Investors Don't Credit Obama for What's Going Right
More than 62% of U.S. investors polled by Bloomberg News had a negative view of President Obama. Surprisingly, 63% of respondents say his policies are "detrimental to the U.S. investment climate." Among U.S. investors, that number increases to 68%. Respondents to the poll of Bloomberg subscribers, who are mostly well-heeled financial-services types, overwhelmingly believe that the Republican victory in the midterm elections will be good for business. That view may be simplistic.
As Bloomberg points out, U.S. corporations could have their biggest earnings growth in 22 years in 2010, and the stock market is headed for its best back-to-back annual gains since 2004. Yes, unemployment remains high, consumer confidence is shaky and the deficit remains as huge as ever, but those market figures are pretty good.
An 8.2% Return So Far on Bailouts
The S&P 500 has gained more than 43% since Obama was inaugurated in January 2009 with the economy facing its worst decline since the Great Depression. And although Republicans, particularly followers of the Tea Party, argued during the midterm campaign that the taxpayer-funded bailouts were a failure, the evidence suggests otherwise.
"The government has earned $25.2 billion on its investment of $309 billion in banks and insurance companies, an 8.2% return over two years, according to data compiled by Bloomberg," the news service says. "That beat U.S. Treasuries, high-yield savings accounts, money- market funds and certificates of deposit. Investing in the stock market or gold would have paid off better."
Not every bailout has been a bonanza for taxpayers, such as the $50 billion GM rescue. According to Reuters, the Treasury Department, which holds a 60.8% stake in GM, may lose up to $4.9 billion on its sale of shares in the IPO. Others argue, though, that taxpayers may break even or profit from it. One rescue that could pay off handsomely is the government's investment in AIG. Taxpayers could see a profit of $26 billion on the AIG bailout if current stock valuations hold, the Washington Post says.
Voters Remain Unconvinced
So, if all these things are going well, what's to hate? According to Bloomberg's subscribers, everything. Some blame the administration's often heavy-handed approach toward business as hurting investor confidence. Among industry's pet peeves are tax policy, such as the estate tax and the Bush tax cuts, the repeal of which, some experts claim, will make the deficit much worse. Obama has also done a dismal job of addressing the housing market and has failed to convince Americans that his plans to raise taxes on the wealthiest Americans wouldn't also hurt the middle class.
Interestingly, the poll was released soon after the bipartisan panel appointed by Obama released its draft recommendations for narrowing the nation's yawning budget deficit. Among its suggestions were raising the retirement age, hiking the gasoline tax and reducing Social Security cost-of-living increases. But both Democrats and Republicans have been quick to attack the panel's findings.
Though these problems predate his presidency, they underscore the vexing challenges Obama faces in getting America's fiscal house in order. Unfortunately, voters won't give him much more time to overcome those challenges.