Obama gets an economic jolt

Dan Balz
Chief correspondent June 4, 2011

Fundamentals decide the outcome of presidential campaigns, and this week’s economic and political news were reminders of that, leaving President Obama to wonder just how difficult his reelection bid may turn out to be.

The first indicator was a grim report on housing prices, showing that long after the recession officially ended, and 31 / 2 years after the economy collapsed, home values in almost every major metropolitan market are at their lowest point since spring 2009. The second was Friday’s employment report that showed a setback in the number of jobs added (just 54,000) and another uptick in the unemployment rate, to 9.1 percent.

Dan Balz is Chief Correspondent at The Washington Post. He has served as the paper’s National Editor, Political Editor, White House correspondent and Southwest correspondent. View Archive

Those reports were a further jolt to a president whose overall approval has risen in the wake of the killing of Osama bin Laden but whose approval on the economy and the deficit have been, so far, stubbornly resistant to movement. Though described as a “bump in the road,” the latest figures on the economy are likely to force Obama’s advisers to reevaluate how they want to address the issue that continues to dominate the public mood and political environment.

The president and his team have looked to Ronald Reagan’s presidency as a possible template for their reelection fortunes. During his first two years in office, Reagan weathered a deep recession that sent unemployment even higher than that which the country has experienced during the current downturn.

In December 1982, 23 months before Reagan’s reelection, the jobless rate hit its recession peak of 10.8 percent. By summer 1984, it was, as the admakers put it, “Morning in America.” Unemployment stood at 7.5 percent — still high enough to cause pain for millions of Americans but better enough to give people a sense of optimism.

The jobless rate began dropping in early 1983, though slowly through the first several months of the year. Still, by July it had fallen from its peak to 9.4 percent. By the opening of the election year, it had dropped more than a full percentage point to 8 percent.

What caused those rapid declines was strong economic growth. In the first quarter of 1983, gross domestic product rose 5.1 percent, and that was just a hint of what was to come. From there, growth rates accelerated — to 9.3 percent in the second quarter, followed by quarterly increases of 8.1, 8.5, 8 and then 7.1 percent in the second quarter of 1984.

Growth slowed the rest of the year to about half that rate, but the political impact had registered with the voters, leading to Reagan’s landslide reelection victory.

Unemployment remained at 9 percent or more for 19 consecutive months during Reagan’s presidency. By comparison, the jobless rate has been at 9 percent or more for 23 of the past 25 months of Obama’s presidency. Sluggish growth rates are a principle reason — and a reason for concern at the White House. The road to recovery still appears to be a long one.

The president has used two messages to deal with the political problem the economic realities present. One has been to talk up successes in an effort to boost public confidence. He was in Toledo on Friday to hail the rebound in the automobile industry and to point to his decision to bail out General Motors and Chrysler as an economic success story. The unemployment report, however, provided a jarring backdrop.

Obama also has sought to convince Americans that he has a plan to win the future, as he put it in his State of the Union address, a blueprint to assure U.S. competitiveness in a global economy where China, India and Brazil are on the rise. While important, Obama’s “win the future” rhetoric speaks little to the immediate pain that many middle-class families are feeling.

A new report from Democratic pollster Stan Greenberg for the Democracy Corps, a progressive group, offers a sobering analysis of the challenge the president faces with this combination of messages. People sense that this is a materially different economic downturn than those in the past, one that has a crushing effect on aspirations. Whatever signs of recovery may exist, for a sizable portion of the population, there is a persistent negative impression of the economy.

Greenberg offers this reminder to the White House: “No incumbent president since [Franklin D.] Roosevelt has won reelection with greater than 8 percent unemployment,” he writes. “Current Democratic narratives too often fail to meet voters where they are in how they perceive and experience the economy and, even more important, do not speak to voters’ aspirations and goals when thinking about the economic future. They do not take the voters’ economic understanding seriously when indeed, they are dead serious.”

He adds that during the first two years of Obama’s presidency, Democrats “have offered a jumble of messages, without a consistent framework that explains why and what Democrats are doing.” Blaming former president George W. Bush for the mess is no longer effective. Even talking about successes doesn’t have much impact.

Democrats must forget the past, Greenberg writes. “ ‘The economy’ is not the recovery, but a set of powerful on-going realities: a middle class smashed and struggling, American jobs being lost, the country and people in debt, and the nexus of big money and power that leaves common people excluded.”

Republicans won the midterm elections last fall in large part because of the state of the economy and because of worries about rising debt and deficits. They have chosen to focus on debt and spending, without effectively dealing with the public’s worries about jobs and housing. They have lost some of their post-election glow, but so far, this has not resulted in a significant gain in confidence in the Democrats.

Given the news, Republican Mitt Romney picked a good moment to launch a presidential campaign based on a critique of the president’s handling of the economy. Romney has a long road ahead battling for his party’s nomination before he can focus solely on the president, but in the meantime, Obama will need to ask the public for more than patience and forbearance. People aren’t yet buying claims of success, even if the president is certain he did the right thing.

There is still too much pain. “For broad swaths of the electorate — from white non-college voters and women (married and unmarried), to suburbanites and Midwesterners, this economy is tough going and Obama and Democrats do not get a pass,” Greenberg argues. “But nor do the Republicans, and they are already living with the same new rules.”

Pure partisanship will not work, a number of Democratic strategists say. Obama cannot count on disaffection with Republicans or rely on fear-mongering over Medicare to carry him through this. Rather than claiming credit for any gains, he needs to convince people that he understands the depth of the distress and that he is capable of bringing politicians together to solve problems.

Through much of the spring, the political news has teetered between the frivolous and the absurd: the theater of Donald Trump’s flirtation with a candidacy; the frenzy of attention surrounding Sarah Palin’s bus tour (to which everyone in the media pleads guilty); the nonstop coverage about whether Indiana Gov. Mitch Daniels or New Jersey Gov. Chris Christie or Texas Gov. Rick Perry may, just possibly, jump into the GOP race.

That began to change this week. Now, for the president and his rivals, it’s back to basics.

Comments
Show Comments
Most Read Politics