Tuesday, January 27, 2015

Two Governments in Washington

The President’s State of the Union address and Speaker Boehner’s invitation to Benjamin Netanyahu to address a joint session of Congress underscore an entirely new level of dysfunctionality in Washington. We now have two distinct governments in Washington, each with its separate elections, constituencies and agendas.

The White House and Congress operate on different political planes. The White House dominates a presidential electorate, the Republican Congress is mostly a product of the 2010 and 2014 mid-term elections. For Democrats, their base is concentrated in large cities, especially on the two coasts, and in college campuses and communities of color. And Republicans win much of the broad interior, more rural areas and the Anglo population, especially among the white and blue collar working class. Democrats focus on such issues as global warming and income equality, and Republicans focus on energy independence and economic growth. They are at odds on international policy, such as negotiations with Iran.

President Obama offered no recognition of the devastating loss his party suffered in 2014--from state legislatures to the U.S. Senate, culminating in a blow to the Democratic Party not seen since 1928 pre-Roosevelt levels of power. Obama does not believe they were his losses. In fact, the White House believes Democrats would have been better served in last fall’s campaigns to have embraced Obama and his policies, such as the Affordable Care Act. Tellingly, he joked near the end of the speech that he has won two national elections (running on his issues and supported by more than half the electorate).

It was difficult to find any interest in passing legislation in Obama’s tone or substance. His speech was essentially addressed to his core constituents and those establishment Democratic officeholders running 2016. Any of the greater public who wanted relief from the gridlock were provided some bromides toward the end of the speech but little recognition of the problem or strategy to address it.

The Speaker’s invitation to Netanyahu highlights that Congress and the President both now have their own foreign and domestic policies. Congress’ first legislation will be the Keystone XL Pipeline, which Obama has already promised to veto.

Both sides know that the basic functions of government need to continue or the public gets very hostile, but the existence of two very separate governments will likely continue until the public concern about dysfunction reaches crisis proportions.

Monday, January 26, 2015

Geopolitical Risk in 2015

All is well in Colorado. The economy is booming, unemployment is down and tax revenues are substantial. But, as Governor Hickenlooper recounted in his inaugural address, all sorts of unanticipated events could darken our bright outlook.

The following seven concerns are geopolitical risks that loom over Colorado’s tranquility in 2015.

Weather – Colorado has been especially subject to extreme weather, ranging from the 500-year drought in 2002 accompanied by devastating and reoccurring fires, to the 100-year flood in 2013.

Economy – The U.S. and Colorado economies in 2015 appear to be in sustained recoveries, but a host of worldwide factors could produce volatility and make a new downturn possible. In the short run, the 50 percent drop in oil price is disruptive. While a substantial longer-term benefit is expected, a worldwide recession could mask it.

Oil’s freefall is partially caused by the decline in demand. The drop in demand can be traced to a number of economic strains internationally, including: Parts of Europe are in or near recession and price deflation; oil producing countries face deficits and defaults; China and emerging markets are slowing; and Japan’s takeoff continues to stall. The EU’s economic troubles are helping fuel a major political challenge to the concept of a union.

Neither the U.S. nor Colorado can maintain prosperity if the world economies decline.

Political Turmoil – The first weeks in the new year have highlighted the political turmoil and national crisis that three determined people with Kalashnikov rifles can cause. France came to a stop and now will spend hundreds of millions of dollars in new security procedures and hardware. Also, Putin is not be through with causing political turmoil in the Ukraine and Central Europe.

Political Gridlock – The October 2013 partial shutdown of Washington D.C. demonstrated how fragile the federal behemoth is to polarized politics in this era. In Colorado, the TABOR tax-limitation amendment is a form of constitutionally mandated gridlock, which has both advocates and opponents.

Social Turbulence – Ferguson is an example of the power of a local incident rapidly gaining national and international attention to the detriment of local establishments and solutions.

Populism – Anti-establishment and anti-immigration parties are on the rise in Europe and are threatening the survival of the EU experiment. In the U.S., the rapid emergence of the Tea Party and Occupy movements show how quickly new social groupings can disrupt normal political and economic activity. In Colorado, an anti-fracking movement continues to threaten one of the state’s leading industries and the Democratic Party establishment.

Tech Disruption – Much of the geopolitical risk described in this post was aided and abetted, and in some cases, launched by social media and new mobile communication devices. The world has borne witness to the power of widespread access to communication--both its magnificence and its malfeasance. Meanwhile, if hackers have their way, they can seriously harm national security and the way many of us now conduct business.

Friday, January 23, 2015

New Leaders for 2015

Leaders from around the world are creating opportunities and problems for the global community. The start of 2015 highly focused on the world’s economy, with slowdowns in Europe, emerging markets, China and Japan. Terror, especially Islamic inspired, dominated January news.

Eleven leaders listed below will be important to the main themes in 2015.  Some are newly installed (Widodo, Modi, Sisi), some recently re-elected (Abe, Erdogan, Rousseff). Many are presenting new populist, nationalist and authoritarian approaches to their constituents and neighbors. One is just trying to maintain the system in which her country thrives (Merkel).

Thursday, January 22, 2015

State of the Union – Public Skeptical About Compromise

Although it’s important for leaders of both political parties to appear reasonable and open to compromise, the public is skeptical,

  • New WSJ/NBC News poll reports most common word selected to describe the State of the Union is “divided” (40%). About half the public rate both President Obama (45%) and GOP in Congress (55%) as “too stubborn.”
  • Pew Research finds 71% believe Republicans and Democrats will “bicker and oppose one another more than usual.” Only 22% say they will “work together more.” (In 2009 as Obama took office, only 30% predicted partisan bickering.)
  • Pew Research reported in December only 44% expect Obama to cooperate with GOP next two years and only 28% expect GOP to cooperate (after the 2006 Democratic takeover, 48% said newly empowered Democrats would cooperate with Bush.)

Wednesday, January 21, 2015

Obama’s State of the Union – Major Issues

No single U.S. problem dominates public opinion as President Obama delivered his last State of the Union speech before the race to replace him heads to Iowa (Iowa caucus Jan. 18),. Satisfaction with direction of the country as Obama speaks has improved, up 9 points since December (32% today, up from 21%).

The uptick in the economy has finally caused the public to move the economy to second place and jobs and unemployment to fourth place on the latest Gallup poll (Jan. 2, 2015). Dissatisfaction with government is the top issue, with health care and immigration in fourth and fifth place.

In Gallup’s open-ended question, “terrorism” was not mentioned. When a list is provided to respondents to rank their priorities, terrorism is first. See Obama’s State of the Union – Terrorism.

Obama’s State of the Union – Terrorism

Pew Research reports that terrorism has now surged to the top position in the public rating as the top priority for President Obama and Congress (Jan. 11, 2015). As reported by Pew, the public’s views on the economy have improved and the economy as a top priority, while still high, has dropped 11 points since January 2013 (5 points since Jan. 2014).

Although Obama mentioned terrorism, domestic issues dominated his next to last State of the Union.

There are strong partisan differences over issue priorities. Republicans are more concerned about the terrorism and strengthening the military than Democrats. Global warming, the environment and the poor get more attention from Democrats than Republicans.

Tuesday, January 20, 2015

Obama’s State of the Union Approval Rating is Up

President Obama’s approval rating has been creeping up since mid-December and is 45 percent in the Real Clear Politics average with 5 percent negative spread. On Election Day, November 2014, his approval rating was 42 percent with a negative 11 percent spread.

Pew Research reports Obama’s pre-State of the Union approval rating is 47 percent, which places him below Bill Clinton (63%), but ahead of George W. Bush (33%), at the same point in their terms. He’s near Ronald Reagan (49%), who was suffering with Iran-Contra (Pew Research, Jan 11, 2015.)

Reasons for the improvement are:
  • The economy is finally seen by the public as improving
  • Some of his post November election executive actions have pleased key constituents, such as Hispanic Americans
  • Simply taking executive action has given him a lift from the November losses and made him seem relevant and in charge
His approval rating is dramatically better than prior to his last State of the Union when he was coming off the poor roll-out of Obamacare and there was a general consensus that Democrats could lose the U.S. Senate in November – they did.

The Real Clear Politics average is a lagging indicator. Several new surveys have Obama’s approval at or near 50 percent.