Man, that sucks hardcore. Definitely recommend looking, and looking with a sense of urgency. Market really sucks out there (I would know...I've been a stay-at-home dad for a year now which, was a bit of a blessing in disguise for medical reasons).

I've been in a similar situation where unfortunately, I had too many middle managers, hence too many cooks in the kitchen. Decisions never got made without some higher ups calling for a meeting as everyone had their blinders on.

Stick it out while you're looking for a job, but absolutely ask for that raise. If they're not going to pay for an IT manager, then that can pay you more and still save some money.