’ll even go three-for-one with [Mitch] McConnell.”