WASHINGTON — For the intertwined U.S. economy and presidential politics, it was a year of twists and unexpected turns.
The wobbly economy framed the agenda for both parties, and how it performs in the coming months will help decide whether President Barack Obama wins a second term.
An improved economy in 2012 could greatly enhance Obama's chances of re-election. If it stays about the same or worsens, his chances could fade, regardless of his GOP opponent.
No president since World War II has won re-election when the unemployment rate was 8 percent or higher. It's now at 8.6 percent after hovering around 9 percent for most of the past two years. Even White House economists don't expect it to dip below 8 percent by the election on Nov. 6, 2012.
Republicans hungering to oust Obama struggled through the year to get their act together. The party's conservative base had successive flirtations with Minnesota Rep. Michele Bachmann, Texas Gov. Rick Perry, Atlanta businessman Herman Cain and finally former House Speaker Newt Gingrich in search of an alternative to former Massachusetts Gov. Mitt Romney.
Until Gingrich's turn for star billing came late in the year, Bachmann, Perry and Cain each had risen to the top of the field, only to crash.
Although Romney began 2011 as the consensus front-runner, many Republicans never warmed to him. By year's end, the GOP battle was shaping up as a two-man battle between Romney and Gingrich.
With the gap now further widening between those two and the rest of the pack before the kickoff Iowa caucuses Jan. 3, the rhetoric is heating up. It ranges from harsh attacks on each other to assertions that Obama's economic stewardship has been a failure and that he is pursuing a doctrine of "appeasement" with hostile governments and has turned his back on Israel.
No matter that Obama is responsible for the operation that killed al-Qaida leader Osama bin Laden, backed policies that led to the overthrow of Libya's Moammar Gadhafi, toughened the U.S. stance against China and helped block Palestinian membership at the United Nations. Or that polls that give him poor grades on the economy give him good ones on foreign policy and national defense.
Obama is sharpening his words, too, portraying Republicans as protecting the wealthy and blocking tax cuts for the middle class. He blames "the breathtaking greed of a few" for the financial crisis and rails against "huge bets and huge bonuses, made with other people's money on the line."
Republicans fire back that he is waging class warfare and that nobody ever won the presidency running on that.
"The Republican race went on for a long time before there was much criticism of the candidates by each other. Now, we're getting close to the Iowa caucuses and the fur is beginning to fly. That's not unusual. Over the next two or three months, we'll have hand-to-hand combat," said veteran GOP strategist Charles Black.
"Probably in March or early April, a candidate will emerge," said Black, who is on the sidelines of this year's primary battle.
Never have there been so many debates in the year before a presidential election. Never before has the primary schedule been so front-loaded, with critical contests crammed into January in Iowa, New Hampshire, South Carolina and Florida.
Republican strategists suggest the many debates and compressed schedule will help harden and polish the eventual winner. Democrats argue that they only serve to help Obama by magnifying the shortcomings of the GOP field.
Last January, Obama seemed comfortably on track to win re-election with the economy still weak but beginning to show signs of recovery. Incumbents have a built-in advantage. Since World War II, only three have lost re-election bids: Gerald Ford, Jimmy Carter and George H.W. Bush.
But the early blossoms of a rebound wilted in the spring and summer under continued high unemployment, a housing market still in shambles, a deadlocked Congress and debt woes in Europe that threatened to spread and undermine the weak U.S. recovery.
Obama's approval ratings in polls tumbled into the mid-40s, the lowest of his presidency, with even lower scores for handling the economy.
The euro debt crisis clearly will not go away soon. Nor do economists expect a major rebound in job-creation or home sales in the coming year.
Meanwhile, the outstanding national debt climbed above $15 trillion in late 2011, leaving little if any room for further anti-recessionary stimulus spending.
There have been signs of improvement in recent months in consumer spending and manufacturing and in some other sectors. The U.S. was poised to export more petroleum products in 2011 than it imported for the first time in 62 years.
Republicans blame Obama for the continuing economic bad times. They insist his $825 billion stimulus legislation that was passed in 2009 was a dud. They also contend he would strangle a still-frail economy with job-killing regulations and higher taxes, especially on small-business owners.
"We will beat President Obama by speaking day in and day out about the one topic he does not want to talk about. And that's the economy," Romney says.
Rich Galen, a Republican consultant who once worked for Gingrich, said the many debates in 2011 worked to Gingrich's strengths — he's generally viewed as having given strong performances — and will do so in the months ahead.
But an improving economy would benefit Obama, Galen said. "And if the economy improves, it helps the country. I keep warning Republicans not to root against a better economy. You can't be caught rooting for high unemployment."
The White House has focused mostly on Romney as the most likely general election rival, but increasingly is keeping a close eye on Gingrich's late-year surge.
Many Democrats would rather see Gingrich as the nominee, citing polls that suggest Romney would be a stronger candidate than the fiery and sometimes bombastic Gingrich, particularly with Romney's business background.
But it wasn't a given that Gingrich would be the weaker contender.
Many Republicans see the former House speaker, for all of his flaws, as a pit bull who could effectively take on Obama.
Gingrich is a known quantity to many Americans, comes across as knowledgeable on a wide range of issues, and can hold his own against Obama, said James Thurber, a political scientist at American University. "Gingrich is always articulate, he's a good debater. It's just that he doesn't have control and sometimes he goes too far," Thurber said.
"But Mitt can self-destruct too," Thurber added.
Heading toward the first contests, Gingrich was leading in most polls, with Romney second. Libertarian-leaning Rep. Ron Paul of Texas was also holding on with a loyal band of followers.
Iowa Republicans say it's conceivable that Paul could win in Iowa, although veteran Republican strategists doubt he can advance much further. Contenders Rick Santorum, a former Pennsylvania senator, and former Utah Gov. Jon Huntsman were languishing in the single digits.
Doug Schoen, a Democratic strategist who worked for President Bill Clinton, suggested Obama faces a hard race against either Romney or Gingrich. Many voters, especially independents who helped decide the 2008 election "are sick and tired" of what they view as unsatisfactory economic solutions from Democrats and Republicans alike, Schoen said.
Schoen is involved with the nonpartisan Americans Elect, which is trying to secure a slot on November ballots in all 50 states for a to-be-determined candidate to be nominated at an online convention next summer. "Whether the two parties will be able to block an independent from emerging is a different question," Schoen said.
The prospect of a government shutdown this past May, a near-government default in August and the first-ever downgrade of America's credit rating helped undermine public confidence in both Obama and Congress, as did the failure just before thanksgiving of a bipartisan supercommittee to produce a deficit-reduction deal. Congress has about a 9 percent approval rating in polls.
Polls near the end of the year also showed the tea party movement, which had such a big impact on the 2010 congressional elections, beginning to lose influence. Both Romney and Gingrich have taken moderate positions in the past — Gingrich on easing immigration laws and Romney on abortion rights and mandatory health care — that go against tea-party doctrine.
Even so, since Cain suspended his campaign last month in the face of escalating accusations of sexual misconduct, his tea party backers have mostly drifted to Gingrich.Comment on this story
"Groups like that tend to dissipate after a while," said Thomas Cronin, an American history professor at Colorado College.
At the same time, grass-roots activism from the political left, in the form of the Occupy Wall Street movement, clearly has the attention of Democratic lawmakers.
Cronin predicted their influence would start to fade, as well.
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