Closed Factories Symbolize Obama's Economic Woes

Donald Lambro
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Posted: Jul 06, 2011 12:16 AM

WASHINGTON -- The likelihood that Treasury Secretary Timothy Geithner may resign from his post later this summer is the latest sign that President Obama's team of economic advisers is disintegrating as the economy grows weaker.

With the nation's 9.1 percent unemployment rate worse than it was when Obama took office in 2009, and the economy slowing down to less than 2 percent growth, Geithner's signal that he wants out further diminishes whatever confidence the country still has in Obama's economic policies -- and polls show that isn't much.

The former president of the Federal Reserve Bank of New York is the chief architect of Obama's economic strategy, which is now under fierce attack from Republican presidential contenders and grumbling from Democrats on Capitol Hill who fear their party will suffer deeper losses if the economy doesn't recover this year or early in 2012.

Geithner is the last big-name adviser in Obama's original economic team. One by one, the rest have left in the past year, some of them with parting shots that the economy needs a much stronger stimulus than it got in 2009 if it is to get back on its feet before Election Day.

Gone are Larry Summers, who headed the National Economic Council (NEC); Christina Romer, who chaired the President's Council of Economic Advisers; and longtime Obama adviser Austan Goolsbee, who briefly took her place, only to return recently to the University of Chicago.

Should Geithner leave, as senior officials have intimated he will, that will leave a thin, faceless team of advisers at a time when the economy demands a team of heavy hitters who can command the respect of the business community and Wall Street, and recalibrate Obama's policies for the 2012 campaign.

Gene Sperling, who rose to become Treasury counselor under President Clinton, has moved into the NEC's directorship, but he is not a trained economist and knows less about creating jobs.

Geithner has indicated that he will remain onboard at least until he has wrapped up negotiations with Congress to raise the debt limit and cut spending over the next 10 years.

Few in the party's liberal base will shed tears if he leaves. He was one of the chief architects of the Bush administration's Wall Street bailout in 2008. He fought to protect big bonuses for financial traders. His prescriptions to deal with the tsunami of mortgage foreclosures and pull the housing industry out of its slump have been ineffective at best.

Should he leave by summer's end, that would precipitate a battle royal over his replacement and ignite new debate in Congress over Obama's economic policies just as he turns his full attention to his re-election bid.

"It's going to be an opening for the Republicans to put the Obama economic policies on a big public trial," economist Kevin Hassett of the American Enterprise Institute told The Washington Post.

The ongoing dismantlement of Obama's economic team comes at a time when there is little left in the government's shrinking bag of stimulus tricks.

The administration's infrastructure spending stimulus is slowing to a trickle. The Federal Reserve is pulling away from its ineffective QE 2 bond purchasing initiative to inject new capital into the nation's economy. The White House all but admits it's out of ideas to pump up the economy. Indeed, it's still pushing for higher taxation on industries and investors, which would further slow an already tepid growth rate.

In the meantime, former Massachusetts governor Mitt Romney is aggressively stepping up his attacks on the Obama economy in major industrial states hit hard by high unemployment.

Last week, Romney went to the shuttered, barb-wired Allentown Metal Works plant in Pennsylvania that Obama visited with much bravado in 2009, saying it was the kind of factory that his $800 billion spending stimulus bill would keep open. It closed earlier this year, laying off all of its workers.

"Look around you: This is what he called the symbol of hope," a shirt-sleeved Romney said at a news conference in front of the factory's padlocked gates. "There are weeds, boarded-up windows. This was the stop he picked to symbolize the success of the stimulus. And my eyes tell me it ain't working."

Repeatedly calling Obama "a failure," Romney talked about his 25-year career in business investment, building start-up companies into job creators, a process he said Obama knows nothing about.

"He's out of his depth when it comes to getting the economy going. It's just not something he understands," he said.

Out of his depth -- and running out of qualified economic advisers who know what creates more employers and produces jobs.

In politics there is something called "critical mass," when an issue becomes so big within the nation's electorate that it overwhelms the incumbent's prospects. That's what is happening to Obama now.

There are lots of closed factories like the one in Allentown that tell of a failed economic recovery. You'll be seeing Romney speaking in front of them on the evening news.