The Obama administration had the sort of week they’d rather see disappear down the memory hole. But unfortunately for the president, the trouble may just be beginning.
First, on the economic front the notion that we are going to bounce back soon from the recession is proving to be a pipe dream. The CBO predicted double-digit unemployment continuing to rise into 2010. Rasmussen reported:
The Rasmussen Investor Index dropped 15 points on Friday, the largest single day decline ever recorded in its seven-year history. The drop caps a week of extreme volatility for the Index and now shows investor confidence at the lowest level in two months.
The culprit — both for the volatility and the current low level of confidence — is shifting perceptions on where the economy is heading next. Today, just 24% of investors say the economy is getting better while 47% say it is getting worse. A couple of days ago, the outlook was much less pessimistic: 34% better and 40% worse.
And the every-growing mound of debt is triggering concern among purchasers of U.S. debt. The Wall Street Journal reported:
The yield of the benchmark U.S. 10-year bond, which moves in the opposite direction to the price, rose by 0.15 percentage point from Wednesday to 3.355%, its highest level in six months. … Thursday’s selloff in U.S. and U.K. government bonds highlights the risks the two countries face as they try to jump-start their economies. The two governments hope that all the money they are borrowing will spur so much growth that the debt will shrink as a portion of their economies. The risk is that growth will be weak, leaving the economies still struggling but with heavy debt loads.
Moreover, the result of the president’s spend-a-thon and the Fed’s hyperactive printing press has been a plunge in the U.S. dollar and renewed fears of stagflation.
This, of course, is the economic picture which Republicans painted when they inveighed against Obama’s stimulus and budget plans. They (and all those Tea Party protestors) warned that the sea of red ink spilling from the U.S. Treasury couldn’t be readily absorbed by purchasers of U.S. debt and the result would soon be higher interest rates and slowed growth. It is the argument they continue to employ in objecting to the gigantic spending items still on the Obama budget. They now have some evidence to support their arguments. This week the reality was driven home: the Obama economic plan is a faulty and unsustainable one. And those Democrats on the ballot in 2010 had better buckle up — it is going to be a bumpy ride.
On the national security front, the week brought a bevy of problems and complications for the president. His own party is in revolt, voting 90-6 in the Senate to defund his scheme to relocate Guantanamo detainees to the U.S. Nancy Pelosi is now reduced to “stonewalling” to fend off reporters’ queries about whether the CIA “misled” her.