Friday’s gloomy jobs report has put President Obama at increasing risk of losing what could be one of the strongest arguments for his reelection: that he turned around an economy in rapid decline and ushered in a vibrant recovery.
Anemic job growth and a jump in the unemployment rate to 9.2 percent are forcing the White House to prepare for a 2012 campaign that focuses not on what Obama has done to improve the economy, but on what the other side would do to hurt it.
No American president since World War II has been elected with unemployment above 8 percent — which is where Obama’s economists now expect the rate to be in November 2012. More than 25 million Americans are unemployed or don’t have jobs that meet their needs or skills. People are now searching for work longer than they ever have before.
On Thursday, David Plouffe, a senior adviser and the architect of Obama’s 2008 campaign, attempted to downplay the idea that Obama would have to defy history to win reelection.
“People won’t vote based on the unemployment rate, they’re going to vote based on: ‘How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?’” Plouffe said at a breakfast sponsored by Bloomberg News.
Then, he launched into a tirade against Republicans. “All of them are basically just bringing out the same old war horses,” he said. “Let Wall Street kind of run amok, cut taxes for the wealthy, starve investment in things like education, research and development.”
Since the start of his administration, the president and his team have consistently had to reevaluate their view of the economic picture. Early on, they said unemployment wouldn’t rise above 8.2 percent.
When that forecast proved wildly inaccurate by fall 2009, as the jobless rate topped 10 percent, the administration took solace that it was still early and predicted the economy would gain much more steam.
And it appeared to do so until slowing significantly this year. The declining unemployment rate reversed and began to head upward. Reacting to the terrible jobs report for May, Obama described “head winds,” and his team said called it a “speed bump.”
With Friday’s report that the economy added just 18,000 jobs last month — a negligible amount — the head winds are now looking like strong gusts, and the bump appears to be a more of a mountain.
A wide range of economists are reducing their outlook for the rest of the year. The economy needs to add more than 200,000 jobs each month to keep up with the growth of the population.
Obama has been showing more regret lately about the state of the economy.
Speaking in the Rose Garden after the Labor Department report was released Friday morning, he said he recognized that “we still have a long way to go and a lot of work to do.”
That followed comments he made earlier this week when he acknowledged that his administration hasn’t been able to come up with a strategy to significantly reduce foreclosures and boost the housing market. He also recently conceded that the stimulus did not create as many new jobs as first anticipated.
The weak economy is turning into big, bright target for Republican presidential candidates. And the tone of the White House’s response suggests it feels vulnerable.
“Today’s abysmal jobs report confirms what we all know — that President Obama has failed to get this economy moving again,” GOP frontrunner Mitt Romney said in a statement Friday.
He attacked Plouffe’s comments, saying that “if David Plouffe were working for me, I would fire him, and then he could experience firsthand the pain of unemployment.”
Plouffe had harsh words for Romney on Thursday. “Governor Romney has reminded us that he’s a world-class political contortionist,” he said. “He’s kind of been all over the map on the president’s leadership on the economy.”
The dismal jobs report could affect the ongoing deficit-reduction negotiations. Most of the discussions have focused on cutting government spending and increasing taxes — neither of which is the customary policy prescription for an ailing economy.
With talk of deep cuts, Obama is struggling to get congressional Democrats to agree to a compromise. The left wing of the Democratic Party is hounding Obama for softening toward the Republican vision of shrinking government at a time when, liberal economists say, government needs to spend more to create jobs.
The fact that the economy is not adding jobs on its own will only fuel those arguments.
“It makes no sense that in an economic recovery still struggling to gain momentum, policymakers are easing up on the gas and threatening to slam on the brakes,” said Chad Stone, chief economist at the Center on Budget and Policy Priorities. “But that is just what is happening.”
Meanwhile, Republicans, who have adamantly resisted measures to raise tax revenues, could use the weak jobs report to underscore the importance of keeping taxes low.
“More spending, more taxes, and more punting of responsibility will only mean more weak job reports,” Sen. Jeff Sessions (Ala.), top Republican on the Senate Budget Committee, and Rep. Paul Ryan (Wis.), chairman of the House Budget Committee, said in a joint statement Friday.
Bill Burton, a senior strategist at Priorities USA Action, a political committee designed to support Obama’s reelection effort, said that “Republicans are playing a reckless and irresponsible game with the American economy..” He added, “They need to meet the President halfway and put creating jobs for the middle class ahead of protecting tax loopholes for corporate special interests.”
Obama has struggled to make clear he is as concerned about jobs as about deficit reduction. He has made weekly, campaign-style visits to politically important states to speak about developing technologies and manufacturing and how to increase job growth in coming years.
But these trips have received far less attention than the down-to-the-wire deficit negotiations in Washington, where the Treasury Department has set an Aug. 2 deadline for Congress to vote to raise the nation’s $14.3 trillion debt ceiling.
And while the unemployment rate might still surprise and decline significantly by November, Obama’s team is not proposing another major stimulus to accelerate that recovery.
Rather, it’s focusing on boosting confidence.
As Obama said in his Rose Garden press conference on Friday, the administration wants to extend the payroll tax cut that expires at the end of the year, which reduced the payroll tax from 6.2 percent to 4.2 percent. It wants to provide loans to companies and states to build new infrastructure. And it wants to pass trade agreements with Colombia, Panama and South Korea.
Washington Post staff writer Peter Wallsten contributed to this report.