Pelosi Blocks Obama’s Re-Election Path

President Obama is pondering how to deal with his strengthened Republican adversaries when he returns from this week’s Asian summits. He might want to spend part of his long return flight thinking about how to handle his friends.

Soon-to-be-former House Speaker Nancy Pelosi is the president’s biggest problem. Because Obama was not on the ballot last week, Pelosi became the poster child for everything voters wanted to protest: high unemployment, health care reform, runaway spending and the prospect of crippling debts being passed to the next generation.

If the president wants to be re-elected in 2012, he has three options.

First, if he believes this election was only about the economy, he can stick to the policies of his first two years and hope that economic recovery will come soon enough, and be strong enough, to get voters to give him another term.

Second, if he believes voters were misled into being frightened of health care reform and his other accomplishments, he can try to persuade them that he was right, or to just trust him. Either way, he wants voters to acknowledge that he is a lot sharper than they are. That’s not often a winning message for a politician, but Obama is free to try it.

Third, he can seek compromise where possible with the Republicans, beginning with the tax legislation that Congress soon will take up. He can otherwise try to moderate his agenda and rhetoric so fewer voters will perceive him as anti-business and, therefore, anti-jobs. Obama already has signaled that this approach has some appeal, as he touted his newfound affection for American business during his weekend trade mission to India.

By announcing that she plans to stay on as leader of the House Democrats in the next Congress, Pelosi is signaling that she wants to take Option 3 away from the president.

Ordinarily, a speaker whose party has lost at least 60 seats in the House and six seats in the Senate would step aside. Just as a struggling team fires its manager to signify a new direction, a political leader whose party is beaten as thoroughly as Pelosi’s Democrats will ordinarily take the hit, even if the leader is not the sole or even the primary individual responsible. A leadership change tells voters that a party is ready to make a fresh start and, therefore, deserves another look.

That is precisely Pelosi’s point – and the president’s problem. He needs that fresh start. Pelosi is not interested in giving him one.

“As a result of Tuesday’s election, the role of Democrats in the 112th Congress will change, but our commitment to serving the American people will not,” she said in a statement. “We have no intention of allowing our great achievements to be rolled back. It is my hope that we can work in a bipartisan way to create jobs and strengthen the middle class.”

Well, it’s my hope that someone will invent a chocolate chip cookie that restores hair and fixes dental cavities, but I am not counting on it. I assign a similar weight to Pelosi’s daydream of bipartisan nirvana for the economy and her party’s “great achievements.”

Ken Spain, spokesman for the National Republican Congressional Committee, wryly welcomed Pelosi’s announcement. “Given that there are now 60-plus defeated Democrat House members urgently seeking jobs due to Nancy Pelosi’s failed leadership, we welcome her decision to run for House Minority Leader based on her proven ability to create jobs for Republican lawmakers,” he said.

I think the election results are a signal from the country’s independent voters that the Democrats’ policies on health care, the environment and financial regulation went too far. Democrats find it convenient to blame the economy, which they in turn blame on their predecessors, as though the long, slow slog to recovery were entirely unrelated to the policy actions and pronouncements of the past two years. Democrats are right that the economy was a major factor in the election. They fail to recognize that their approach to government is a major factor in the economy.

Pelosi’s stubbornness may be costly her president and her party, but it will not hurt her personal prospects. She cruised to victory last Tuesday with more than 80 percent of the vote. A Democratic candidate would probably have to appear in an al Qaeda recruitment video to lose an election in California’s 8th District, which Pelosi represents. Across the rest of the country, voters rejected Pelosi by proxy.

The majority of Democrats who lost their jobs were, in fact, moderates, since moderates are more likely to have seats in potential swing districts in the first place. When these districts swung hard toward the Republicans, voters did not oppose their own representatives so much as they opposed Democratic Party leadership, personified in Pelosi and Senate Majority Leader Harry Reid.

Unlike Pelosi, the president does not represent a safe district. He represents the ultimate swing district: the United States of America, which has alternated parties between the past four presidents. Up until now, Obama has remained largely in step with Reid, Pelosi and other true believers in the party’s pro-labor, activist-government, business-skeptic philosophy. Now, however, if Obama wants to win another term, he will have to act on the message voters sent at the polls and move toward a more centrist path.

Having Pelosi as House Minority Leader will make it difficult for Obama to widen his appeal. If Pelosi remains in a high-visibility position, Republicans will make the 2012 election as much a referendum on her agenda and policies as the 2010 election was. Republican candidates will once again run against Pelosi instead of their direct opponents, including in the race for the White House.

This puts Obama in a no-win situation. If he, too, runs against Pelosi, he will offend most of the Democratic base and lose the election. But if he defends Pelosi, he will go down the same path that just led dozens of his party’s members to a political dead end.

Democrats could elect a more moderate Speaker of the House, which would allow the president to turn toward the center without appearing to reject the liberal base. However, this is not likely to happen. As I mentioned earlier, most of the newly jobless Democrats are moderates, leaving the party’s House membership more sharply liberal. When asked whether he thought Pelosi should seek the position of Minority Leader, Rep. Jim Matheson, a co-chairman of the Blue Dog Coalition, told Politico, “No. We just got whupped.” But the majority of House Democrats are less likely to hold Pelosi accountable for the election results.

Obama may still get re-elected if Republicans choose a weak enough nominee or run a poor enough campaign. But the president’s track record to date and Pelosi’s determination to keep him on the same track for the next two years have made it more likely that Obama will be a one-term president.

About Larry M. Elkin 534 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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