Maybe it’s not the economy, stupid.
White House officials have begun to entertain the idea that they can run for re-election without being able to point to a strengthening economy. For one thing, they may not have a choice. For another, they believe that recent Republican budget proposals have given President Obama an opportunity to draw contrasts in which he is more in line with most voters.
The clearest statement of this idea has come from David Plouffe, Mr. Obama’s top political adviser. “The average American does not view the economy through the prism of G.D.P. or unemployment rates or even monthly jobs numbers,” Mr. Plouffe said at a recent Bloomberg Breakfast here. “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?’ ”
Not surprisingly, Republicans seized on the comment to say the White House was out of touch. They are preparing to follow the path of not only Ronald Reagan’s 1980 campaign, but also — in slogans, if not policies — Bill Clinton’s 1992 campaign, which coined “It’s the economy, stupid.”
Mr. Obama’s advisers, meanwhile, are looking for lessons from re-election bids that overcame a first-term rise in unemployment, like those of George W. Bush, Richard Nixon and Dwight Eisenhower, Republicans all. That’s a turnabout from the Obama team’s initial plan to base its re-election campaign on the economy’s progress since 2008.
The White House approach certainly does come with caveats. Mr. Obama and his aides are well aware that the economy is the biggest threat to his re-election. Their 2012 campaign will be filled with talk of the economic crisis the administration inherited. And administration officials say they will continue to push for steps to put people back to work, like road construction, that Congressional Republicans have blocked.
But you can already see how the White House strategy is affecting the fights that it chooses to have and, by extension, the economic and political risks it takes.
In the debt ceiling talks, Mr. Obama has not made new stimulus his top priority. He has instead pushed for a grand bargain that would sharply reduce the deficit. His calculation seems to be that any stimulus he could win from Republicans would have only a minor effect on job growth — and come with a political cost.
By now, many Americans are at best skeptical of stimulus. If Mr. Obama argued for more temporary tax cuts and spending, he might be able to increase popular support for such measures and make them a bigger part of a debt ceiling deal. (For the deficit to fall, the steps would obviously have to be offset by larger spending cuts or tax increases.) Yet by pushing for new stimulus, he would also tie himself ever closer to the troubled economy and the unpopular policies to help it.
His attempt at a big deficit-reduction package — which seemed to come back from the dead on Tuesday — allows him to project a different image. He takes on the moderate role of fiscal conservative, looking to cut spending and increase taxes on the affluent. The refusal of many Republicans to consider such a package, Mr. Obama noted last week, puts them to the right of most Republican voters, polls show. House Republicans have opposed any tax increase and have instead proposed an overhaul of Medicare.
So far, many political observers believe Mr. Obama has played his hand well. Amy Walter, political director of ABC News, wrote this week that the president’s approval rating — 48 percent, hardly stellar — was still “remarkably high given the level of economic pessimism.”
Yet the White House strategy of not trying absolutely everything in its power to lift economic growth has drawbacks, politically and economically.
The stimulus of the last three and a half years has mostly worked. The best six months of economic growth, in late 2009, came on the heels of the maximum effort from the Federal Reserve, Congress and the White House. Late last year, the Obama administration persuaded Republicans to agree to a smaller stimulus package, which extended jobless benefits and temporarily cut the payroll tax for households, as part of the deal to extend the Bush tax cuts.
Still, the economy continues to struggle. That’s the normal pattern after a giant debt bubble pops. A full recovery takes years and years. Consumers and businesses remain reluctant to spend. The less aggressive the government is in filling the void, the weaker the recovery tends to be.
White House officials are no doubt correct that the most ambitious ideas — say, a huge new federal program to rebuild roads, bridges and other infrastructure — have no political chance. They are also correct that economic policy would have been more aggressive if they had been able to dictate legislation. And those of us outside the debt ceiling negotiating room cannot fully know what is and isn’t possible.
But there do seem to be options within the realm of plausibility, and it is not too late to pursue them. The negotiation over the debt ceiling is, after all, a negotiation.
One option would be an immediate extension of the payroll tax cut, which is set to expire on Jan. 1, to give consumers and businesses more confidence. By waiting until the end of the year to announce an extension, Washington would end up paying all of the budgetary cost without getting the full economic benefit.
Perhaps the most intriguing idea is a 2010 proposal from Mr. Obama to give a $5,000 tax credit for each net new worker that a business hires. The credit aims at the economy’s main problem — a lack of jobs — and its annual cost is a mere $35 billion, easily offset by longer-term cuts to domestic programs or the military. Yes, it died in Congress last year. But given the ongoing slump, does abandoning the idea make sense?
Four years after the mortgage-bond market first quivered, the share of Americans with jobs has again fallen to its recent nadir. Yet Washington is occupied with another crisis, one that’s entirely self-imposed. The bond market would be ecstatic if the federal government simply lifted its debt ceiling, as it always has before. Congress can make this problem go away whenever it wants.
The jobs crisis is different. Solving it will take a whole lot of work. Right now, there are not many people trying to do that work.
E-mail: leonhardt@nytimes.com; twitter.com/DLeonhardt
Article source: http://feeds.nytimes.com/click.phdo?i=fea1e6f7e2fb61711dd343fff4fea2a8
Speak Your Mind
You must be logged in to post a comment.