Predictions for Obama’s Next Four Years – Right or Wrong? - Updated 11/28/2012

In a November 11, 2012 blog, I outlined my predictions for Obama’s second term.  I intend to revisit these predictions as significant events occur.  These will be dated and presented in reverse chronological order for easy reading.

·         Prediction: Obama’s second term will be characterized by more bailouts.

o   11/28/2012 – FEDERAL STUDENT LOAN PROGRAM TROUBLED – The President pushed for the expansion of Federal Government involvement in financing student loans.  Last year 93% of these loans came directly from the Government.  As usual this program is a disaster waiting (not long) for disaster.  The program does not consider the borrower’s ability to pay and does not assess the “value” of the borrower’s education.  Student loans outstanding are now nearly a trillion dollars (up 56% in real terms since the end of 2007).  Delinquency rates (non-payment for 90+ days) have increased from 8.9% in June to 11% in September of 2012 alone.  The New York Fed researchers claim that these figures will become much worse because many recent borrowers are still in school or have been granted postponements for various reasons.  Imprudent borrowers are likely to become “indentured servants” for life.  Bankruptcy is not an easy answer because it is nearly impossible to discharge education loans via Bankruptcy.  The endgame is either a bailout of the program itself or “relief” for individual borrowers.  In any case, the taxpayer will be on the hook.

Obama's Next Four Years

Politics and Energy intersect.  The Election sets up a very serious crash at this intersection.  Over the next four years, federal agencies like the EPA, Department of Energy etc. will help implement Mr. Obama’s agenda.  The war on coal will continue in earnest, oil and gas drilling on Federal Lands will be limited by OCS leasing and serious regulations will be promulgated on fracking.  Continued trillion plus deficits coupled with Progressive ideology will, at some point yield higher taxes.   Look for a push for fee on carbon and/or a VAT.  Don’t look for real spending cuts.  In fact look to the agencies for more “bailouts” (one of the more significant may be mortgage principal write-offs for homeowners costing the taxpayer $100 billion plus).  Here are my detailed predictions for the next four years.