Columnist.
"Stop the bad stuff" is what John Boehner told a bunch of us at breakfast a few weeks before the election. That's how he defined the GOP mission. Now he's speaker. And now there's an opportunity for both ends of Pennsylvania Avenue to move in the direction of a supply-side economic growth model to reduce chronic unemployment and really get the economy moving again.
The past is not always a prologue to the future. But looking at some of the big winners and losers of 2010 does provide some strong hints of a positive 2011. The biggest winner last year was the tea party, which shellacked President Obama in the election. Obama becomes the biggest loser. And the economy and stock market will be the beneficiaries.
On a historic night this past Thursday, a new tea party Republican Congress completely transformed U.S. economic policy. Elections matter, and so do their ideas. Smaller government, low taxes and less spending were key election themes in the Republican landslide. And those themes triumphed this week as a large tax-cut bill finally passed the House and a monstrosity of a spending bill was defeated in the Senate. In one fell swoop, Obamanomics is out the window. Reaganomics 2.0 is now in the driver's seat.
For once, top Obama economic advisor Larry Summers got it right. Warning opponents of the big tax-cut deal, Summers told reporters, "Failure to pass this bill in the next couple weeks would materially increase the risk that the economy would stall out and we would have a double-dip recession." Too bad Summers didn't advise the president to cut taxes across-the-board two years ago, rather than push for the misbegotten $800 billion government-spending package. That policy dismally failed to ignite a real economic recovery or to lower the unemployment rate.
Unemployment jumped to 9.8 percent in a very disappointing November jobs report. Non-farm payrolls increased by only 39,000, and private jobs expanded by just 50,000. This is way below what the economy needs. Most discouraging, the smaller-business household employment number fell for the second time in a row, down 173,000 in November after a 330,000 drop in October. This is the 19th straight month with unemployment above 9 percent.
The great Bernanke QE2 debate continues to heat up. In the run-up to the G-20 meetings, China, Russia, Germany and others have all come out against the Federal Reserve's quantitative-easing agenda. They don't want hot-money excess dollars to flow into their higher-yielding currencies. The assault against Bernanke's easy money has reached such fever that President Obama felt it necessary to defend the $600 billion in new-money printing in a news conference in India.
Momentous events this week -- the Republican House sweep and the Fed's QE2 -- moved the stock market needle only a little over Tuesday and Wednesday, although the net impact was a gain of about 90 points. Obamanomics was repudiated at the polls, and the Republicans inflicted a crushing defeat on the Democrats in the House. Tea partiers disappointed in several Senate elections, however, leaving Harry Reid and Co. in charge of the upper chamber.
On the eve of the midterm elections, a third-quarter gross domestic product report showing a meager 2 percent growth rate is the final nail in the Obama Democrats' political coffin.
The falling dollar is on most everybody's mind, especially in financial markets here at home and globally. A currency war? World protectionism? Race to the bottom?
Believe it or not, with jobs falling for four consecutive months and unemployment stubbornly high near 10 percent, President Obama is out on the campaign trail bashing businesses and promoting class warfare. Huh? Oh my gosh is he off message.
Friday's unemployment report for September, the last before the election, brought more bad news for the Barack Obama Democrats.
Could it have been the new Gallup poll that drove stocks up almost 200 points on Tuesday? That blockbuster survey, regarded by many as the blue-chip gold standard for election forecasting, pointed to an unprecedented Republican landslide tsunami in the generic congressional race. That blowout could include a GOP House gain of 65 to 70 seats, and a bare-majority 10-seat pickup in the Senate.
At a small, informal breakfast in Midtown New York Tuesday morning, House Republican leader John Boehner said the lame-duck Congress, scheduled roughly for Nov. 15 through Dec. 22, will pass a bill that extends all the George W. Bush tax cuts. And he said President Obama will not veto that bill.
Am I the only one who saw weakness when President Obama and his departing chief of staff, Rahm Emanuel, gave each other big, fat, full-bore hug following their speeches at the resignation event in the White House's East Room on Friday? Remember, this is on global television. And it has to do with the very top of the United States government. Our friends and enemies were all watching.
President Obama is crowing about his small-business bill, signed into law on Monday. "It was critical that we cut taxes and made more loans available to entrepreneurs," he said. Trouble is, small businesses and community banks don't want Obama's $30 billion program. That's right. They don't want it.
Fed head Ben Bernanke and the FOMC dropped a new policy bomb at their meeting this week. Now they say inflation is too low. That's the real problem. And the solution? Punch up the money supply and punch down the dollar -- or what I used to call King Dollar. No more.
This past week, I gave a speech to a group of investors. The organizer of the event e-mailed me the night before, asking that I please try to be optimistic. Well, that's my usual habitat. But optimism has been hard for me this year. Our muddle-through economy and lackluster stock market, challenged by so many taxing, spending and regulating problems coming out of Washington, are the reasons why.
Under pressure from a barrage of bad midterm-election polls, President Obama has gone on the campaign trail to blame Pres. George W. Bush for all our economic problems and to bash House Republican leader John Boehner as nothing more than a Bush retread.
Corporate profits are at all-time highs, and bond rates in the Treasury market are virtually at record lows. That's a good combination for stocks, and it helped trigger a 255 point rally in Wednesday's trading. What's more, a surprisingly positive read on the ISM August manufacturing report delivered a strong blow to the double-dip recession pessimism that has plagued investors for many months.
It's a bit too early for House Republican leader John Boehner to measure the drapes and pick out new wallpaper. But the Intrade pay-to-play prediction markets are now showing a 76 percent chance of a GOP House takeover in November, along with a 60 percent probability that Republicans will capture at least seven new Senate seats.
