Posts Tagged ‘Barack Obama’

Handicapping the 2012 Presidential Race

Monday, July 18th, 2011

Conventional wisdom tells us that no sitting president is ever re-elected when the unemployment rate tops seven percent and people have less disposable income.  Others wonder if President Barack Obama should have taken on housing reform before tackling healthcare because home ownership and the value of the residence is perceived by Americans as a measure of personal wealth.

In the opinion of Douglas Hibbs, a retired economics professor who taught at the University of Gothernburg in Sweden, “The best predictions of 2012 election results, as of earlier elections, will almost surely be delivered by price data at thick-market betting sites like Intrade because they indicate the level of disposable income.

Writing in The New Yorker, Samantha Henig says that “The Republican field may be full of Eccentrics and Implausibles, but President Obama does have a formidable foe in the economy, Elaine Kamarck, a lecturer at Harvard’s Kennedy School of Government, says.  The President also has to contend with Americans’ newfound belief, stemmed from the economic disaster in Greece, that ‘deficits are the roots of all economic evils.’”

Alan Abramowitz’s “Time for Change” model tries to achieve this task.   Using 2nd quarter GDP growth in the election year, presidential approval in the election year, and a dummy variable (one or zero) for whether the party in the White House has completed one or more terms, he finds that the term variable is very important.  President Obama is expected to win 4.4 percent more of the popular vote than he would if his party were in its second term in the White House for a projected percentage between 53 – 54 percent.

The fact that President Obama raised a record-breaking $86 million for his re-election campaign from April to June, exceeding a $60 million quarterly target and effortlessly surpassing all Republican challengers, lends credibility to Hibbs’ and Intrade’s prognostications.  Small donations drove that enormous cash collection in the 2nd quarter; 98 percent of those donations totaled $250 or less.  The average donation was approximately $69, according to campaign manager Jim Messina.  Obama’s campaign received donations from more than 552,000 individuals and noted that it had “more grass-roots support at this point in the process than any campaign in political history.”  According to Chris Arterton, a political management professor at George Washington University, “They have smashed all records.  I think it is quite dramatic.”

The President’s successful fundraising likely surpassed that of all his declared opponents.  Combining the known fundraising totals, Republican candidates brought in $35.5 million.  Former Massachusetts Governor Mitt Romney raised a paltry $18 million in the quarter.  “We did this from the bottom up,” Messina said.  “We didn’t accept one single dollar from Washington lobbyists or special-interest PACs.”

The ability to raise campaign cash,  a key indicator of the success of any presidential candidate, is more important in the 2012 presidential election, which is expected to be the most expensive in history.  Quarterly fundraising statistics are a closely watched barometer of early-stage presidential races because they offer clues to a candidate’s long-term viability, organizational expertise and the enthusiasm among supporters.  The enormous intake of campaign cash for the president comes as the importance of having an effective fundraising operation is greater than ever, in part because of the 2010 Supreme Court Citizens United decision that lets corporations and unions exercise free speech rights by spending unlimited amounts on campaign ads.  President Obama, who filled his 2008 campaign coffers with millions in small donations, is now armed with the power of incumbency, and is likely get sizeable donations from corporate and establishment donors.

“Your early support means we can make more investments now, giving our organizers more time to build relationships on the ground, reach more people and recruit more volunteers,” Messina said. “The most important thing isn’t the dollar total, but the number of people who pitched in to own a piece of this campaign.”

Obama Administration Sets Its Sights on Housing Reform

Tuesday, September 14th, 2010

Obama administration turns to reforming the root of the financial crisis – the housing market.  The Obama administration – fresh from its financial regulation reform legislative victory – is not resting on its laurels.  Next on the busy agenda is reforming the American housing market, which is viewed by many as the root of the financial crisis. In a response to collapsing housing prices and waves of foreclosures, the administration it looking at overhauling the government’s housing policy, although the specifics of the proposed legislation are still under discussion.

The new approach could include bigger downpayments and higher interest rates, as well as more barriers to lower-income people purchasing houses they cannot afford.  The goal is to create a more stable housing market that puts fewer taxpayer dollars on the line and lessens the risk that owners will be unable to pay their mortgages.  Reform also could bring changes to the financial markets as investors are forced to find new investment vehicles if the government removes incentives for putting their money in the mortgage market.  Since the financial crisis began in 2008, the federal government has spent hundreds of billions of dollars to keep housing afloat and assure that borrowers can get loans – and much of that money will never be recovered.  Since the federal government seized Fannie Mae and Freddie Mac, the two mortgage giants and the Federal Housing Administration have more or less been the sole sources of backing for new mortgages for nearly two years.

The Treasury Department’s new Office of Capital Markets and Housing Reform is studying options and has decided that federal policy should highlight “sustainable homeownership” rather than merely growing the rate of ownership.  According to Vincent O’Donnell of the Local Initiatives Support Corporation, “My impression is that the administration at pretty much every level is serious about a balanced policy.  Their purpose is to make more workable rental housing programs.”

Next Up on the Presidential Agenda? Reforming Fannie and Freddie

Thursday, August 5th, 2010

Reforming Fannie Mae and Freddie Mac is next on President Obama’s to do list.  The next item on President Barack Obama’s ambitious agenda is likely to be overhauling Fannie Mae and Freddie Mac, the government-backed mortgage firms that so far have cost American taxpayers $145 billion to keep afloat.  The two firms, which own more than half of the nation’s $11 trillion in home mortgages, collapsed along with the housing market and were taken over by the federal government in September of 2008.

Many Congressional Republicans believe that scrapping Fannie and Freddie is mandatory; Democrats disagree and President Obama is expected to support reforms backed by consumer, real estate and banking groups.  The core of the emerging consensus is to preserve the 30-year, fixed-rate mortgage.  Susan Woodward, former chief economist at the Department of Housing and Urban Development (HUD) and a founder of Sand Hill Econometrics, said “People regard it as a right as Americans to get a 30-year, fixed-rate loan.”

Banks and builders agree with consumer advocates representing homebuyers that it’s good for the government to promote residential lending by supporting what Fannie and Freddie have done for years – purchasing mortgages and bundle them into securities that they sell to investors.  When the system works as intended, the MBS market creates additional money that is funneled back into the market to make new affordable loans.  The task is to determine how to accomplish this without the lax practices that the taxpayers had to pay for when catastrophic losses occurred in 2008.

The Obama Administration and leading Democrats strongly believe that the federal government should have a role in promoting homeownership.  Shaun Donovan, HUD Secretary, said “We should not compromise any of our core policy goals in the decisions we make in structuring our house financing system.”

Geithner Gains New Powers With Financial Regulation Overhaul

Tuesday, August 3rd, 2010

Treasury Secretary Geithner gains power with new financial overhaul law.  With the passage of historic financial reform legislation, Treasury Secretary Timothy Geithner is being given the authority to reshape bank regulations, oversee financial markets and create a consumer protection agency.  Few Treasury secretaries will wield this much influence once President Obama signs the new financial overhaul legislation passed by Congress.

Geithner’s fingerprints are all over the effort to expand financial regulation.  The bill is extremely close to the initial draft he released last summer but also names him — as long as he remains Treasury secretary — as the head of a council of senior regulators.  The legislation also puts him at the head of the new consumer bureau until the Senate confirms a permanent director.  In other words, Geithner will mold the regulator over the next several months.  It also will be his responsibility to work out several issues left unresolved by the bill — for instance, which financial derivatives will be subject to the strict new trading rules and which risky activities big banks will have to spin off.

The legislation “will help restore the great strength of the American financial system, which — at its best — develops innovative ways to provide credit and capital, not just for our great global companies, but for the individual with an idea and a plan,” according to Geithner.  Efforts to win passage of the financial regulatory bill were driven primarily by the Treasury, proof that Geithner has significant autonomy within the administration.

Sen. Christopher J. Dodd (D-CT), who moved the financial overhaul package through the Senate, said it wasn’t his preference to put the Treasury secretary in charge of the new council.  He would prefer that a member of the Federal Reserve board fill that role.  At the same time, he said, having a member of the president’s Cabinet in charge could make the council “more politically responsive.  It gives you some accountability,” Dodd said.

Economy Grows 3.3 Percent During 2Q

Wednesday, September 3rd, 2008

Contrary to the recent grim news about home foreclosures, bank failures, the credit crunch, rising unemployment rates, soaring oil prices, inflation and stock-market jitters, the United States’ economy — surprisingly — grew by 3.3 percent during the second quarter of 2008.

The economy grew at its fastest pace in nearly a year, thanks primarily to foreign buyers purchasing inexpensive U.S. exports, as well as the tax rebates that sent Americans on a shopping spree.

According to Commerce Department statistics, the GDP increased at a 3.3 annual rate from April through June.  This revised statistic represents a significant improvement over the initial 1.9 percent estimate, and exceeded economists’ expectations of a 2.7 percent growth rate.

The rebound was welcome news after two grim quarters.  The economy contracted during the last three months of 2007, and registered a feeble 0.9 percent growth rate during the 1st quarter of 2008.  Spring’s 3.3 percent performance was the best result since the third quarter of 2007, when the economy grew by an impressive 4.8 percent.

Still, the good news is something of a fluke.  The economy is still quite fragile, according to Federal Reserve Chairman Ben Bernanke, who recently warned that the weakness will remain throughout 2008.  Analysts expect the economy to hit another pothole during the 4th quarter, once the glow of the tax rebates dims.  Additionally, exports could decline if other nations experience similarly slowing economies.

Add presidential politics into the mix.  Democratic nominee Barack Obama favors a second government-stimulus package, while Republican John McCain supports free trade and other business measures to energize the economy.  With less than two months remaining until the election, the candidates are certain to have a lot more to say on how they plan to energize the economy.

Branding the Candidates

Wednesday, April 23rd, 2008

As an avid follower of presidential politics since the age of six, this year’s protracted primary process has been interesting.  The talking heads’ endless dissection of every policy statement; speculation as to which of the all-powerful super-delegates will back whom; the endless round of debates; the questions of who made the best impression.  One of the more interesting stories behind the story was National Public Radio’s (NPR) look at how the candidates have branded themselves.  Reporter Scott Horsley portrayed the Barack Obama brand as an accidental (McDonald’s was mentioned) franchise that harnessed activists’ energy and got them “fired up and ready to go”.  The catalyst was a 2006 chance meeting between Obama and a Texas community activist named David Kobeirowski, who was planning to start a book club to discuss “The Audacity of Hope”.  Obama approved of the idea, saying, “David, that is fantastic.  This is the kind of grassroots spirit I want to have all over the country.”  In effect, NPR reported, Kobierowski had become a Barack Obama franchisee – not a paid staffer, but an independent booster, acting with Obama’s blessing.According to Horsley, “Harnessing that kind of energy is one way for a start-up enterprise to quickly establish a national presence – whether they are selling hamburgers or Obama’s health care policy.”  The signature “O” logo has become a recognizable symbol – similar to interstate signs for franchise hotels and fast-food chains.  Next up was John McCain’s roller-coaster campaign, which has survived more ups and downs than the stock market.  According to NPR correspondent David Kestenbaum, McCain “started out as big and powerful before nearly going out of business.  Now he finds himself in the forefront again.  Business professors compare his campaign to products such as Apple computers or the Mars Bar, which have had similar boom-and-bust business patterns.”  The McCain candidacy – like the Mac computer – is perceived as a maverick.  Says David Brady, a senior fellow at the Hoover Institution and a professor of political science at Stanford University, the Mac computer “is never mainstream, in the sense that it doesn’t sell as many computers as Dell or HP, but they’ve got a nice loyal following.”  The same can be said of John McCain.  In NPR’s final report on presidential candidate branding, David Kestenbaum noted that the Hillary Rodham Clinton campaign comes across as a well-established national brand – but with a difference.  Clinton had a definite advantage coming into the race, having spent eight years in the White House as First Lady, as well as eight years in the Senate.  Like on “Cheers”, everybody knew her name.  Susan Jung Grant, assistant professor of marketing at the University of Colorado at Boulder, posits that if Bill Clinton is an established brand such as Lay’s Potato Chips, then “Senator Clinton could be sour cream and chive potato chips.  It’s the idea of a flanking brand that’s a little bit different from the main category.”  While an established brand can be perceived as hackneyed because of overexposure, an innovative variation can energize the candidate’s image and increase the appeal to consumers.  So which brand are the American people buying?  Stay tuned.