On the Ropes: Will Democrat Desperation Lead to a Double Dip Recession?

After Scott Brown's stunning victory in Massachusetts this week, the White House seems to be staggering to get up from the mat and fight to regain some momentum.

Not only has Brown's victory resulted in throwing a wrench in the advancement of the Obama health care plan, but symbolically, the timing of the victory just one year after the President's historic inauguration has dealt a double blow to the administration as favorability plummets.

The election seems to not only be a rejection of health care, but also of what history may determine was an overreach by liberal Democrats, most notably underscored by historic deficit spending.

From a strategy standpoint, it looks like the White House is finally realizing that it is time to shift the message away from the health care debate to an attack on financial institutions. This is a risky, potentially all-or-nothing strategy as the White House works to position Congressional candidates for mid-term reelection.

Why is attacking the banking industry so risky?

Just look at the stock market. Is it coincidental that the market retracted this week with President Obama's announcement of a new tax on banks and a new reform package?  Likely not.

The bank tax is just bad public policy. Rather than taxing financial institutions deposits, payment for programs like the TARP and TALF efforts seem they would be better funded through FDIC or some other mechanism.

The reform package to fix the moral hazard created by the governments intervention to stop the market crash in 2008 is another story. In my opinion, this needs to be fixed to prevent risky behavior by large institutions moving forward (again, just my personal opinion).

However, this is all complex. The general population, and sometimes the whimsical stock market, don't think deeply about the market actions of politicians.

The president has decided he will take the populist approach and govern "campaign trial-style" by attacking the banks and banking that the public will will join the pile-on, leveraging profits and bonuses to stir the masses.

It's all great to get the people on your side, but the support may be short lived. As the attack on the banks (whose loans and ability to loan are the backbone to any recovery) continues, it's very likely the stock market will continue to slide.

As the market slides, so goes perception on the overall health of the economy.  Mix in what appears to be a new rise in fuel prices and continuing unemployment, not to mention the powder keg that could explode if the Bernanke confirmation is rejected, and the White House and the Democrats have big problem moving deeper into the election cycle. It might be too late already (not that the GOP is any better equipped to deal with the situation).

The bottom line here: The President's desperation to regain political momentum by attacking the banks may actually result in a double dip recession and, subsequently, solidify Barrack Obama as a one term president.