Predictions Again

Yes, it's me again!

Jonathan Chait has a lengthy article predicting what will happen in Washington depending on who wins the presidency in November.  Great inside baseball here, and the analysis really rings true for me.  Too much to exerpt, but if you have a few minutes I suggest you click on the link.

While Chait covers tax policy very comprehensively, he doesn't predict the outcome for the economy. I've been doing this from time to time, going on record with my opinion, and intend to return with a big "I told you so" later on.  My recovery predictions last month are here.

Since then, however, we've had good economic news (even if conservatives insist on claiming it's all lies).  Unemployment is under 8% in the latest jobs report, and other numbers look good too.

So my prediction that the economy is going to continue getting better between 2013 and 2017 still looks good.  No matter the outcome next month, the next president is going to preside over a steady improvement and will get the credit for it.

Another big change since September is that Romney has finally done his Etch A Sketch to the center, and is giving signals that he won't implement the full Ryan plan when he comes into office.  In my opinion, this is the major reason for his resurgence in the polls.  (The dominant narrative was that Obama's terrible performance in the first debate was the cause, but now that the President kicked butt in debate #2 and hasn't seen much rebound from it, I'm moving over to a different narrative- Romney's pivot to the center was the real key- he sounded reasonable, indicated he might govern as a moderate, and that's won over some independents who were turned off by the hard right turn during the primaries).  So it seems really unlikely now that President Romney will implement the severe austerity budget that is the most plausible way Republicans could damage the recovery.  More and more it's clear that they're going to take their tax cuts and run up the deficit, leading to Keynesian stimulus that should work pretty well (while they gut the safety net and make life miserable for the poor, but that won't stall the recovery for the rest of us).

So the stakes are high in this presidential election, but not for economic recovery.  Either way, we're going to have continued economic growth.  The important things we're fighting for are:

• Who gets credit for the growth
• What happens to universal health care (if Romney wins, ObamaCare gets repealed and there won't be universal health care for another generation)
• Who bears the tax burden (taxes on the rich are going way down under Romney.  Taxes on the poor are likely to go up to respond to this "47%" rhetoric we keep hearing)
• Deficit reduction- sounds crazy given the campaign rhetoric, but under Democrats the deficit will be brought under control thanks to the expiring Bush tax cuts.  Under Republicans those tax cuts will be renewed and maybe even expanded, and even with the recovery increasing tax revenues it won't be enough to make up for those cuts- deficits have gone up under Republicans since Reagan, and that won't change this time.

So yeah, this election really matters, even if recovery is coming either way.