Buying Time on the Economy

Despite all the accomplishments of his first six months, the president's long-term success will depend on how soon the economy starts creating new jobs.

Posted:
 
terryobama6
AP

Barack Obama has been president for exactly six months, and we’ll have to wait a while to find out whether all the frenetic activity in these opening rounds of his presidency will amount to anything over the long haul.

There is no argument that the administration and the president have both been busy and ambitious; one key piece of evidence is that six months in, the president is in a fight for his life over reforming national health care. However, the fight is about what the plan will look like and how much it will cost, not whether there will be a plan. If he wins that battle, he will have assured his place in history as one of the greatest political tacticians to have occupied the White House, and when you add in all the other highlights of the first six months–the stimulus package, bailouts, CAFE standards, Guantanamo, Sonia Sotomayor, credit card reform, a much improved image in the world—it is easy to see that Obama is a man on a mission.

But after the clashes over the stimulus package and the AIG bonuses, after the mini-rapprochement with Cuba, and the bankruptcy of GM and the sale of Chrysler, what we have witnessed is an exquisite exercise in buying time.

In the end, Obama is on the hook for “saving or creating 3.5 million jobs over the next two years,” as he said in an economic speech at Georgetown University, just 12 weeks into his administration. How close and how soon he comes to keeping that promise will be the ultimate judgment of the administration, and everything else is shadowboxing.

Beneath all the lingering euphoria over the historic dimensions of Obama's 2008 victory and his impressive beginning as president, there is a simple calculus to the Obama administration: The economy recovers, he succeeds; the economy doesn't recover, or doesn’t recover fast enough, he fails.

The president remains optimistic that his stimulus package will eventually turn the economy around, but he is up against a growing sense that if it is happening at all, it is not happening fast enough. Job loss numbers keep rising, and Republican criticism of an exploding deficit, particularly related to health care reform, may be starting to resonate politically. The administration, for example, has decided that it would delay its release of a midsummer budget update, worried that it will compare unfavorably with earlier projections, and Vice President Joe Biden foreshadowed the administration’s response by recently saying that when Team Obama took office they, “misread how bad the economy was."

Republicans understand that a still-ailing economy in 2010 is the best chance to gain some momentum against the president and the Democratic tidal wave that swamped them in 2006 and 2008, and they have decided that they will try to capitalize on growing public apprehension about the economy.

Obama, who has made it a practice to ignore the GOP, feels the need to respond: “I love these folks who helped get us in this mess and then suddenly say, ‘Well, this is Obama’s economy,’” he said last week in Michigan, where in June, the unemployment rate was 15.2 percent, the highest in the country. But there were also hikes in the unemployment rate in 37 other states as well.

The administration shrugs off the job numbers with the explanation that hiring is one of the last areas to respond to economic growth. When more of the $787 billion in stimulus money goes into the economy, they anticipate a boost to come with it. And, they add, no one expected that until next year.

As Lawrence H. Summers, who is the president’s chief economic adviser, said last week, “Both administration and independent forecasts predicted that only a very small part of the total job creation expected from the Recovery Act would take place within six months.”