The Take

The Take: Obama Stands to Be Judged on Economic Recovery

People swarm a career fair in Oak Brook, Ill. The unemployment rate last month climbed to 9.5 percent.
People swarm a career fair in Oak Brook, Ill. The unemployment rate last month climbed to 9.5 percent. (By M. Spencer Green -- Associated Press)
By Dan Balz
Wednesday, July 8, 2009

Nothing may be more important to public assessments of President Obama's leadership than the state of the economy, and at this point there are political warning lights flashing.

In light of the latest unemployment figures, there are more persistent questions coming at the administration. Did Obama and his team get it right last winter when they put together their $787 billion stimulus package, or did they undershoot? If they made a mistake, what should they do now?

The administration is trying to tamp down talk that it didn't get it quite right -- talk created by Vice President Biden. On Sunday, he told ABC's George Stephanopoulos, "We and everyone else misread the economy." But he insisted that the stimulus "is the right package given the circumstances we're in."

Obama, in Moscow yesterday, tried to modulate the impact of the vice president's words that the administration had somehow miscalculated. "No, no, no, no, no," he told NBC's Chuck Todd. "Rather than say 'misread,' we had incomplete information." To ABC's Jake Tapper, he said, "There's nothing that we would have done differently."

What both Obama and Biden were trying to explain away was the dissonance between their early assurances that the big stimulus package would hold the unemployment rate around 8 percent and Thursday's report showing it at 9.5 percent. The jobless rate is expected to rise further in the months to come, with some economists predicting that it will go above 10 percent for the first time since 1982.

It seems hard to square an assessment that the administration underestimated the severity of the recession and the assertion that the White House wouldn't have done anything differently had it known how bad things really were. There were some economists who warned that even a package as big as $800 billion was not enough to deal with the severity of the economy's collapse.

But Lawrence H. Summers, director of the White House's National Economic Council, said in an interview yesterday that unemployment and job loss have been even greater than expected, given the level of gross domestic product in the first two quarters of the year. In other words, the rate of economic contraction so far this year tracks with the administration's projections, but job losses nonetheless have been higher. "We were of the judgment that a substantial stimulus was required, and we delivered the largest stimulus in history," Summers said.

Administration officials contested claims that the stimulus money has flowed more slowly than anticipated. "We're actually doing better than expected," said Jared Bernstein, the vice president's top economic adviser. By the administration's calculations, almost 25 percent of the money has been obligated -- roughly $200 billion -- in about a quarter of the days in the life of the package. Officials argue that obligating t he money triggers economic activity, even if all the money is not yet spent.

Officials say the impact will be greater in coming months. "The second hundred days, you're going to see a lot more jobs created," Biden said Sunday.

Senior officials say they believe the plan is on track, despite criticism from Republicans and grumbling from some Democrats. Which is why they say it is premature to decide whether a second stimulus package is needed. Obama said the question of whether there is something more to do is something "that we wrestle with constantly." But he added that there are legitimate concerns about the size of the deficit all the current spending will create.

Concerns about whether the stimulus package is working, or will, are the last thing Obama needs at this moment. White House Chief of Staff Rahm Emanuel has set the administration's calendar to focus all energies this month on the legislative battle over health care. Questions about the economy, and about the need for more stimulus funding, may only complicate hopes for passing what other presidents have failed to get done.

Obama continues to argue that health-care reform is a critical piece of his plan to fix the economy, long term. But even some Democrats worry that the centerpiece of the administration's economic program is not working as well as they had hoped. Senior administration officials contend that no stimulus effort could offset the full effects of this recession but that the plan is helping and will continue to ameliorate the effects of the downturn.

So far, Obama hasn't been blamed for the overall state of the economy, which he repeatedly reminds people is something he inherited from his predecessor. But there continue to be indications of slackening confidence in his remedies.

A recent Washington Post-ABC News poll recorded a noticeable decline in the percentage of people who said they believed the stimulus package had worked or would -- and that was before the unemployment rate rose again. That poll also found that rising optimism about the direction of the country had hit a plateau -- or even begun to slip.

On Tuesday came another, perhaps more troublesome, signal of disenchantment with the president's policies, in a survey of attitudes in Ohio by Quinnipiac University. In the past two months, Obama's overall approval rating in the state dropped from 62 percent to 49 percent. His economic approval rating also fell, from 57 percent to 46 percent.

Most significant was the sharp decline among independents. Obama's economic approval rating among these critically important voters plummeted from 51 percent to 33 percent. His overall approval dropped from 59 percent to 38 percent.

Ohio is just one state -- admittedly a politically sensitive one -- and the Quinnipiac poll is just one survey. Much more will be needed to fill out the picture of Obama's presidency. But the shifts are big enough to warrant attention from the president's political and economic advisers. Yesterday afternoon, Biden's office announced that the vice president will be in Ohio tomorrow to talk about the economy.

Administration officials may be right in thinking that the stimulus package will kick into higher gear during the remainder of this year and that no further action may be needed. But getting the economy right remains the most important challenge facing the Obama administration.

© 2009 The Washington Post Company