In a major victory for President Obama, the economic year ended with Tea Party freshman Republicans in the House of Representatives being outmanoeuvred, forced to reverse their opposition to a much-needed boost for the economy. Senate Republicans and Democrats had approved a two-month renewal of payroll tax cuts for every worker and an extension of unemployment benefits for millions by an 89-10 vote and had returned home for Christmas, which left the House with no alternative but to support the measure. These are the same Tea Party economic Neanderthals who refused to raise the debt ceiling and caused the US to lose its AAA credit rating last August.
That the economy over the past three months has generated nearly half a million jobs - and the unemployment rate has fallen fast from 9.1 per cent to 8.6 per cent - is a problem for the Republicans in an election year. Increasingly, it looks as if the party is doing everything it can to prevent the economy recovering from recession. Republican policymakers are being obstructionist and the public, it would seem, is on to them.
Opposing everything that the administration wants - no matter if you've advocated it in the past, even when it's good for jobs - isn't an obvious vote-winner. Registered voters in a mid-November CNN survey, asked which candidate they were more likely to support, gave Mitt Romney, the Republican front-runner, a lead of 4 percentage points over Barack Obama: 51 per cent to 47 per cent. The same survey mid-December found an 11-point switch, giving Obama the edge by 52 per cent to 45 per cent.
The Republican presidential primary is heading my way on 10 January, so I have been thinking about which contender I should vote for. New Hampshire is the first primary of the season, following the first, if unrepresentative, caucus in Iowa, with its large evangelical Christian constituency. Romney won Iowa, just, with Newt Gingrich in fourth place. However, the latest national Gallup poll of registered Republicans puts Romney on 24 per cent and Gingrich on 23 per cent. So the national race is far closer than the Iowa result suggests.
I am registered as an independent in New Hampshire, but according to state rules I am able to vote in whichever primary I choose as long as I change my affiliation as I enter the voting booth. So I will vote in the Republican primary and change my affiliation back to independent as I leave. As Obama is running unopposed this year, the same rule applies to registered Democratic supporters, who have the opportunity to influence the outcome of the Republican vote. All this makes the result particularly unpredictable.
I cannot bring myself to vote for Ron Paul, the libertarian crank who wants to abolish income tax and the Federal Reserve, return America to the gold standard and, ludicrously, cut $1trn of spending in a single year. His credibility took a further hit in the run-up to the primaries when words from his past came back to haunt him. It was revealed that, in addition to the now notorious newsletters filled with racial bigotry and support for violent militia groups and published under his name in the 1990s, Paul had criticised Aids patients, minority rights and victims of sexual harassment in a book published in 1987.
Of the other candidates, Rick Perry, Michele Bachmann and Rick Santorum do not have credible economic plans and Jon Huntsman will not be in the race long. It may surprise you to learn that I am planning to vote for the ex-Speaker of the House of Representatives Newt Gingrich, even though he has grave weaknesses. In 1997 Gingrich became the first House Speaker to be reprimanded by colleagues for ethical misconduct. The bipartisan vote of 395-28, to reprimand him for bringing discredit on the House by failing to ensure that his use of tax-exempt groups was legal, was historic in itself, but worse still he was fined $300,000 for misleading the House ethics committee and causing it to extend a costly investigation. This is also the man who was having an affair with a House staffer while he was trying to have President Bill Clinton impeached over his relationship with Monica Lewinsky.
Nor does Gingrich have a plausible economic plan. He is for an optional, highly regressive flat tax of 15 per cent and wants to strengthen the dollar, which would hurt US exports. He has also promised, according to his website, a "return to the Reagan-era monetary policies that stopped runaway inflation", although inflation is close to zero. He wants to reduce the power of the Fed and balance the budget "by growing the economy, controlling spending, implementing money-saving reforms, and replacing destructive policies and regulatory agencies with new approaches". He fails to explain how he would do this as, to my knowledge, there are no sound "new approaches" available.
Flip and flop
Notwithstanding all of this, Gingrich remains my man. Why? Because he has no chance of becoming president. But the longer he remains in the primary race, the more money Mitt Romney will have to spend on destroying his opponents' credibility and the less money Romney will have to attack Obama. Welcome to tactical voting American-style.
For the record, I don't believe a word Romney says. He is well known as a "flip-flopper", for good reason. He supported fiscal stimulus to rescue Detroit car firms but then opposed it; on abortion rights, he was pro-choice but then turned pro-life; he argued that climate change was man-made but reversed his position; and he introduced the health measures known as Romneycare for everyone in Massachusetts when he was governor, but now says that he opposes Obamacare, a strikingly similar policy. Moreover, he lacks a credible plan to put America back to work. Slashing public spending and neutering the Fed, which is the position of all these candidates, would surely push the US economy back into recession.
It is the lack of anything vaguely cogent to say about the economy that will prove the Republicans' undoing and gift the presidency back to Obama come November. But just to make sure, I'm going to vote for Newt on 10 January.
David Blanchflower is professor of economics at Dartmouth College, New Hampshire, and economics editor of the New Statesman