Obama's Ratings Rising
Black Gold and GDP Float His Boat
The most immediate threat to economic growth and economic recovery.
“In proportion as the structure of a government gives force to public opinion, it is essential that public opinion should be enlightened.” –George Washington (1796)
On New Year’s Day, my son and I embarked on an adventure, driving from our mountain home in East Tennessee to his mountain home at the Air Force Academy in Colorado Springs.
As has been our practice on many family road trips when our kids were younger, we departed from the Interstates and took mostly scenic back roads, thus turning a two-day, 18-hour drive into a four-day, 32-hour excursion.
We traveled through Arkansas, Oklahoma, Texas and New Mexico, circling around the west side of the mountains in Colorado and then east into the Springs. We cruised through rain and snow in temperatures ranging from 60 degrees in Tennessee to -15 at Great Sand Dunes National Park in Colorado. Along our route, we saw beautiful countryside and an abundance of wildlife: white tail and mule deer, pronghorn, elk, bighorn sheep, bison, fox, turkey and many raptors, including peregrine falcons.
Notably, our average fuel price was well under $2, and bottomed out at $1.75 in Oklahoma. This was the lowest price we’ve paid for road-trip fuel since BOE (Before Obama Era), in 2008.
In fact, the price of oil plummeted almost 50% last year and is still falling.
That price drop has meant significant energy savings for the average American family, which translates into rising consumer confidence and spending, and is directly accountable for Obama’s rising public approval ratings. When combined with two other factors – the resilience of the U.S. economy (*despite* Obama’s failed “economic recovery plan”) and renewed optimism that the wide and deep 2014 Republican resurgence will halt further Democrat economic malfeasance – the result has been a surge in economic growth.
In fact, gross domestic product (GDP) grew at a reported 4.6% annual rate in the second quarter of 2014 and an accelerated 5% in the third, the strongest growth rate since 2003. Obama’s sycophantic leftist cadres, and his adoring Leftmedia, are framing this as the “Obama Boom.”
So, has the economy turned the corner?
The oil price drop is a mixed blessing. On the positive side, it reflects increased production in the U.S.. But it also reflects lower demand for oil, as the European and Asian economies continue to struggle.
On the supply side, nobody is cutting production – and by “nobody” I mean primarily Saudi Arabia, which could decrease production to stabilize the price of oil if it chose to do so.
The Saudis, however, are intent on punishing two hostile nations whose economies are almost solely dependent on oil export prices – Russia and Iran. And the U.S. economy is, in the short term, a net beneficiary.
Even though the Saudis’ cost of oil production is slightly higher than Russia’s, they are flush with cash reserves and lower oil prices are not an economic threat. Thus, they are using lower prices to punish Russian President Vladimir Putin for his support of the Assad regime in Syria and the resurgence of the Islamic State, whose particular brand of Muslim fundamentalism poses a direct threat to the Saudis.
Indeed, Russia is taking a licking. As George Will notes, “[Vladimir] Putin’s truculence varies inversely with the strength of his position, and he is very truculent these days because his position is suffering terrific economic damage. … They have a hunter-gatherer economy, which is to say they are primitives. … It’s a simple extraction economy and it’s extremely vulnerable therefore to the sway of one price – the price of oil, and it’s just devastating [Putin’s] position.”
The net effect on Russia’s economy is indeed devastating – as it was when Ronald Reagan cut a deal with the Saudis back in 1986 to keep oil flowing as part of his strategy to bankrupt the USSR, and bring to an end almost seven decades of Soviet tyranny.
In order to avoid collapse in the short term, Putin has increased production to offset the loss of incoming revenue from price reductions, in effect creating something of a death spiral.
Like Russia, Iran’s economy is dependent on the price of oil. And like Russia, Iran has supported Syria and Islamic jihad in the region and worldwide, in addition to terrorist organizations such as Hezbollah. Notably, Iran is using oil riches to enrich uranium in its quest to become a nuclear power. But the Saudi oil strategy is pushing Iran toward bankruptcy.
That’s the good news.
On the other hand, the Saudis are also undermining the profitability of more costly U.S. oil production such as fracking, which is profitable when oil prices are in the $80 to $100 per barrel price range.
And, oil prices are also dropping due to declining demand, the result of economic stagnation in Europe and Asia, which poses serious challenges to continued GDP growth in the U.S.
That stagnation has resulted in a flight to the dollar, and a strong U.S. dollar will substantially hinder U.S. exports, while making imports more attractive. That may be good for inflation, but not good for U.S. economic growth, particularly export-dependent sectors.
But the most immediate threat to economic growth and economic recovery is the resurgence of Barack Obama’s job approval ratings. His stock is rising with the GDP and consumer confidence.
Rasmussen polling now puts Obama over the 50% mark for job approval, though we should note that his ratings among one particular group, American military personnel, have collapsed from a meager 35% in 2009 to an understandably miserable 15% now. Of course, our uniformed Patriots have more skin (and blood) in the game than American consumers in general.
In advance of his State of the Union speech on January 20th, Obama and his propaganda machine are in high gear, taking full advantage of the GDP boost to his ratings and higher employment, the latter being driven in large measure by the expiration of unemployment benefits expiration of unemployment benefits, which ironically, Obama has vigorously opposed.
Though Obama has erected an insurmountable gauntlet to oil and gas exploration leases, and this week reaffirmed his commitment to veto the XL Pipeline project, he had the unmitigated audacity to claim credit for the reduction in oil prices: “We’re saving drivers about 70 cents a gallon at the pump…”
Really? Who is “we”?
Recall if you will, when Obama entered office, gasoline cost about $1.60 per gallon. In four short years, despite the deepening recession, his severe constriction on oil production increased the price to more than $3.50 a gallon. Ahead of the 2012 election, Obama declared, “We can’t just drill our way to lower gas prices.”
Well, apparently we can, despite his objections.
Obama is also using the boost in his approval ratings to rewrite history in regard to the huge losses suffered by Democrats in the November midterm elections. He delusionally insisted the losses were due to the distance Democrats placed between him and them: “I’m obviously frustrated with the results of the midterm election. I think we had a great record for members of Congress to run on.”
Let’s start the New Year with a quick review of Obama’s “great record” and hope that reality will catch up with his approval ratings.
Obama’s administration is now defined by his litany of BIG lies and legacy of scandals, most notably the failure of his trillion dollar “economic recovery” plan; his long list of ObamaCare lies leading to passage of his disastrous signature legislation – the so-called “Affordable Care Act”; his utopian “climate change” agenda – a charade to advance centralized economic control consistent with his objective of “fundamentally transforming the USA;” his “war on coal” and “war on oil;” his “Fast and Furious” gun-control play; his phony “hate-crime agenda;” his lawless use of executive orders; his IRS enemies list; his “divide and conquer” race bait rhetoric and the heavy price paid by two officers with the NYPD; his spewing of class warfare rhetoric while taking exotic vacations at taxpayer expense and hobnobbing with the rich and famous; his phony “immigration reform” ploy while ignoring the immigration crisis on our southern border; his VA death panels cover-up; the long-overdue resignation of his Attorney General Eric Holder, the most lawless AG in our nation’s history; his unparalleled foreign policy malfeasance; the dramatic resurgence of al-Qa'ida; his Benghazi security failure and subsequent cover-up to protect his 2012 re-election bid; his trade of senior Taliban terrorists from Gitmo for an Army deserter; his unwillingness to address the pandemic threat of jihadist Bio-Bombers; his hollow “Red Line” threat to Syria; the Middle East meltdown in Egypt, Libya, Syria, Yemen, Jordan and Gaza; the disintegration of Iraq; the rise of the Islamic State; the “Russian Spring” in Crimea; his sweetheart deal with the Castro brothers in Cuba; and, well, stay tuned.
All that notwithstanding, Obama’s New Year resolution is, “More Obama, Ad Nauseam.”
Will Republican House and Senate majorities in the 114th Congress contain a resurgent and emboldened Obama, reverse his obstructionist legislative and regulatory agenda, and advance their own agenda? I’ll answer that question next week, but in the meantime, here’s a teaser: The greatest threat to the Republican majority is not from outside the Party.
Pro Deo et Constitutione – Libertas aut Mors
Semper Fortis Vigilate Paratus et Fidelis