Two strange things happened on the way to the 2016 Presidential election.
- The economy got better
- President Obama’s popularity rebounded
Both of these things proved yet again that Republican predictions leading up to 2014 were wrong.
Let’s review them just to make sure that we have a good list, then we can discuss how Republicans are attempting to pivot away from the messages they used to win the 2014 midterm elections.
Price of gas
Mike Lee predicted $6.60/gallon gas if Obama was re-elected. Newt Gingrich predicted $10/gallon gas. Mitch McConnell piled on blaming “burdensome” regulations restricting drilling and failure to approve the Keystone XL pipeline
When it comes to the rising cost of gas at the pump, it’s my view that the administration’s policies are actually designed to bring about higher gas prices,” McConnell declared, asserting that the “burdensome” regulations restrictions on drilling and the recent rejection of the Keystone XL oil pipeline from Canada are to blame for high prices.
Instead we have $2.00/gallon gas with no change in Obama’s policies including a likely veto of the Keystone XL pipeline. That reduction in price is the result of the collapse of the OPEC cartel. That cartel is collapsing because of Obama’s (and Bush’s) policies to expand our energy exports.
Romney predicted that re-electing Obama would result in continued high unemployment.
If this president’s re-elected you’re going to see chronic high unemployment continue for another four years or longer. You’re going to see low wage growth, if any growth at all. And of course there’ll always be this fiscal calamity at our doorstep.
Instead the official unemployment rate is under 6%. More of the long term unemployed are rejoining the workforce. Companies are finally being forced to compete for new hires and wages are once again going up.
“Employment growth is astonishingly strong,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “With every indicator we follow screaming that payrolls will be very strong for the foreseeable future, wage pressures will intensify.”
All this while the supposed job killing Obamacare healthcare plan is expanding and taxes on the wealthy have gone up.
Stock market crash
In addition to McConnell (in the quote above) predicting a financial collapse, a whole host of other conservative pundits piled on.
Charles Bilderman, the author of the “Intelligent Investing” column at Forbes, wrote that the “market selloff after Obama’s re-election [was] no accident,” predicting “stocks are dropping with no bottom in sight.” Bilderman said that the policies the Obama administration would pursue in his second term would “crash stocks.”
On Bloomberg TV, investor Marc Faber predicted that, because of Obama’s reelection, the stock market would drop at least 20%. According to Faber, “Republicans understand the problem of excessive debt better than Mr. Obama who basically doesn’t care about piling up debt.” Faber joked that investors seeking to protect their assets should “buy themselves a machine gun.”
Instead the market is up over 35% since Obama’s re-election.
Rush Limbaugh painted a picture of economic apocalypse in a second Obama term. I’m grateful to Newsmax for still posting these quotes to support this prediction.
“If Obama’s re-elected, it will happen. There’s no if about this. And it’s gonna be ugly. It’s gonna be gut-wrenching, but it will happen. The country’s economy is going to collapse if Obama is re-elected. I don’t know how long: a year and a half, two years, three years.”
“California is going to declare bankruptcy, and you know what Obama will do? He’ll go to states like Texas or Arizona, Florida to bail them out. That’s what he’ll do, and that’s gonna precipitate this stuff. California is showing where we’re headed in every which way,”
“We’re on an unsustainable course. You simply can’t pay people who aren’t working. You just can’t. You cannot pay them anything, much less full-fledged incomes, lifetime healthcare and lifetime pensions. You can’t do it. Even if you wanted to, even if that was your definition of fairness and equality, you can’t do it. The money isn’t there.”
“I don’t want any of this, but I know mathematics, and I know economics. I know history. I know socialism, statism, Marxism, I know where it goes. I know what happens at the end of it.”
Funniest thing. The economy didn’t collapse. In fact we have seen the strongest economic growth in this country in a decade. What happened? Middle class consumers returned to the market buoyed by a rising stock market, improving job prospects, lower gas prices, and rising wages. They ignored all of the conservative doomsday politicians and pundits. They ignored the creeping Marxism and socialism that was sapping their competitive spirit. Instead they went out and bought new cars and the auto industry set new employment records.
Oh and California? That socialist state that can’t afford to support it’s safety net where high costs of living are driving out business. They are projecting a record surplus of $4B. They still have long term pension issues to deal with, but they now have the funds to actually address the problem.
The state that IS in trouble is Kansas. The reason they are in trouble is because Sam Brownback actually implemented the aggressive plan of cutting taxes and spending that Congressional Republicans have been proposing for years. The result was an economic collapse which cut tax revenues even deeper. The state spent $379M in rainy day funds, cut $278M in spending, and will have to cut another $435M to balance the budget this year. That means cuts to both highway and education funding.
Sounds eerily similar to the predictions that Bush made when he proposed his trickle down version of this same supply side economic voodoo. Pretty much the same thing happened too. The promised economic growth didn’t occur. Instead unemployment went up, middle class workers lost their bargaining power, wages stagnated, CEO’s kept all of the profits, deficits ballooned, and ultimately the economy collapsed.
How did Brownback get re-elected? He claimed that his plan was working, it just needed more time to take hold. Facing a revolt in his own party, however, Brownback finally blinked and agreed to raise taxes on cigarettes and alcohol. Pretty much what Bush I had to do to deal with the deficits that Reagan left.
Republicans are facing a similar dilemma.
They can’t continue to deny the reality that the economy is growing. Nor could they prevent Obama and Democrats from taking the credit, since they had successfully convinced 2014 voters that they deserved the blame. By shifting the blame, they also abdicated any claim that anything that they did over the past six years contributed to the recovery.
Instead they have decided to recast themselves as defenders of the middle class by claiming that there are still too many people out of work, and that they have a better idea.
We’ll pick up that curious piece of logical gymnastics in the next post entitled, “Nobody is happy about this recovery”.