Is 47% the Tipping Point for Romney?

We are just a few weeks after a less than extraordinary Republican Convention missing the military but including a scene from "Old Man and the Chair" and a somewhat more energizing Democratic Convention showing why the Twenty-Second Amendment is the only thing that prevented Bill Clinton from a 3rd and perhaps 4th term. Most probably due to this difference in Convention outcomes (and probably unrelated to the release of the new iPhone 5, I think), President Obama now enjoys a roughly 5% gap in most popular opinion polls on the 2012 Presidential Election. Removing the undecideds for a moment (do they actually ever vote or do they just stay home on Election Day?), this would give us a roughly 53%-47% split in the popular vote should the election be held today.

That 47% number for Mitt Romney has unfortunately for him been echoed in what may well be the most damning words spoken by him yet. The webosphere is overwhelmed by articles analyzing Mitt Romney's claim that:

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax.

This video and several more sections of Romney's talk to rich donors earlier this year are now posted on the Mother Jones website:

There are many reviews of the numbers, but here is an article in the Daily Beast that points to a lot of the factual analyses: http://www.thedailybeast.com/articles/2012/09/18/who-are-the-47-percent-7-facts-about-the-americans-mitt-romney-attacked.html

The bottom line is that although Romney paints a picture of 47% of Americans not paying taxes, most of those still incur payroll taxes. Many of the 47% are elderly living only on Social Security, military or students not making very much from summer jobs, etc. Most of the rest earn under $20,000 per year.

Beyond all that, of the ten states with the highest percentage of people not paying income taxes, eight of them are traditional Red States and Florida has been a battleground state for many years.

This video has the potential to not only incite Democrats who as a whole are called out, but also many rank and file Republicans who through no fault of their own do not pay income taxes. It is difficult to imagine a speech ticking off such a broad spectrum of people in this country.

A gaff or a damning video by itself won't necessarily cause damage. In national elections, it often takes a few cracks in the same area before enough people notice and change their minds on a candidate. As was mentioned on electoral-vote.com:

"A report that Romney had an affair with a staffer would get zero attention because nobody would believe it was true."

However, the story about Mitt Romney being an uber-rich snob who likes to fire people and doesn't care about those who aren't rich had already received some traction adter many hits. To hear and watch him say a lot to reinforce that branding could have a lot of traction. With only seven weeks left in the election, not only could this create a wedge that is tough to overcome, but there is very little about Mitt Romney that helps him overcome a public opinion that he really doesn't understand or care about people who don't make a lot of money.

The numerical cry of this election had been 99% vs 1%, but the actual Tipping Point of this election may have actually been close to the midpoint - 47%.

Lehman Moment Turns Four

Four years ago today, on September 15, 2012, Lehman Brothers filed for Chapter 11 bankruptcy and failing to find a buyer, hurtled toward liquidation. On the same day, Merrill Lynch sold itself (and its bull logo and statues) to Bank of America.

Soooooooo, are we better off now than we were four years ago?

The answer will be different for individual people, but from a macroeconomic sense, the answer is an irrefutable "YES".

As an Economics and Math major, I had the unfortunate reality of understanding the financial precipice we stood on that day, the potential 'next shoes to drop' and the impending domino effect. For the first time in my adult life, I was scared. Not scary movie scared, seeing the apocalypse in front of your eyes scared. No matter what I and my family did, we would be the victims of whatever was about to happen. Not unlike citizens of post-war Germany who saw hyperinflation change prices dramatically overnight.

We should not underestimate the macroeconomic 'guesstimate' efforts that brought us back from the brink, have provided us with a 'new normal' stability, and the markets have responded with new highs.

Part of the credit should go to President George W. Bush, who against the stand of some from his party, chose to accept and implement the recommendation for the program known as TARP. This was instrumental in preventing our economy from looking like the last remnants of bathwater circling down the drain. Although TARP has had many detractors, realists know it was the unpleasant but necessary action that saved our economy. The fact that we have gotten a substantial portion of the money back due to the way it was structured will be appreciated more and more as years go by.

However, since the plug was put in the bottom of the bathtub, there have been two other major decisions and several smaller ones that have stopped the disaster from getting worse and begun to move us closer to our pre-recession existence.

The Auto bailout and the Stimulus have received a ton of bad press and frankly neither one is something to feel proud about. However, they were needed. No, there were essential in preventing extended 15% unemployment. The fall of GM and Chrysler would have resulted in the failure of many of their suppliers and other vendors. unemployment would have increased by several million. The Stimulus was watered-down and smaller that what was truly needed, but the right package would not have passed Congress. Tax refunds ('Making Work Pay' tax credit) felt good (or should have), but as most economists will tell you, don't have as large an impact as other measures. However, the 20+ consecutive months of job growth can be attributed at least in part (the percentage is debatable) to the Stimulus.

Are we where we need or want to be? No. Was this the perfect plan. Definitely not, but politics often prevent perfection. Is the US economy better post-Stimulus? Yes, and frankly anyone who would make a claim otherwise is unlikely to have gotten beyond Economics 101.

The events of 2008 sucked. Big time. The actions that were taken were painful. However, we are now able to calmly discuss the merits of these actions because we have substantial stability in our economy. There is no way to overstate how important that is and how close we came to not having it.

When you make your decision on who to vote for in the Presidential election this year, you really need to ask yourself the question - if we ever had to stare down into the economic abyss again, which candidate would we want to make the tough but long-term decisions, the ones that were unpopular in the short-term, but were necessary for the continued existence of the US economy?

I've got my choice made. Some times we focus on the small stuff or a single item rather than looking at the big picture. The roll of the President is to always look at the big picture regardless of what everyone else is looking at.