Analysis: Obama risks hurting 2012 push with economy warnings

Reuters News
Posted: Oct 20, 2011 1:24 PM
Analysis: Obama risks hurting 2012 push with economy warnings

By Alister Bull

WASHINGTON (Reuters) - President Barack Obama's grim warnings about the state of the U.S. economy could backfire on him by undermining a key goal of his re-election campaign -- restoring the confidence of Americans.

In his drive to push a $447 billion jobs package through Congress to spur hiring, the president has spoken of an economic emergency that he wants Congress to fix by approving his ideas to create jobs.

But the more Americans worry about the economy, the less likely they are to spend, jeopardizing any upside from Obama's jobs program.

The president is also trying to move the dial of public opinion against Republicans by crisscrossing the country to push for a "fairer" American economy. He has voiced understanding for the Occupy Wall Street movement protesting policies during the recession that critics say helped banks but provided little relief for high unemployment and job insecurity.

By siding with public anger against big banks and pushing for higher taxes on millionaires, Obama may make Americans more unhappy about wide income inequality, which could hurt his re-election bid.

"Populism is predicated on people feeling that they are getting the short stick," said Jim Kessler, vice president for policy at Third Way, a nonpartisan think-tank in Washington.

"In tough economic times, optimists win presidential races and pessimists lose. It is very hard to be both a populist and have a sunny view of America's future," Kessler said.

U.S. consumer sentiment slumped in early October as worries about declining incomes drove consumer expectations down to the lowest level in more than 30 years.

Some past American presidents, like Republican Ronald Reagan and Democrat Franklin Roosevelt, managed to project beyond tough economic times and win re-election despite high U.S. unemployment. Obama must perform the same trick.

Reagan was re-elected in 1984 after the U.S. jobless rate improved from 9.5 percent to 7.2 percent. No president since then has won a second term with unemployment above 7.2 percent.

In confronting the economic Depression of the 1930s, Roosevelt "appealed to a broad cross-section of Americans by showing he was willing to try anything ... vigor and determination count for a lot," said Richard Porter, professor with the Harvard Kennedy School of Government.

Roosevelt also was able to capture the popular imagination with his mass employment plans.

"The picture that Roosevelt used was of putting millions of young men to work on the Civilian Conservation Corp where they were doing physical labor out of doors in nature, three of the totemic ideals of American life," Porter said. "In the age of electronics, what is it? We all power up our Ipods together?"


The White House says Obama is simply being straight with the country about the risks ahead.

"You have to be honest with people that, obviously, the economy is growing at a very, very slow rate, we're not making a dent on jobs, and you have this Europe thing overhanging," a top White House official told reporters in a recent briefing.

The European Union is grappling with a crisis of debt among some of its members that is affecting world markets.

"The president (is) saying: 'Listen, there is a chance here it could get even worse than it is, and so therefore the urgent case for action is even more pronounced," the White House official said.

Part of Obama's challenge is to get voters to look past the economy's gloomy short-term outlook, the still-battered housing market and unemployment pinned above a lofty 9 percent, to a brighter future that appeals to natural U.S. optimism.

There is some polling evidence that Obama's message of the need for more fairness in the tax code is getting across.

A CBS poll published on October 3 found that 64 percent of Americans supported millionaires paying higher taxes to help lower the deficit.

Republicans are resisting tax increases, insisting that reducing the federal deficit through spending cuts will spur job growth.

"He seems to have solidified his Democratic base. That is very important and those numbers are not going down," said Karlyn Bowman, a senior fellow with the American Enterprise Institute in Washington.

"That is one of the reasons he might be using the populist rhetoric, but obviously he has to appeal to a broader swathe of the population than that."

(Reporting by Alister Bull; Editing by Vicki Allen)