1. The economy will remain sluggish. Reports of a recovery are premature. The economy will recover, it always does, but government spending and uncertainty about government regulation will dampen the recovery. The best-case scenario is that the early 2010s will resemble the 1970s. The worst-case scenario is that government policy under Obama will continue to mirror the policies that caused the recession in the first place, leading to another severe contraction in the economy.
2. A watered down version of healthcare reform will pass. The Democrats have put too much on the line to let healthcare reform fail. Some kind of bill is likely to pass, even if it is heavily watered down. Of course, this bill will make the healthcare problem worse.
3. Cap-and-trade will not pass. After the fight for the healthcare bill, President Obama, Senator Reid, and Rep. Pelosi will have no further political capital to spend on the passage of cap-and-trade. Businesses will breathe a sigh of relief.
4. The Democrats will introduce a value added tax (VAT). The VAT is similar to a national sales tax on all goods and services. This proposal will further anger voters.
5. The Democrats will suffer major losses in the 2010 midterm elections. Voters will be angered by their elected representatives who go against their campaign promises and voter wishes by supporting the present version of healthcare reform. The Republicans will take control of the House and possibly the Senate as well.
6. The US will suffer at least one major terrorist attack.
7. Iran will continue to flout UN resolutions. Iranian dissidents will continue to be brutalized while the country works toward a workable nuclear weapon. Meaningful sanctions will continue to elude passage thanks to Iran’s partnership with Russia. A larger regional war with Iran is likely in the long term, but unless Israel or the US launches an attack on Iranian nuclear facilities, I doubt that it will happen in 2010.
8. More cells of home-grown Islamic radical terrorists will be discovered within the United States. The existence of these cells may be discovered through attacks or detection by law enforcement.
9. Unemployment will remain high. Although unemployment numbers may fall in the short term, the unemployment rate is likely to go even higher in the long term. This is due to anti-business government policies and the probability of economic stagnation.
10. President Obama’s approval rating will continue to fall. By the end of 2010, President Obama may very well be less popular than President Bush was when his term expired. This is due to President Obama’s abandonment of bipartisanship and key campaign promises such as tax cuts, fiscal restraint, and vigorous prosecution of the War on Terror.
Happy New Year!