09.02.11

Obama's Summer Blues

Summers have proven cruel to this young president, but 2011 will require Obama to regroup, reboot, and grow bolder if he is to win reelection.

Another summer of discontent for the nation, and for President Obama, is coming to an end. Angry town hall meetings his first year nearly took down health-care reform. The summer of 2010 saw the BP oil spill undermine what the White House had billed as a “summer of recovery.” And this August has been especially cruel, with a vitriolic debt debate, crashing markets, and declining confidence in Obama (at or below 40 percent according to Gallup).

The president this week will use a prime-time speech to refocus his presidency on the issue that got him elected in 2008: jobs. And conservatives—especially the Tea Party—will try to lure him anew into debating other issues, like the debt and regulations. It remains to be seen if Obama will take the bait.

Americans are out of work and anxious about the future, yet Washington seems singularly focused on deficit reduction that has “nothing to do, zero, with job creation,” says economist Robert Shapiro, who advises the centrist New Democratic Network.

Reining in the debt is a worthy effort that in normal times would bring interest rates down, but they’re already at historic lows. Lost in all the talk about spending cuts and tax increases is the fastest way to close a budget gap, and that’s to stimulate economic growth that increases tax revenues.

Obama and his aides have huddled for weeks to debate how big and bold his new economic plan should be, or whether the president should trim his sails in hopes of finding areas of accommodation with Republicans.

“It’s silly to worry about what can get through Congress,” says former Labor Secretary Robert Reich, who teaches at the University of California at Berkeley. “The Republicans will say no to everything. He should go for broke and stand up and fight for it.”

The problem for Obama is that the Tea Party dominates the conversation, and is setting the terms just as much for the Republicans as the Democrats. The Tea Party goal is to dismantle government, not to expand government, even if it is for some societal benefit. Chastened by the anti-spending and big government outcry, Obama sought to get ahead of the discontent, naming a deficit commission, freezing federal pay and some domestic spending, and giving away far more than he got in last month’s debt-ceiling deal.

“He seemed to be telling the public inadvertently that controlling debt is the best way of restoring the economy, and nothing could be further from the truth,” Reich says. “By doing what he did, it’s very hard for the White House to pivot to jobs and growth.”

The biggest unspoken opportunity for the congressional supercommittee tasked with finding more deficit reduction is to zero in on pro-growth policies. That’s the way President Clinton did it in the mid-'90s, thanks to Silicon Valley and the Internet boom, and it’s why politicians should be talking more about clean energy job incentives, temporary extension of the payroll tax holiday for workers and employers too, plus incentives to corporations to repatriate their money if they hire American workers.

Shapiro advocates a federal program dedicated to providing funds to small entrepreneurs, and he would open community colleges nights and weekends to offer free computer training, initiatives that would create a narrative on how Obama can make things better. “Then let the Republicans block it, and if he’s re-elected, then he has a mandate to do it,” says Shapiro, pointing out that Obama’s strategy is to focus on the future.

Obama is expected to tee up his ideas for the supercommittee when he unveils his new plan on Thursday. What’s being floated are “all fairly small potatoes relative to the size of the problem,” says Reich, who doubts the Republicans on the committee will do anything that expands the long-term deficit in order to jumpstart the economy. “It’s the worst economic crisis since the Great Depression in which a large swath of Americans are out of work…you would think our elected representatives would respond,” he says. “I honestly don’t get it.”

The worry among Democrats is that Obama won’t go big enough to reclaim the conversation on jobs.

The worry among Democrats is that Obama won’t go big enough to reclaim the conversation on jobs.

Progressive Democrats think Obama’s original sin was appointing a team too sympathetic to Wall Street and the big banks to respond with equal urgency to the needs of Main Street and Middle America. “He should have been president in the 1950s,” says a staunch Democrat, recalling the benign times of President Eisenhower when “I like Ike” captured the non-partisan, post-partisan, tone.

Small, incremental proposals are fine if times are good. That was the Clinton ’96 strategy, but the economy was booming. With high unemployment and the economy in danger of slipping back into recession, the voters are tired of hearing the same-old, same-old. Obama has to decide who he is—a deficit cutter or a job creator. Blurring the lines, as he is so often inclined to do, won’t inspire, and time is running out.