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As President Obama enters the final year of his first term in office, Americans appear to be deeply pessimistic, our year-end IBD/TIPP survey finds....


As the year comes to an end, the airwaves and Internet are full of prognostications about 2012 from pundits, assorted experts, media mavens and politicians.

While those musings may be interesting, we at Investor's Business Daily thought we'd add something new to the mix — namely, you. What do the American people predict will happen in the next year?

We asked Americans about everything from Iran's nuclear ambitions to the possibility that ObamaCare will be repealed to the likelihood of another U.S. recession taking place in 2012. The answers that came back were surprising — with an unusual amount of pessimism about both the domestic economy and foreign affairs.

Our poll was taken from Dec. 4-11 with 909 respondents and a margin of error of +/- 3.3 percentage points.

President Obama Will Be Re-elected

The public may be dissatisfied with the job President Obama is doing — just 37% give him high marks on his overall performance, and only 47% think he deserves re-election, according the IBD/TIPP poll — but most still think he's likely to win a second term.

In fact, 65% say an Obama victory in November is very or somewhat likely. Just 32% say that outcome is not likely.
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If these results seem incongruous, election experts say it probably reflects the public's understanding of the power of incumbency. It's not often that an incumbent presidential candidate loses. Plus, Obama's GOP opponents have been busy criticizing each other rather than aiming their barbs at Obama's record.

However, when you look at just the "very likely" responses, 23% think Obama's is a lock for re-election.

Among Democrats, that figure is a surprisingly low 39%, and among independents it's only 22%. Among Republicans it shrivels to 9%.

For almost every income and demographic group, the share saying Obama's re-election is very likely is stuck in the 20% range.

The bottom line here is that while Obama is clearly vulnerable, Republicans would do well not to underestimate his chances in November. The public doesn't.

ObamaCare Will Not Pass Legal Muster

Americans don't like ObamaCare, and majorities have long hoped that it will be repealed. Those who believe it likely that the Supreme Court will overturn the law are also a majority.

Our poll found that 45% think it's "somewhat" likely and 18% believe it's "very" likely that the court will reject the law. By comparison, only 29% say it's not very likely or not at all likely.

This could be just wishful thinking. Then again, it may reflect a solid instinct developed by a passing knowledge of our constitutional heritage of limited government and personal liberty.

Most Americans recognize Washington stepped beyond its constitutional limits when it required citizens of a free nation to buy health care insurance, as ObamaCare does with the individual mandate. Even Democrats seem to recall that the document set some limits on what government can do: 58% believe it's very or somewhat likely the court will strike down ObamaCare.

Believing something will happen and that event actually taking place are, of course, two different things.

But in this case it would be unwise to bet against the majority. There's little chance it won't get what it's expecting.

Tax Hikes Coming?

Just before taking off for Christmas, Congress extended the payroll tax holiday an additional two months. And a year ago, President Obama agreed to keep the Bush income tax rates in effect until at least 2013.

Still, a substantial majority of Americans see an income tax hike coming in 2012, with 72% saying one is very or somewhat likely. Among Republicans, the figure is 81%, but even most Democrats surveyed (57%) believe income taxes will be raised in the new year. And across almost every age and demographic group, the figure is around 70%.

That's likely due in part to the public's awareness of the country's dire financial straits, now that the national debt equals the nation's entire gross domestic product.

Just as likely, it's a result of the incessant comments about the need for tax hikes coming out of the White House and from Democratic Party leaders.

To be sure, the chances of a tax hike in the middle of an election year are remote. Even if Obama were willing to sign such a bill, it would be next to impossible to make it through the Republican-controlled House, since most have signed a no-tax pledge.

Even so, it's likely the public's expectation of higher taxes in 2012 continues to dampen economic activity today.

Anti-Americanism Continues In Mideast

Americans have watched the Arab Spring unfold and think there are more changes ahead. Eight in 10 believe that "instability and uprising" will "intensify in the Middle Eastern countries ruled by dictators in 2012."

If they're right, then there's trouble to come.

So far, at least two Middle East dictators who have been removed appear likely to be replaced by governments that are more hostile to the U.S., the West and peacemaking than their predecessors.

Libya's late dictator Moammar Gadhafi was no friend to America, but he'd been mostly neutered as a threat. The likelihood he'll be replaced by an Islamist government is high.

The future is no rosier for Egypt. Hosni Mubarak, who was nominally pro-American, is almost certain to be replaced by a theocratic government that will see America and its ally Israel as enemies, a stark turn of events.

While neither Gadhafi nor Mubarak was a saint, they were the devils we knew. Those we don't know will surely be worse. If the American people are right, we're going to be getting more of what we don't know, probably next in Syria.

Iraq Is Destabilized In Wake Of Pullout

With President Obama appeasing his liberal base by completing a full pullout of U.S. troops from Iraq this month, the public is decidedly glum about the future of the country Americans spent so much blood and money liberating.

Sixty-three percent believe it likely that our withdrawal will have the effect of destabilizing Iraq in 2012, with only 32% considering it unlikely.

Within that majority, 20% consider destabilization a very likely possibility; 7% are not sure or didn't want to answer the question.

The pessimism is similar across lines of income, lifestyle and political affiliation, with 57% of self-identified Democrats believing the Iraq pullout will mean big trouble for that country in 2012 — 15% believing it very likely — and 39% considering it unlikely.

A large share of Republicans, at 67%, and independents, at 66%, also think destabilization likely.

For rank-and-file Democrats to be so sure that Iraq is on the path to failure after a liberal Democratic president got his way is a striking revelation.

Do they believe Barack Obama's promise in December to Iraqis that "you will not stand alone" but will "have a strong and enduring partner in the United States of America"? How could they when they expect Iraq's fledgling liberty to begin disintegrating next year?

Iran Gets Its Bomb

After years of news stories about Iran refining high-grade uranium and running secret, remote weapons facilities, it should come as no surprise that 62% of respondents consider it likely the Islamofascist terror state will acquire a nuclear weapon in 2012 and that only 32% believe it unlikely.

Breaking down the numbers further, 23% consider an Iranian bomb very likely, while only 8% believe it not at all likely.

Only 49% of Democrats are in the likely camp, however, and 44% of them think it unlikely Tehran will become a nuclear weapons power in 2012.

Interestingly, the subgroup within that 44% believing it not at all likely amounts to only 10% of Democrats.

Self-described Republicans, on the other hand, comes in at a lopsided 77% likely to 17% not likely. Independents, at 63% likely and 34% not likely, are more representative of the public at large.

Democrats' lesser concerns on Iran suggest one of two factors: Either liberal-minded Americans place above-average faith in diplomatic efforts to prevent Tehran from getting the bomb, or they believe leftist writers such as the New Yorker's Seymour Hersh, who argue that the Obama and Bush administrations have distorted and overestimated Iran's "military capabilities and intentions."

Another Downgrade Of U.S. Credit Rating

Without much fanfare, President Obama picked up the phone last week, dialed Congress and asked for a fresh $1.2 trillion to extend the debt ceiling. It was a repeat of the debacle last summer that led to a long congressional standoff over the size of government and concluded in America's first-ever sovereign downgrade.

With business as usual in government with no talk of cuts, and in fact government still expanding, is it any wonder a broad-based majority of Americans think the country faces another credit downgrade?

Sixty-one percent of all IBD/TIPP poll respondents think the U.S. will be downgraded again in 2012, while only 35% say no. Those ages 18 to 24 who'll be left with the bills to pay are the most pessimistic, with 79% expecting the downgrade against only 14% who don't expect one.

The lowest-income residents — which include many entry-level workers — have similar numbers, with 72% saying yes and 25% saying no.

All this may reflect Congress' lack of seriousness about changing its high-spending ways. After all, more than 960 days have passed since it passed a legally mandated budget.

Meanwhile, government hiring is up and federal union members take home record salaries and pensions that far outstrip what's being earned in the private sector.

Then there's the ticking time bomb of entitlements, which remain unprivatized, with Medicare costs growing rapidly and Social Security running on empty.

GOP budget maven Rep. Paul Ryan has made serious proposals to cut spending, but remains a voice in the wilderness.

More Terror Attacks On U.S. Are Unlikely

A decade after the 9/11 attacks, a complacency has settled into the minds of a once-vigilant U.S. public.

Those who believe it likely America will be victim to another major terrorist attack on the scale of 9/11 total just 34%, while 63% consider another such attack not likely. The share within that large majority believing it to be not at all likely the nation would become subject to another major attack was 21%.

On this question, the difference in opinion by political affiliation was stunning.

Some 78% of Democrats considered another 9/11 unlikely, with only 19% believing it likely some time in the future.

Republicans, on the other hand, were evenly split at 50% and 49%. Independents were in between at 61% to 35%.

The most startling finding: Three times as many Democrats as Republicans think a terrorist attack like 9/11 is nothing more than a remote possibility.

Only 9% of Republicans thought a big attack not at all likely, but an alarming 30% of Democrats took that view, as well as 22% of independents.

Border War Looms With Drug Cartels

Lost on the radar of major media concerns, the widely ignored war raging in Mexico is growing as a public issue.

A surprising 50% of respondents believe the U.S. will get into a shooting war with drug cartels on the Mexican border, while 46% believe it unlikely.

For farm-dwelling and downtown urban respondents — those likeliest to witness firsthand the activities of Mexico's violent, lawless cartels in the U.S. — the margins are the highest at 63% and 68%. So why is the concern growing?

Though the U.S. aids Mexico through the $1.5 billion Merida Initiative, the White House has treated the war on our 2,000-mile border — with 86,000 dead since 2006 — less as a security threat than a political opportunity.

Exhibit A is illegal immigration, which the Obama administration has incentivized in a bid to win the Latino vote. Crime cartels hold a monopoly on illegal border crossings and earn as much as a third of their profits from human smuggling. Any political effort to ease illegal immigration — through de facto amnesty, tuition breaks and anti-discrimination measures — boosts cartel profits.

Exhibit B is the Operation Fast and Furious scandal, a cynical political plot to use the U.S. government to arm Mexico's cartels to build political support for gun control in the U.S. An ongoing congressional probe of the issue shows White House fingerprints all over this outrage.

Meanwhile, Mexico's presidential elections will be held in 2012, and the long-ruling center-left PRI party is likely to win. Whatever PRI claims, it has a long history of accommodation with the drug cartels, which could mean Mexico's government loses control — and the U.S. steps in.

European Union: It Won't Disintegrate

Americans learned in 2011 that troubles in distant places can hurt their own economy. One example: As the debt-fueled crisis in the European Union has unfolded, the U.S. stock market has gone on a roller coaster ride.

Americans have started to wonder if Europe's problems — too much debt, too much government spending, excessive taxes, too slow growth — would soon be our own.

Even so, those we queried seem to have faith that the EU will hold together. Just 38% in our survey said the EU will fall apart. Some 50% said it was not likely to happen.

Again, Republicans (48% saying the EU is likely to disintegrate) were far more pessimistic than Democrats (28%). Among investors, just 37% said EU disintegration is likely, vs. 40% for noninvestors.

The optimism over the EU and its common currency will be tested in the New Year. The EU countries are deeply in debt, and their cradle-to-grave welfare state model has come under attack as unsustainable.

A handful of EU members — Greece, Italy, Spain and Portugal mainly — need massive bailouts to have any hope of paying their debts, which now total well over $4 trillion.

The European Central Bank has emerged as lender of last resort for these nations — a gamble that puts European taxpayers on the hook for the debts run up by individual countries. An emergency fund of $600 billion has been disbursed, but if that's not enough, experts say, it may be tough to come up with more — which could lead to default of several nations and the EU's collapse. Stay tuned.

Another Recession?

In recent months, economists, pundits and politicians have pushed the idea that a slow-but-steady increase in jobs and a drop in unemployment below 9% means the financial crisis is behind us, bringing solid economic growth with it.

Americans aren't buying it. By a 67% to 31% margin, they think the U.S. will likely fall back into a recession in 2012.

Those ages 18-24, who have suffered the highest unemployment rates in decades, are most glum. In the poll, 89% of this group says a recession is likely. Even among the most optimistic age group — those 65 and older — 56% say another recession is imminent.

Some interesting demographic differences emerge from the data. Democrats (54%) are far more optimistic about the final year of President Obama's term than Republicans (81%). Yet majorities of both parties expect a recession, as do a hefty majority of independents (67%).

Blacks are by far the most optimistic group in our survey, with just 43% expecting a recession.

Job growth is key. With an estimated 30 million people unemployed or looking for work and unemployment at 8.6% — 2.6% above where President Obama predicted it would be — the economy can't sustain growth unless businesses begin to hire again.

But businesses face head winds from the crisis in the euro zone, a wave of new regulations, higher taxes and the ongoing reckless expansion of government spending.

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