WASHINGTON: One would think, given so much practice, that the Obama White House would have been better prepared for last week’s wretched jobs report.
Instead, we witnessed the five stages of bad public relations. Delusion: It was a “step in the right direction.” Dismissiveness: Don’t “read too much into any one monthly report.” Grudging acceptance: “It’s still tough out there.” Cliché: “There are no quick fixes.” Self-pity: “I suspect that most people in Cincinnati would acknowledge that I’ve tried real hard.”
I suspect that most people in Cincinnati and elsewhere would prefer an economic strategy that consists of something more than blame shifting and the systematic lowering of expectations.
Obama’s economic agenda is debilitated by a political problem. Announcing an ambitious new set of policy proposals would be an admission that previous approaches were insufficient — that the economy is not moving in the right direction. But winning re-election during a serious labor market recession is no easy task.
Up to this point, Obama has successfully finessed the issue — recalling the initial challenges he faced, urging patience and criticizing congressional obstruction on a series of incremental reforms. At some point, however, claiming to be a victim of fate just appears feeble. Patience takes on the air of complacency. And the lowering of expectations seems more like the acceptance of permanent decline — a new normal less ambitious and optimistic than the old.
Obama’s economic message is currently premised on the denial of a crisis. But last month — three years into an anemic recovery — more American workers went on Social Security disability (85,000) than got jobs (80,000). Hispanic unemployment is at nearly 11 percent; African-American unemployment at about 14 percent. In any other political circumstance, the Democratic Party would be seized with urgency. A McCain administration would be seeing preparations for a union-sponsored Labor Day march on Washington demanding jobs, jobs, jobs. The Obama administration, in contrast, gets some muted criticism from Robert Reich, who argues for “large and bold things to turn the economy around.”
But it is not clear what such things might be. Given the federal budget crisis, prospects are poor for major new stimulus spending or backfilling state and local budgets. While the jobs number for June was bad, it was probably not bad enough to result in another round of quantitative easing when the Federal Reserve meets late this month. So Obama is left with a series of smaller-scale proposals — maintaining existing middle-class tax breaks, spending on infrastructure, funding some jobs for teachers — that no self-respecting Keynesian economist would judge sufficient.
Obama is showing signs of ideological exhaustion. He seems incapable of producing an economic agenda equal to his political challenge.
The administration is left with one main self-justification: that financial panics cause longer downturns and slower recoveries. Which is historically correct, but not the primary issue. The relevant question: Has Obama accelerated or slowed the recovery?
Obama is not responsible for the eurozone crisis or the softening of the Chinese economy. But he has done several things to hinder American recovery. “He turned a temporary expansion of government, through TARP and the auto bailouts, into a permanent expansion of government,” argues Keith Hennessey of the Hoover Institution. “Government, measured by federal spending, is this year about 15 percent bigger than the historical average, measured relative to the economy. … This drains resources from private firms and individuals and means slower productivity growth.”
Obama’s major regulatory initiatives, particularly Obamacare and the Dodd-Frank financial reform, have added to economic uncertainty. Businesses are waiting for the implications of these laws to become clear, and federal rules to be written, before making investment choices. At the same time, the Obama administration has failed to make tough calls and secure legislative compromises on a variety of issues — the federal debt, future tax rates, the Keystone pipeline — that might remove sources of economic uncertainty. Instead, we get short-term policy extensions on large policy matters.
Given both the state of the economy and his policy performance, the buoyancy of Obama’s polling is a political marvel. But a portion of this depends on doubts about Mitt Romney, which can be eased. A humanizing Romney convention speech, some reassuring debate performances, a few innovative policy proposals appealing to Latinos or suburban women — and Romney becomes a more broadly imaginable president.
In this case, Obama could well suffer a Carter-like collapse, circa 1980. Not because of an ideological shift but a simple, collective judgment: He did not deliver recovery.
Gerson is a Washington Post Writers Group columnist. He can be reached at email@example.com.