The markets shuddered Wednesday and Thursday after the Fed lowered its forecast for GDP and raised its forecast for unemployment in 2012. But the biggest rattle of all could be heard coming from the White House, where President Obama's reelection hopes hinge on a shaky economy.
The President's vulnerabilities were revealed in a recent Bloomberg poll of 1000 adults that showed:
- Only 30% said they were certain to vote for the president while 36% said they definitely won't. Only 23% of independents said they would support Obama's reelection.
- By 44% to 34%, those surveyed said they were worse off than when Obama took office.
- 66% say they believe the country was on the wrong track and only 23% said they saw signs of improvement in the economy.
Clearly, President Obama is vulnerable, although he still leads in the polls over top GOP contenders in head-to-head matchups. (See: Americans Down on the Economy, But Don't Blame Obama: WSJ/NBC Poll)
"I think President Obama can be defeated," says Steve Forbes, CEO of Forbes Inc. and two-time Republican presidential contender. But "it's not enough to say you're against deficits, bloated government and Obamacare. You've got to have something people see as positive."
True to form, Forbes says the GOP's path to the White House is paved with a "Reagan-esque pro-growth message," featuring a simplified tax code and less regulation, as well as a (true) strong dollar policy.
"Those are the kind of themes that will resonate," he says, citing former Minnesota Governor Tim Pawlenty's tax reform plan as a good example.
Last month, Pawlenty proposed cutting the corporate tax rate to 15% from 35% and the top individual income tax rate to 25% from 35% while eliminating taxes on capital gains, interest and dividends and repealing the estate tax.
While "not as far as I would go" (see: tax, flat) Forbes called Pawlenty's plan a "very strong pro-growth message [that] set the pace" for the GOP field.
Despite lauding Pawlenty's fiscal plan, Forbes concedes the former governor did not have a good showing at the first GOP debate in New Hampshire. "Why he started to pick a fight with Romney and then back off? Bad, bad decision," Forbes says. "It will take a while to recover from that."
But Forbes hasn't given up hope for Pawlenty's campaign or that another GOP contender, like Texas Gov. Rick Perry, will emerge to successfully challenge President Obama.