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2011 Political Situation Analysis

As 2011 starts, I'd like to take a little look at the state of politics and the economy for the coming year.

Obama is about half way through his term with an approval rating around 50%. While he has no particularly popular programs to claim victory on, he can at the very least say that he's one of the most well-regarded members of the federal government. His calm and cool demeanor is simply preferable by contrast to the typically rabid and doom-predicting politicians we've had for the last decade or so.

A new Republican majority is taking over the House of Representatives, and the polls indicate that they're also getting a little bit of a honeymoon type boost. While Congress is never particularly popular as a whole, it is still up a few points over the last few weeks since the Republicans took over. Even though the Republicans have a few more seats in the House, no one really expects them to pass much against the Democratic Senate and President. Instead, the likely outcome of the 2010 election is more gridlock and inaction.

Healthcare reform remains relatively unpopular, with about 60% of the population saying they don't support the recent changes. Those who have healthcare as an employment benefit still like the coverage they've got, but the problem is that they're healthy enough to work a forty plus hour week and they don't actually see the costs or terms of their policy until much further down the line. Republicans will try to repeal this reform bill, but unless they offer some radically progressive alternative to the status quo they won't get much support from anyone but their most die hard base.

The economy is teetering toward a dangerous position. Bailouts and stimulus measures have stopped overall prices from falling: but unfortunately, gas is back over $3 and houses continue to crash. Instead of ever trickling down, the financial system bailout has enriched commodity holders while preventing price drops in the cost of living. Of course, even though housing wealth drops rapidly, rents have been on the way up. Workers are feeling the pinch from every direction, and if this trend continues it will only climax in a new wave of foreclosures and bankruptcies. Those, in turn, hurt the collateral that underlies our highly leveraged financial markets, and creates a new run on the banks and markets.

Will the cost of living recede again, or will wages suddenly catch up with them? The first is unlikely due to government policy, and the second is unlikely due to a large number of unemployed individuals willing to work for less. Then, when and if the next panic hits, will Obama respond with the same kind of panic that enabled Bernanke and Paulson to enrich their friends on Wall Street, or will he find the courage to act more like the Obama from the elections?

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