High Unemployment Could Put Obama Out of Work as Well
By ALBERT R. HUNT | BLOOMBERG NEWS
Published: July 24, 2011
WASHINGTON — For all the frenzy in Washington over debt and deficits, President Barack Obama’s political strategists realize that jobs are more important in the elections next year; they see the two different scenarios.
In one, voters conclude that while the incumbent is a nice fellow, the administration’s policies have failed, the economy is not getting better and whatever their reservations about the opposition, change is needed. The other (more likely, the advisers insist) is that while times remain tough, the president inherited a huge mess, has made a good start in cleaning it up and has a vision for where the United States needs to go that is a lot better than the one put forth by Republicans.
If 2012 brings the equivalent of the Japanese trauma or Greek crisis this year and persistently high gas prices, with relatively anemic growth of 1.5 to 2 percent and joblessness stuck around 9 percent, the first scenario may be more likely.
If these external wounds are minimal, investor and consumer confidence improves, and growth is double that bad-case-scenario number, with unemployment moving closer to 8 percent, Mr. Obama becomes difficult to beat.
Top White House economic and political advisers are uncertain where the balance lies. Asked what gas prices probably will be a year from now, a leading administration expert admits: “Nobody has any real clue.”
On the political-economy front, there have been mixed messages of late. After playing on Republican turf all year, the president has captured the public high ground in the ferocious fight over the debt and deficits. He can maintain that advantage as long as the debt ceiling deadline does not lapse without a deal, which could cause global markets to crater.
Mr. Obama has been criticized since last December for failing to embrace the recommendations of the bipartisan deficit commission he appointed. The White House view is that by staying on the sidelines, they forced the House Republicans to unveil Representative Paul Ryan’s budget, which, with its huge cuts to Medicare, the health insurance program for Americans over age 65, has proved wildly unpopular with the public. This, the president believes, gave him the leverage he needed in the current negotiations.
On the other hand, the recent economic news has been gloomy.
Goldman Sachs downgraded its economic forecast for next year, predicting that the unemployment rate would drop only “modestly” to 8.75 percent by the end of 2012. Stories of layoffs are dominating headlines.
David Plouffe, the White House political guru, says voters focus on their own personal situation and do not “vote based on the unemployment rate.” Experience suggests that is misleading. The jobless rate, and its direction, usually is a good indicator of how the public feels and how it will vote.
Since World War II, no president has been re-elected with a jobless rate higher than 7.2 percent. That was the number when Ronald Reagan won a landslide victory in 1984; in the 40 years before that, no president had been re-elected with an unemployment rate of more than 5.3 percent.
Many Democrats say that if the economy is on an upswing a year from now, the president can persuasively argue that he is cleaning up the disaster he inherited — in the financial and automobile industries, in particular — and setting the stage for better economic times ahead. That is, if the unemployment rate is declining.
“If the arrow is pointing in the right direction, he’ll have a good case,” says John Sasso, a top Democratic political strategist.
More instructive than national data may be the numbers in the important states. There are two caveats: too much attention is paid to the Electoral College; with the exception of the 2000 election, it always follows the popular vote. And there are other factors: two of the three states with the highest unemployment rates, California and Rhode Island, are certain to be in the Obama column 15 months from now. The three states with the lowest jobless rates, all under 5 percent, Nebraska, North Dakota and South Dakota, are just as certain to vote Republican.
Nevertheless, it is instructive to look at the “blue” states (which went for Mr. Obama in 2008) that will be most hotly contested this time.
When it comes to job numbers, they can be divided almost in half. In June four had unemployment rates well above the national average: Nevada (the highest, at 12.4 percent), Michigan, Florida and North Carolina. Ohio, with an 8.8 percent jobless rate last month, is close to the national average. It will be a tough slog in these five states, which have a combined 84 electoral votes. (Mr. Obama won the Electoral College 365 to 173 in 2008; the threshold is 270.)
Other battleground states, like Colorado, Pennsylvania, Virginia and Wisconsin, have unemployment numbers below the national average, though they all have added more than 100,000 to the jobless ranks over the past three years.
There are many uncertainties. It is never wise in politics to count chiefly on your opponents’ shortcomings. Still, a Republican field that is privately viewed as second-rate by many party leaders and that could be forced to the right by conservative activists isn’t the stuff of a formidable general-election campaign.
And while jobs will be a bigger voting issue than deficits, the current high-stakes battle between House Republicans and the president will shape the debate next year. With their preference for cutting back on Medicare and Social Security instead of raising taxes on higher-income Americans, the Republicans are getting clobbered in voter opinion polls.
If the debt ceiling is increased, avoiding a potential cataclysm — an outcome cherished by more than a few Tea Party-affiliated House Republicans — the president has a chance to stay on the offensive on the deficit issue, particularly if he offers significant budget cuts and revenue increases now and next year that are supported by the public.
Mr. Obama certainly has lost any shot at short-term stimulus, except possibly extending the payroll tax cut for workers. Finally, the man hailed only three years ago as the best political communicator since Mr. Reagan has to belatedly offer a vision of America’s economic future and jobs outlook.
Whether the jobless rate is closer to 9 percent or 8 percent a year from now, Mr. Obama will be in trouble if he does not rise to this challenge.