Why Obama/Biden Cannot Possibly Win the Presidential Debates

If we cut through the surface images of the two presidential debates – aggressive confident Romney, subdued and passive Obama, jeering Biden, and polite Ryan – the Obama/Biden team has little chance of winning any of the four debates.  Despite recent improvements in survey numbers, the vast majority of Americans think the country “is headed in the wrong direction” and almost eighty percent are “dissatisfied with the way things are going in the United States.”

Reduced to fundamentals, Obama and Biden must defend the status quo, which voters believe is a disaster. They cannot offer major makeovers because that would amount to admitting policy mistakes, and they must somehow make voters believe that they have done a good job or that the sorry state of the country is not their fault.  It goes without saying that this is a tough and almost impossible sell after three and a half years in office.

Romney and Ryan have their hands free to blast the status quo, focus on the policy errors of the past three and a half years, and explain what they would do to fix the mess we are in.

When the current team manager is having a losing season, fans decide it is time for a new one. Romney and Ryan can play the role of the new manager with new ideas which can turn the season around if given the chance. Obama and Biden are left with explaining why, due to weather, injuries, and other things beyond their control, they have lost so many games. Fans don’t want excuses. They want wins.

 go to forbes.com

Are There No Limiting Principles? An Electoral Dilemma That Needs to Be Addressed

President Obama is telling his presumed constituents of college students that he is fighting for them against the evil republicans. They want to raise the student loan rate back to 6.8 percent (already a bargain) from its temporary low of 3.4 percent. Republican nominee Mitt Romney has already caved out of fear of giving Obama another campaign sound bite. Support for the 3.4 percent rate is already prominently featured on Obama’s campaign web site.

Government-backed student loans, let me tell you, will be our next financial catastrophe. The default rate is rising and banks (and the government as guarantor) will be again left with toxic assets. Government backing of student loans is already an enormous asset for college students. Banks would not otherwise lend to students based on the promise of higher future earnings. They should be happy to get the loans at 6.8 percent because scholarly studies place their lifetime annual rate of return from a college education between 8 and 13 percent. A college education is a ticket to the upper middle class.

The trap Republicans face is that Obama can promise to have the government pay for any meritorious good – green cars, condoms, books, laptops, free public transportation, virtually anything – and paint those who oppose as miserly ogres who do not want to help. Mitt Romney cannot cave in to every such “caring” gesture of candidate Obama.

How and where can we draw the line?

French Socialists Test Ride Obama Platform

French voters went to the polls today to winnow a ten-candidate presidential field down to the “right-of-center” incumbent (Nicolas Sarkozy) and his socialist challenger (Francois Hollande). The two will face each other in a  runoff election on May 6. A Sarkozy loss would be the first of an incumbent French president in  thirty years. It would threaten the German-French sponsored European Union rescue package. It is no surprise that Germany’s Angela Merkel openly supported Sarkozy’s candidacy.

The French election previews the U.S. November election contest between incumbent Barack Obama and challenger Mitt Romney in the following four ways:

1). Both Obama and Hollande offer almost identical leftist platforms (details on this below).

2) The bland challengers (Hollande and Romney) ignite electoral passions less than their more colorful opponents (playboy Sarkozy with his celebrity wife and Obama, the first black president).

3) The sorry state of the economy gives both challengers a hefty leg-up.

4) The French and American elections are foreshadowed by electoral disasters for the incumbent party in off-year races in 2010 and 2011. In both, the incumbent  party lost long-held majorities in one house of Congress or parliament.

Whereas the outcome of the U.S. election is currently too close to call, opinion polls show the French socialist candidate poised to win decisively in the run off. As the odds tip increasingly in favor of a Hollande victory, the risk premium on French bonds will rise. It is no secret that the investment community views a Hollande victory  a threat to France’s solvency.

A victory of France’s socialist candidate Hollande will not translate into electoral success for his American soul mate, Obama, for three reasons:

go to Forbes.com

Dr. Gregory's latest book can be purchased at Amazon.com.

Obama Care’s Commissar’s Conceit

As a writer on  Soviet planning, I am struck by its parallels with Obama Care.  Both believe their planning is “scientific” and executed by “the best of the best,” who know what is best for ordinary people. Both types of planning commissars suffer Hayek’s “fatal conceit” – the belief that they can plan incredibly complex economic systems. Their “scientific” plans, however, fall apart under the weight of unintended consequences as ordinary people circumvent their genial rules and instructions.

The New York Times’ Mr. Health Care Mandate features economics professor cum scientific planner, Jonathan Gruber. After the Supremes’ brutal questioning, the Times probably felt that Obama Care needed a boost from Gruber, who, by his own admission, “knows more about this law than any other economist.” It was to Professor Gruber that the White House turned to design its new health care law.

The Times reassuringly describes Gruber as “the numbers wizard at MIT,” who has “spent decades modeling the intricacies of the health care ecosystem.”  Gruber has “brought a level of science to an issue that would otherwise be just opinion.” The Soviets reserved such praise for their planning commission, Gosplan. I draw little comfort from Professor Gruber’s scientific-planning credentials, especially when I learn “he’s the only person you can go to for that kind of thing.”  Gruber, aided by his MIT graduate student assistants, is a one-man Gosplan. Science is better served by competing ideas not by monopoly.

go to Forbes.com

Phoenix Shows Romney Right and Obama Wrong

I wrote the following advice to President Obama in late August:

“Instead of trying to prop up the overbuilt housing market, the President should propose measures to allow the economy to work off its excess inventories of housing and to find a bottom in housing prices. Only after the bottom is reached will construction resume.” 

In a campaign appearance, Mitt Romney came to the same conclusion, saying that we must let the housing market clear and then we can have a recovery. Romney was widely ridiculed and has said little since then. In the meantime, Obama has tried one scheme after another to keep housing prices up and foreclosures down.

Today’s Journal’s Rise in Phoenix Housing Prices Shows Path for Other Cities shows the wisdom and courage of Romney’s words.  Phoenix’s housing prices fell  fifty five percent and its foreclosure rate rose to number three in the nation, but Phoenix housing prices are turning around.  Whereas, housing prices continue to fall nationwide, Phoenix’s are rising as low prices have brought new buyers into the market. Buyers from Canada are flooding the market and investors are bidding for blocs of homes, which they put on the rental market. Owners of underwater homes are being offered purchase contracts which allow them to stay in their houses as renters.

As one expert notes: “Phoenix has hit bottom.”  This means that Phoenix will be among the first cities to experience a revival in homebuilding and the jobs that go along with it.

I remember well the housing bust of Houston as oil prices plummeted in the 1980s. No one propped up mortgages. Underwater homes went on the market. The inventory disappeared, and housing construction revived.

This is simple economics of supply and demand.

What appears to liberals as mean spirited capitalism actually shortens the period of pain and accelerates the recovery.  I guess they will never learn this elementary lesson.