Valliere: Barack Obama, One-Term President?

For the first time since Barack Obama’s inauguration 16 months ago, we’re beginning to think there’s a reasonable chance he’ll be just a one-term president.

Even though the economy is enjoying a modest recovery, there are three compelling factors that are making us think Obama is in serious trouble in 2012:

He has a tin ear: The Gulf oil spill disaster has highlighted a major Obama flaw – he doesn’t do empathy very well. Cerebral and aloof, Obama spent over an hour in a recent press conference (his first one in 10 months) describing the Gulf crisis in clinical terms, before he discussed his daughter’s plea to cap the well. Bill Clinton could empathize better than any recent president; he felt your pain 24/7. It’s a skill set Obama simply doesn’t have.

President Barack Obama
Photo by: Pete Souza
President Barack Obama

The press has turned: So much for the press being in bed with Obama. Reporters are furiously digging for more evidence of lax oversight of the oil industry in the revolving door climate in which regulators get hired by Big Oil. The media refuses to believe that an economic recovery is underway, and seems to be rooting for a good story to boost ratings and circulation – and what better story than the endangered incumbents? Reporters clearly adored Obama during the 2008 campaign, but the bloom is off the rose.

The Electoral College map has shifted dramatically: This is the Big One. Precise state electoral totals won’t be available until the census is completed, but here’s our rough math — John McCain won 173 electoral votes in 2008, but we see several states Obama carried that are likely to shift back to the GOP: Indiana (11), Ohio (20), Virginia (13), North Carolina (15), Florida (27) and Colorado (9). That gets the Republicans to 268, just three votes short of winning.

This means several other states could make the difference: New Hampshire (4), Illinois (21), Pennsylvania (21), Michigan (17), New Mexico (5), and Nevada (5). It’s entirely possible that Obama would have to win every one of them; there may be no margin of error.


It’s obviously too early to make a definitive call on 2012 because so many variables are still up in the air.

We think a sustainable recovery is underway, which gradually will produce declining unemployment, but the public still worries about layoffs and foreclosures, and now a growing crisis in Europe could – at the least – trim a bit from U.S. GDP growth, according to former Fed Gov. Lyle Gramley.

And it appears that there’s no Ronald Reagan waiting in the wings for the GOP. The early favorite is former Massachusetts Gov. Mitt Romney, who won passage of a health reform bill in the Bay State that looks very similar to the federal measure enacted this spring. Conservative activists have always suspected that Romney doesn’t stand for much, and if he’s the nominee, the Tea Party could take a hike.

But if the Republicans find a fresh face who can appeal to all wings of the party – Minnesota Gov. Tim Pawlenty comes to mind – Obama could have a real fight on his hands.

Two and a half weeks is a lifetime in politics, so two and a half years is an eternity. No one can predict accurately what will happen in the Middle East, whether scandals will erupt, or when the next hurricane might hit. But for the past three decades we have always analyzed elections with one overriding tool – the Electoral College map. And that looks like a real problem for Obama.

What does this mean for the markets? Obama has to be smart enough to realize that he has to embrace the new austerity and dial back big government. The left wing already is angry with him, but where can they go? Obama has to move toward the center – if not for pragmatic reasons, then simply because he won’t have the votes in the next Congress.

The era of activism is about to come to an end, and the counter-revolution has begun. Obama will either go the way of Jimmy Carter – who served one disastrous, tone-deaf term – or Bill Clinton, who survived largely because he proclaimed that “the era of big government is over.”

The choice is Obama’s, but we increasingly wonder if this professorial president has the street smarts to survive.

Greg Valliere is Chief Political Strategist at the Potomac Research Group, a Washington-based firm that advises institutional investors on how government policies affect the markets. Greg has covered Washington for over 30 years, starting his career as an intern at The Washington Post, then co-founding The Washington Forum in 1974 to bridge Wall Street and Washington. He has held several positions, including Director of Research, for Washington-based firms, including the Schwab Washington Research Group. Greg is an exclusive commentator for CNBC-TV, where he appears regularly on most of the network’s programs.