If Barack Obama Wins Reelection, This Will Be Why

Posted: Jul 13, 2011 12:01 AM

If Barack Obama wins re-election, we will likely look back to this two week period and attribute it to his masterful strategic re-direction by means of press events like this week's press conference.

Because when it comes to government spending and debt, President Obama has managed to cast himself as the reasonable, responsible, adult willing to make the tough choices while a horde of discordant, contentious ideologues put their own elections ahead of America’s debt crisis.

And he’s done it in the course of just two weeks by switching sides from advocating a debt ceiling increase without preconditions; to now advocating a debt reduction plan he claims will cut $4 trillion from America’s debt within a decade.

Even more amazing, he’s done it without offering a single concrete idea to actually reduce the debt except for tax increases.

Other higher tax rates, Obama’s “Grand Plan” consists of an ambiguous combination of accounting changes, unexplained reductions in Medicare, and vague suggestions of possible cuts in defense spending.  What it does not do, is give even one example of a government program, agency or initiative he would eliminate.

With a show Barnum and Bailey would envy, President Obama has managed to shift the focus of the media, the public and even Republicans away from the ugly reality of our growing debt emergency to an amazing display of plate spinning.

The strategic political benefits for his reelection are incalculable.   The President looks like the only adult able to forge an agreement among otherwise warring factions.  He’s painted Republicans as narrowly interested in ideological calculations rather than mature problem solving.  And, if he gets anything close to the deal he’s aiming for, he’ll have delayed dealing with another noisy debt ceiling vote till well after the next election.

Even more ambitiously, Obama’s pushing hard for increases in marginal tax rates as much because he prefers higher taxes to less spending; as because he knows their potential to divide the Republican coalition in advance of the 2012 elections. 

Interestingly, one thing the debt debate has caused is the impressive rise among his Republican competitors of Michelle Bachmann’s candidacy.  She seems to be the only Republican so far who possesses sufficient passion about the debt crisis to make solving it core to who she is and why she’s running.

The other Republicans currently running seem to lack that passion.  They certainly talk about debts and deficits, but they don’t seem to see how unrestrained spending by the nations of the world has put us on track to experience an economic meltdown unprecedented in its scope and Great Depression-like in its pain.

Once the 185 nations currently competing for available capital to fund their deficits hit the debt wall and liquid funds are no longer readily available, they will set off an interest rate, currency printing war that can only result in economic chaos. 

Think Greece times 185, but with inestimably greater pain because no one’s there to bail the rest of us out.

Of course, it’s only a problem for President Obama if we hit that debt wall before the 2012 elections. If he can postpone the inevitable long enough; and if he succeeds in casting himself as Washington’s chief of fiscal integrity, he’ll probably still have his job even when the rest of us are losing our’s.

See also these top features from Townhall Finance:

The Ticker Daily Market Commentary
Larry Kudlow The Tea Party Is Ceiling the Deal
John Ransom Obamanomics: Never Say Sorry to a Cash Contributor
George Friedman Libya and the Problem with The Hague
David Malpass Debt Outlook Stark
Tony Marsh If Barack Obama Wins Reelection, This Will Be Why
Mike Shedlock Inflation Wild in BRIC Countries

Join John Ransom on Facebook and follow him @Twitter 

email: thfinance@mail.com