Osama and Obama

You can't avoid it. All the speculation revolves around what the killing of Osama bin Laden means for Obama's re-election chances. Obviously one school of thought, is that he is now a lock to get re-elected having just shown what a smarter, awesomer guy he is than, well, anybody ever (although to many of Obama's supporters, a Navy SEAL conducted execution killing on foregin soil of an American enemy might not be something too worthy of praise...but no matter, the ends justify the means with this crowd, so they are free to praise this if it helps their secular messiah). Another school of thought is that Obama, while worthy of some credit, benefited from the GWOT architecture put in place and maintained by President Bush against withering criticism. Some look to history and note that popular leaders with military victories under their belts like Woodrow Wilson, Winston Churchill, and George H.W. Bush all went down to subsequent defeat. All very well. I am inclined to believe that this helps Obama undeniably, but that he is still not a lock to win in 2012. Obama's only real advantages up to this point were incumbency and uninspiring opposition. Now his advantages are those two plus a big score against bin Laden. Good but not great. Naturally, partisan America will stick to the two emerging schools of thought as noted above; the independents, as always, are the key, and the key to independents is the economy. For example, the business community, who pay very close attention to the regulatory environment and who were a key element of Obama's 2008 coalition, will not be swayed by the bin Laden news. That is one element of the coalition that is not coming back into the fold. It boils down to heartland independents, red state Democrats and young people. Will these folks view this victory as a sufficient positive to outweigh economic conditions such as gas prices (last week was the fourth bad week in a row, three of which were very bad), unemployment, broad-based inflation, etc.? Will bin Laden's death be enough to rebuild the coalition that Obama needs and/or dampen the significant fervor seeking to defeat him? How will young people view the death of bin Laden against their employment/career prospects, which, if they don't improve, will look still look poor come election time? We'll see. Restoring optimism among the first job-seeking set is a tough nut to crack. Regaining that post-partisan, world-class temperment gloss is a tough restoration project after the last two years. Was bin Laden high enough on their electoral punch list to get black voters to turn out just as enormously for Obama in 2012 as they did in 2008? Does the bin Laden achievement do all this? These are the things to watch. My take, this slightly sways heartland independents, but doesn't move the needle with blacks and job-seeking young people. Jobs and paychecks remain #1. So, despite having proven that he is indeed fighting the war on terror, which many feared he was not, Obama also remains robustly committed to the war on business. The tandem has a distinctly one-step-forward-two-steps-back feel to it.

I think the market is saying that this is good for Obama and thus is selling off. That is a controversial view, the conventional view is that the death of bin Laden augers a reprisal and thus a "risk off" posture (stocks down, dollar, treasuries up). Even though the political conditions have changed drastically since Obama first took office, I think the inverse relationship that I have argued for still holds. The stock market had a great April with Obama clearly spiralling down in the polls as inflation worries heated up and the head-scratching Libyan foray bogged down. Granted it's only one day, but the trend seems to have been broken as May kicks off with the bin Laden news (check out an opposing view here). This is my very early take that necessarily needs to unfold as it is not supported by alot of data, and there are alot of wildcards: the debt ceiling, Syria and the Middle East, inflation, etc.

On another note, it will be very interesting to follow yet another direct experiment in contrasting governance given the election results in Canada. Harper now has the majority he's craved and can build on his success to date or disappoint. Conservative governance in Canada will contrast markedly with life here at home and the comparisons will be illuminating (again). Canada is likely to do many of the things that Republicans in Congress are arguing for, and that Democrats are arguing are extreme, here in the US. We'll have a mini-laboratory right next door. If Harper plays it well and the results are noticable, Canada could be an embarassment for Democrats come election time, for example if they are sporting a sub-6% unemployment rate and we are still mired @9%.