1/22/13 10:38 AM – Inauguration Speech Portents

Several things about President Obama’s inauguration day yesterday were very telling.

1. The media love affair with Pres. Obama – Our local paper gave the headline and a picture of the first couple over 80% of the first page this morning. There was actually next to no text on the cover page. Not since JFK and Jackie has the media so fawned over a first couple. I can’t remember any other 2nd term inauguration receiving anything close to that.

2. Spending and taxes – The agenda for the second term will be ambitious. Normally, presidents don’t accomplish much in their second term. Pres. Obama seems very set on rolling out a lot of legislation, and that probably means a lot more spending and a lot more in taxes. Get set for four more years of fierce partisanship as the House Republicans and the president continue to butt heads over spending and taxes.

3. Entitlement reform – by referring to the major entitlement programs like Medicare and Social Security as “commitments we make to each other,” it seems unlikely that the president will be receptive to changes in these huge, rapidly expanding budget-busters. As I have written here before, entitlements are now so large that all federal revenues cover barely more than these. The cost of nearly everything else in the budget is being borrowed each year. Basically, your taxes go to transfer payments of one kind or another. The rest is borrowed. Aside from taxes, the reason this matters to investments is that it will likely lead to more downgrades of the U.S. credit rating, increasing the interest rates on government bonds. This will trickle down to other bonds as well.

4. Deficits – Since spending cuts aside from these large programs cannot be very large and since entitlement programs will very likely continue to grow much faster than the economy, as well as tax revenues at current rates, there is likely to be a lot of upward pressure on the deficit and on taxes.

5. Green energy – Once again, the president highlighted green energy programs as a priority and so spending more on these will likely be a focus again – no surprise there. BTW, I read today that North Dakota now produces more energy than Alaska and Oklahoma combined. That is due to new fracking technology. I don’t think the president can afford to side with the environmental lobby against fracking because it is moving us much closer to being a totally self-reliant energy producer consumer. He may give environmentalists some gains in other areas to make up, potentially affecting some energy investments.

6. Anniverseries – yesterday was Martin Luther King Day but oddly, received only a passing remark. It was also the 40th anniversary of Roe v Wade, the Supreme Court decision that legalized abortion. Since that decision, roughly 55 million babies have been aborted in the U.S. but the president did not mention that at all, not even an echo of the Clinton line that “abortion should be legal and rare.” On the Christian blog portion of this web siteI posted a WSJ article about a survey on attitutdes toward abortion. The results may surprise you.