In which I pretend to be a legal scholar.

I’ve seen a meme going around, saying to the effect that now that the Supreme Court has ruled on ACA, everyone on facebook gets to be a legal scholar for one day. Quite true. I’m surprised at how many of my friends, many of them non-political, have commented on the recent ruling upholding ACA, otherwise known as “Obamacare,” as constitutional. So I thought I’ll play along. I’m not really qualified to comment on the legalese of the ruling – I’m an economist/consultant, not a lawyer – but I think I am able to proffer a reasonable opinion on the political fallout of the ruling.

This wasn’t a total victory for Obama. Let’s construct a short narrative. In 2010, the health care law gets pass. At the time, both Congress and the punditocracy thought that there would be little substantial challenges to the constitutionality of the law. I remember reading one prediction, whereby a majority of surveyed law professors thought that the law would be upheld 8-1, Thomas being the lone dissent. Over the past two years since its passage, there’s been a small but growing conservative insurgency, which argued that the law was unconstitutional. Their core argument was this: the law creates a mandate to buy a private good, a power that the federal Congress, acting under a system of enumerated powers, does not have. The court agreed with this, giving conservatives a partial victory. Roberts, in his ruling, writes that:

The Affordable Care Act is constitutional in part and unconstitutional in part. The individual mandate cannot be upheld as an exercise of Congress’s power under the Commerce Clause. That Clause authorizes Congress to regulate interstate commerce, not to order individuals to engage in it. In this case, however, it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance. Such legislation is within Congress’s power to tax . . .

So, Roberts agreed with the conservatives on the core, ideological issue at dispute, but sidestepped it by ruling that Obamacare, and the mandate, is a tax. He gave Congress no new powers and in-fact limited them in abstract. A lot of conservative bloggers and scholars are saying that this opens the door for a bunch of challenges to the federal government’s current powers. Perhaps. I’m a bit more skeptical.  I’m always a bit hesitant on a deal that offers me potential benefits in the longrun in exchange for very real pain in the immediate.

Politically, I think this helps the GOP. Low information Democratic voters, thinking that the battle is now over, may fall into a bit of lethargy, potentially depressing turnout. From my read through of right leaning blogs’ comment roles, this has fired up both the physical and financial enthusiasm among right voters. Observe that in the few hours after the announcement, Romney collected over 1.5 million in donations. People arguing that right wing turn out will be depressed because of the squishiness of Mitt Romney are wrong. Right wing voters know that, much like the rebel alliance in Star Wars, they have one chance to blow this thing up. Elect Romney (and a GOP Congress) and repeal it. Difficult, but possible. I think it’s harder to say what independents, who surprisingly strongly detest the bill, will do. Two possible outcomes. First, they rally to Romney in order to get the bill repealed. Voters who might be skeptical of Mitt on other issues, social issues in particular, may bite the bullet now that they have a tangible reason to vote for him. Or, independents could consider it a loss battle, and return their focus to the economy and other issues.

Finally, there is one big, open question left. Did Roberts make this easier to repeal? I’m not that brushed up in the pedantic nuances of Congressional rules, but I think, and I may be wrong, that tax votes don’t require the 60 vote cloture proof majority in the Senate. This means, and this is important, that repeal could be achieved with only 50-51 votes, assuming a Romney presidency. Since it’s now a tax, can it be repealed as a tax? 

I think I know who the President is going to be…

And it’s not Obama.

Allow me to explain.

I’ve been following this latest election very closely. Truth be told, I follow all elections closely, as I am unfortunately a politics/news junkie. That said, I thought that this race would be a close one. I thought Obama had the upper hand, being an incumbent, and would likely win re-election. A confluence of recent events makes me think otherwise. Over the past month, my confidence in Obama’s re-election has dropped, to the point where I think it is highly unlikely that he will win, despite the recent polling showing the race a dead heat. Why? Read on and I’ll tell you.

Before I do that, I want to say that although my political leanings are well known (right-wingish) I’m going to try to present the following analysis as unbiased as possible. I’m not going to say what I want to happen or what I think should happen or who I think should win. Rather, I’m going to give to you, all five of my loyal readers, why I think Romney has this election on lock. I’ll try to be as objective as possible. I’ll admit that while I do read left-wing websites, I read more conservative information sources than liberal, so I may be missing important data. If you feel that I’m wrong, or ignoring some factor, call me out on it. I welcome, and encourage, all criticism. With that said, let’s get to it.

This election is about one thing: the economy. It’s not about Sandra Fluke. It’s not about Bain Capital. It’s not about the “War on Women.” It’s not about Trayvon Martin or Fast & Furious or immigration. It’s all about the dismal state of the American economy. Unemployment recently crept back up to 8.2%. GDP growth has been tepid. Incomes remain stagnant. Inflation, though not too strong, has noticeably impacted people’s food and gas budgets. Labor force participation, a measurement of how many people are actually working, is at a record low. The stock market is currently plunging. This is a dark, scary time. There is a very real, and palpable, feeling out there that this is no ordinary recession or market downturn. That instead, the US is slipping into a malaise at best and a depression at worst which threatens to permanently lower living standards, leaving all of us with less opportunities and wealth than before. Among the younger generation, there’s a worry that we won’t have the same lifestyles that our parents did, that the American dream has been shut off to us.

But these feelings aren’t new. They were there back in 2008, and even before the beginning of the recession. Although it may be youthful nostalgia clouding my perception of the situation, I don’t think Americans have been fully confident in their future since the late 90s. September 11^th, and then the hollow, debt fueled recovery afterwards gave birth to this sense of unease. The 2008 election was, in many ways, an attempt to return to the pragmatism, led by a then-charismatic young politician, of the 90s. I don’t think people wanted another cultural war. I don’t think they wanted another war on terror, or a war on the right, or a war on religion. I think they wanted, and expected, an improvement to the economy. Obama was charged with one goal, albeit a very complicated and difficult one: get the economy on the right track. Has it done it? No. Now, you can blame the GOP in Congress, or his policies, or George Bush, or whatever boogie man (or woman) you’d like, but I don’t think even the most devout Obama fans can say that the economy is where they’d want it to be.

With the recent economic news coming out that the recovery has stalled (for the third time), I think the great middle of relatively non-ideological voters that flip from election to election are going to break for Romney. It’s as simple as that. The economy hasn’t improved. You can offer a lot of technical explanations and excuses as to why it hasn’t improved (and I’m personally sympathetic to a lot of them) but at the end of the day, it hasn’t improved. Okay, want more? Here are three additional reasons why I think Obama loses.

1) Europe. As someone who has lived on the continent for two and a half years, I can tell you that Europeans have really let themselves go. They’re running on the fumes of a brilliant and beautiful civilization, now ready to die out. Ever so kind, they’re going out with a bang. You don’t have to be a Goldman Sachs analyst to realize that Europe, and their stupid pet project of the Euro, is falling apart. To make a long story short, the countries that make up the Eurozone are in heavy debt with slow growth. To get growth restarted, they need more debt. But if they get more debt, bond traders will bankrupt their countries. And if they don’t get growth restarted? Bond traders will bankrupt their countries. The end result being that at any moment, we could see another Lehman Brothers type event, causing a runaway financial meltdown. If the European banking system goes, our banks are going to get hit. It’s a double hit. Our banks take huge losses and our economy losses out on trade. If Euroland goes nuclear, it’s going to hit the American economy hard, furthering harming Barack Obama’s chances.

2) Money. Read this article here. http://www.politico.com/news/stories/0512/76849.html. If you read one article on the Presidential election, make sure it’s this one. Back in 2008, Obama massively outraised the McCain campaign. In this election, Republicans have a huge, $1 billion (yes billion with a b) war chest that they’re ready to drop on Obama. That’s NOT including the Romney campaign and the RNC. Thanks to the Supreme Court Citizens’ United decision, billionaires can donate unlimited funds to super pacs, which can then run ads. Combine this with recent reports that Obama’s campaign has maxed out donors and is struggling to raise money, and you have a Romney campaign with a massive financial advantage.

3) Polls. Here is a lovely map of the last election, showing battleground states in manila:

There’s been a ton of polls released, some of them contradictory. But generally, the trend is that Obama is below 50% in most of the battle ground states. Romney has a strong lead in North Carolina and Florida. Wisconsin is about to elect Scott Walker, a pretty hardcore Republican, putting it in play. Rasmussen just released a poll with Romney ahead in Ohio. In Pennsylvania, traditionally a Democratic stronghold, Republicans swept state offices in 2010, taking a senate seat and the governorship. Nevada, Colorado, and Iowa, all once solidly Obama states, are unnecessary for Romney to win if he wants to narrowly edge out a victory. Yet, recent polling puts Romney in a statistical dead heat in all of those states. These numbers will likely fluctuate, but remember where we are. Romney has just received all of the needed delegates to secure the nomination. Although it may seem hard to believe, a lot of low information voters still don’t know who he really is. His campaign hasn’t kicked into full gear. The fact that he’s running competitively in a lot of these states, at his weakest point, shows that his campaign has a solid foundation. Couple that with the fact that Obama is consistently polling sub-50% in most of these states, and you have a precarious situation for the Obama campaign.

                      

Of course, all of this can and will change. It’s hard to forecast a race some 6 months out. Anything can happen. But if I had to put money on it, I’d put it all on Romney. As the kids say, the odds are in his favor.