Betting tips / Paul Krishnamurty / 08 August 2011 / Leave a comment Bet Now View Market

Barack Obama has been criticised by all sides of the US political spectrum but a return to campaigning will show the president at his best while his compromise over spending cuts may turn out to have contained a canny political manoeuvre.

Nine months ago, in the wake of the Democrats' mid-term mauling at the hands of Tea Party-inspired Republicans, I set out five reasons to back President Obama to win a second term. With all those reasons now at the heart of US politics, and following the most tumultuous week of his political career, it's time for an update.

Before explaining why, lets cut to the chase. I remain a confident Obama backer, even at the now reduced odds of [1.78]. However he won't win on a change-y, hope-y 'Yes We Can' ticket. Rather he will win because the opposition is worse, on the wrong side of public opinion and American history.

To read the criticism from his own side, one would assume Obama was finished. The Liberal wing of the Democrats is furious that he compromised with enemy Tea Party Republicans over the budget, in order to avoid a costly, humiliating default. However politically at least, they may have underestimated Obama's long-game strategy.

To briefly summarise, Democrats insisted that any deal to balance the budget must include ending the Bush-era tax cuts to millionaires and other tax measures, such as closing corporate tax loopholes. Republicans, particularly those backed by the Tea Party, were unwilling to sanction any tax rises whatsoever, insisting instead on huge spending cuts. In order to get a deal on the debt ceiling, Obama agreed an initial deal for spending cuts over the course of a decade, and set up a Commission to report in November on how to find further savings.

If a deal can't be reached in November, dollar for dollar cuts will be made to social and defence spending. Obama has made it clear that tax reform must be part of that deal, otherwise the contentious Bush tax cuts will be vetoed.

So, basically, accusations that Obama has betrayed his party on tax are premature. What he has actually done is ensure the central issue at the next election will be whether to preserve tax cuts for millionaires and corporations, or cut much-loved social programmes like Medicare. Issues about which Democrats are on the correct side of public opinion.

Anyone basing their betting on the current anti-Obama narrative really should examine the polls. On the specific issue of handling the debt deal, Obama has a 46% approval rating, Democrats in Congress have 28%, Republicans 21%. Asked the rather leading question whether the politicians behaved like responsible adults or spoiled children, a whopping 77% went for the latter. The consensus is 'a plague on both their houses', with the Republicans taking more of the blame.

On the issues, 65% agree with the level of cuts, suggesting the critics from his base hold minority views. Only 31% said Obama gave up too much. However, 60% agree that the rich and business are not paying enough tax. When it comes to the question of 'Increasing taxes on companies owning private jets, oil and gas companies, individuals earning $250,000 plus", (in effect, Obama's line), over 70% agree. A whopping 87% disagree with cutting Medicare, and a similarly decisive 84% oppose social security cuts. Bad news for the numerous Republicans who have called for slashing, privatising or even abolishing both.

In short, Obama has dealt with his party's weak issue by compromising in the face of a crisis, saving their winning lines for the forthcoming larger battle. Obama has been the moderate pragmatist in a divisive Washington battle that appalled the public. In doing so, he's earned the right to be decisive, without looking dictatorial, in November. Smart politics.

Where it is harder to argue with critics like Paul Krugman, is that Obama has made a huge mistake in ceding the terms of reference on economic policy, for there is scant evidence that spending cuts are a good move given the current environment. As we see across Europe, swingeing public sector cuts aren't working, making a bad situation worse. It is increasingly unimaginable that Obama will have a good economic story to sell next year. He can at least take heart from the fact that, asked who is responsible for the deficit, 44% single out the previous Bush administration, compared to 15% who blame Obama.

Nevertheless, this likelihood of ongoing economic gloom remains the principal barrier to Obama being re-elected, although thanks to the Tea Party, he might get away with it.

Not only has their intransigence seriously endangered economic recovery, their extreme ideology has dramatically polarised US opinion. Since inspiring the Republicans' mid-term success, Tea Party candidates and supporters have regularly run into trouble.

Sarah Palin's reputation took a battering after the Gabrielle Giffords shooting. Cheerleader Glenn Beck has lost his Fox News show. Tea Party-backed Governor Scott Walker's radical anti-union agenda led to the 'Battle of Wisconsin'.

Consequently, several Wisconsin Republican now face recall challenges, which might soon return power in the state to Democrats, in turn altering the Washington maths.

And yet, the extreme Right retains immense influence in the Republican Party, and will likely poison the race to be their Presidential candidate.

John McCain, 2008 candidate, long seen as a moderate, recently likened them to 'hobbits', but McCain's own past decisions illustrate the importance of Tea Party backing. It was he, after all, who picked Palin as running mate, presumably because he thought winning was impossible without energising the base.

Tea Party favourite and [3.4] chance to take on Obama, Rick Perry, spent this weekend leading a 'prayer for America'. Courting the evangelical vote may indeed be the key to winning his party's nomination, but there is little to suggest it goes down well with the independent voters that determine elections.

While the Tea Party is anathema to the majority, Obama remains the standout best performer in US politics. There are a few pivotal moments during a political cycle where finding the right words, conveying the image of strong, empathetic leadership define a President. Remember how George W Bush's response to 9/11 transformed his persona from an illegitimate President to a Commander-in-Chief.

So far Obama has handled key moments well - the Giffords shooting, the killing of Osama Bin Laden. In fact, much of Obama's problems stem from when he's taken a back seat, during the healthcare or budget negotiations. As the election nears, he'll be back on the stump, leading arguments he already knows are in tune with the majority of Americans.

And however damaged his reputation is since the heady days of November 2008, there are few, if any, politicians capable of selling an argument like the current President.