Donald Lambro

WASHINGTON -- The economy is tanking. Economists say it has slowed to a near comatose 1.5 percent growth rate, unemployment claims were at a nine-month high and jobs are scarce, yet President Obama is focusing on corporate campaign donations.

While the economy is the clear overriding issue in the midterm elections, threatening to topple Democrats from power in Congress, Obama was devoting his weekly radio address last Saturday to an issue far from the real concerns of workers, families and employers struggling to survive.

If anyone is looking for signs Obama is completely disconnected from the failing economy, his radio address blaming Republicans for blocking his legislation to place restrictions on corporate campaign donations delivered that in spades.

With polls showing Obama's job approval rating slipping to 43 percent last week because of the economy, Democratic strategists grumble privately that the White House has a "tin ear." Republicans said Obama's focus on campaign politics instead of policies to get the economy growing again showed how much he wanted to change the subject in this year's elections.

"Americans want us to focus on jobs, but by focusing on an election bill, Democrats are sending a clear message to the American people that their jobs aren't as important as the jobs of embattled Democrat politicians," said Senate Minority Leader Mitch McConnell in response to Obama's remarks.

But the Obama administration remained in deep denial about the declining health of the U.S. economy, insisting that it was "moving in the right direction," dubbing it the "Recovery Summer" and declaring that economic growth was "growing at a good clip."

A few weeks ago, Vice President Joe Biden predicted the creation of between 250,000 to 500,000 jobs was just around the corner.

But as the summer draws to a close, and with the elections a little more than two months away, those jobs are nowhere to be seen. If anything, the economy's health was worsening, and this administration didn't seem to have a viable plan to pull the country out of its economic decline.

Among recent developments:

-- Last week the government reported that more American workers had filed for jobless benefits than at anytime since last November. Unemployment-benefit claims rose by 12,000 to 500,000 for the third straight weekly increase -- the first time claims had hit the half-million mark in nine months.

-- While the official unemployment rate stood at 9.5 percent in July, the real jobless rate is much higher than that. Factor in the 1.2 million unemployed who have given up looking for work and have dropped out of the labor force, plus those who want full-time work but can only find part-time jobs, and the national unemployment rate is 16.5 percent.

-- The housing industry has sunk into a deeper slump, with nearly half of homeowners who enrolled in Obama's mortgage relief plan dropping out -- raising fears that foreclosures may increase in the second half of the year.

-- Other troubling signs point to growing economic desperation in the workforce. Longterm unemployed Americans are forced to apply earlier than they planned for Social Security benefits in an attempt to make ends meet. And a record number of workers are withdrawing funds from their 401(k) retirement accounts to pay their household bills and put food on the table.

Meantime, the Obama administration is planning to slam the U.S. economy with the largest tax increase in American history by letting President Bush's 2001 and 2003 top income tax rate cuts expire at the end of this year.

Beleagured businesses, both large and small, have been saying all year that this will deeply hurt the economy, risk-taking investors and job creation, but the White House and Democratic leaders are stubbornly determined to go ahead with their big-spending tax-hike plan.

It isn't just the business community saying higher taxes will weaken the economy: the nonpartisan Congressional Budget Office is saing it, too.

A CBO analysis released last week said permanently extending the Bush tax cuts would give the country a "considerable" economic boost over the next few years.

"Under that... scenario, economic growth would be stronger next year; unemployment would be lower next year," said CBO director Douglas Elmendorf, who was appointed to his post by Democratic leaders in Congress.

Moreover, "under current law, both the waning of (Obama's) fiscal stimulus and the scheduled increases in taxes will temporarily subtract from growth, especially in 2011," CBO added.

Notably, a growing number of Democratic candidates are also urging Obama and their party to keep the lower tax rates in place, saying it would be the height of economic folly to raise income taxes on the people who create jobs at a time when the economy is in a steep decline.

Some of the don't-raise-taxes Democrats are Senate candidates in critical battleground contests, including Missouri Secretary of State Robin Carnahan, Rep. Brad Ellsworth of Indiana and Rep. Charlie Melancon of Louisiana.

When Ronald Reagan cut tax rates across the board in the 1981-82 recession, the economy surged into a spectacular recovery, with quarterly rate increases of between 4 percent and 9.3 percent over the next several years.

There's a message there somewhere for the stubborn Obama Democrats to consider.


Donald Lambro

Donald Lambro is chief political correspondent for The Washington Times.