The best list I’ve seen so far. I especially like #4 … and I agree with the logic.
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Excerpted from IBD, “Nine Possibilities Heading Into 2009″, December 31, 2008
1. A Less Safe Homeland ?
Will Obama take the heat from the left of his own party and boldly use his constitutional authority as president to go the extra mile in protecting the country, as Bush did, or will he dilute the indispensable tools that have helped keep us safe since the 9/11 attacks ?
We’ll see. Promising to get Osama bin Laden sounds great in a campaign; governing requires more than catchphrases.
2. Stimulus Pushes Deficit To $1 Tril
Late in 2008, talk centered around a deal involving up to $800 billion in new spending, focused mainly on infrastructure and so-called Green Jobs. Tax cuts of $150 billion or more will focus on the middle class. Under Obama, those who no longer pay any taxes will surge from 44 million currently to more than 50 million, as those in the top 5% of incomes shoulder a greater share of the tax burden.
Obama’ s stimulus, along with the nearly $2 trillion in outlays for 2008′s financial and auto bailout, will push the deficit to more than $1 trillion — 7% of GDP, the biggest deficit since 1946.
Republican efforts to cut capital gains taxes — a proven way to strong economic and job growth — will fail.
Businesses may start feeling left out, and the GOP will try to make it a wedge issue in congressional elections of 2010.
3. China Falls Into Recession
After decades of stunning 10% GDP growth, China’s economy stumbled late in 2008. It will continue to slow in 2009 — and possibly beyond. The main trigger for their slump: Soaring energy prices during early 2008, and a steep decline in U.S. demand for China’s goods.
If China grows by 5% or less over the next year or so, it won’t create enough jobs and will face serious social pressures that could break into open violence.
Despite its rapid growth, China still only ranks No. 81 on the U.N.’s human development index, a gauge that combines health, education and income. Things are far worse for the more than half of China’s 1.3 billion people who live in rural areas.
4. Recovery In The U.S.?
The U.S. economy will pull out of its recession as a massive home inventory overhang is worked off, oil prices stay low, trillions of dollars in stimulus and bailout funds are put to work and Fed interest-rate cuts kick in.
Banks and finance companies will start lending again, and rising demand will push companies to hire.
World demand for oil will fall, as it did in 2008. And since each 10-cent drop in gas prices is equal to a $12 billion tax cut, the U.S. will get a “silent” tax cut of about $295 billion.
The bear market in stocks — which are one of the economy’s best leading indicators — should be drawing to a close. This bear is now in its 15th month, and most don’t last more than 15 or 16. Nine to 10 is more like it.
5. Energy Fever, Climate Change Cool Off
The cooling trend that began in 1998 will continue as solar activity remains dormant. Last year was the coolest year in a decade.
As the evidence grows, more scientists will join the list of climate “deniers,” as protests arise in Europe and the U.S. over expensive alternate-energy schemes that slow global economic recovery.
But as long as crude remains below $70 a barrel — the make-or-break level for many energy projects and alternative energy — Congress will continue to drag its feet on drilling for more oil and gas in the U.S.
6. Big Labor Fights For Relevance
Organized labor made a big deal about its $400 million in campaign spending to win the election for Democrats in 2008.
But as 2009 rolls in, all that cash is starting to look less like power projection and more like a last-gasp bid to go for broke.
The big problem is that in a weak economy, the union agenda is incompatible with economic growth. Businesses can’t grow and create jobs in an atmosphere where workers are forced into unions and free trade is restricted. Given the choice of a recovering economy or a satisfied union base, Obama is likely to tilt toward saving the economy, if only for the sake of his own political viability.
Unions want to show they still matter after watching their share of the U.S. work force shrink from 31.4% in 1960 to less than 12% today.
Two fronts will emerge: “card-check” — a change to the National Labor Relations Act that would eliminate secret ballots to make organizing new unions easier — and free-trade pacts.
7. Obama Seeks Health Care Reform
Even health care experts sympathetic to Obama’s goals argue the president-elect understates his plan’s costs. Obama’s plan of near universal coverage means “a $100 billion infusion of new health care spending.”
ObamaCare’s massive new spending will be a tough political sell, especially with taxpayers already footing the bill for bailouts of banks and the auto sector, and millions of Americans losing their jobs.
Obama will insist that a big government health care reform is imperative for economic recovery, imposing the kind of socialized medicine found in France, Britain and Canada, where waiting lists and substandard quality are the norm.
8. India Gets Assertive
India’s citizens have gained a lot from their opening to the world in 1991 and they aren’t about to give it up. But threats remain from the global economic downturn and terror attacks out of Pakistan.
Fiscal stimulus is on the plate, and possibly more defense spending. The government may tighten its alliance with the U.S. to modernize its military.
As a large market, India will forge closer trade ties with markets like the U.S., Japan, and EU.
9. Israel Gets Rid Of Iran’s Nuclear Threat
Will Israel use its altercation with the Iranian-backed Hamas as a stepping stone toward a strike on Iran’s nuclear facilities?
The signs are that an Obama Administration, committed to “tough diplomacy,” will be less likely to let Israel take matters into its own hands and strike Tehran.
Lack of U.S. support would make such airstrikes more difficult, and leave Israel even more vulnerable politically on the world stage.
Still, Israel might be tempted to go for broke, taking out Iran’s burgeoning nuclear threat rather than letting Tel Aviv go up in a mushroom cloud.
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