WASHINGTON – To a struggling White House, the economy that was supposed to be a political millstone is losing some drag.
During Barack Obama’s presidency, pocketbook worries have been the dominant issue with Americans. But an uptick in growth and a downturn in unemployment give him a stronger story line going into the 2014 congressional election year and provide Democrats with a counterpoint to Republican attacks on Obama’s health law.
The economy has pushed ahead despite a government shutdown, edge-of-the-cliff deals on the debt and indiscriminate budget cuts that were supposed to hold back the recovery.
Yet, to the surprise of many, virtually every important economic indicator has brightened.
The unemployment rate dropped to a five-year low of 7 percent in November, employers created 203,000 jobs, the stock market is roaring, home purchases are up and manufacturing grew last month at the fastest pace in 2½ years.
But Obama’s fortunes have seesawed for months, marked by ups and downs on foreign and domestic policy. Whether this economic trend accelerates remains to be seen.
What’s more, voter opinions about the economy typically lag behind signs of improvement.
“If the trend line continues, you have to assume that has to catch,” Republican pollster Wes Anderson said. “If that’s the case, people will feel better about the economy some time next summer.”
That’s a big if.
Economists still predict that the pace of the recovery will improve in 2014. But there are weaknesses in the jobs numbers, notably that 4.1 million Americans have been jobless for 27 weeks or more, and the average length of joblessness rose from 36.1 weeks in October to 37.2 in November.
News that the economy grew at a 3.6 percent annual clip from July through September, the fastest since early 2012, was tempered by the fact that nearly half the growth came from a potentially temporary buildup in business stockpiles.
What’s more, there are worries that the stock market could grow into an unsustainable bubble, that Washington could replay fiscal brinkmanship and that the rollout of the health law could hit another major obstacle.
For Obama, President Ronald Reagan’s experience in 1986 presents a cautionary tale.
In November 1985, during the first year of Reagan’s second term, the unemployment rate had fallen to 7 percent from a high of 10.4 percent in February 1983. The economy heading into the 1986 midterm elections was growing at an acceptable 3.9 percent rate in the third quarter.
Reagan’s Republican Party controlled the Senate.
On Election Day 1986, Democrats retook power. At the time, Reagan’s approval hovered above 60 percent. Obama’s is at 40 percent.
“Obama needs help,” said Brendan Nyhan, a political scientist at Dartmouth College who has written about misperceptions about politics. “Turning out his coalition in a midterm election six years into his presidency is no easy task.”
Positive economic news, Nyhan said, “is not going to get his agenda through Congress, but it certainly could improve his standing with the public.”
The White House has been quick to claim some credit for the improving economic conditions, and to use it to justify its legislative agenda.
Jason Furman, the chairman of the president Council of Economic Advisers, said Friday that the reduced growth in health care costs and the domestic energy boom that has reduced oil imports have helped the manufacturing industry.
“The president is not out there calling for a new recovery act,” Furman said. “He’s calling for investments in infrastructure, investments in training, reforming our business tax code, the same agenda that the business community has for America’s competitiveness.”
But other analysts believe that the economy in general and businesses in particular have stopped waiting for Washington to act.
“It may be the case that the sustained dysfunction of Washington has created an atmosphere where everyone can ignore it properly,” said Matt McDonald, a partner at Hamilton Place Strategies and an adviser in three past Republican presidential campaigns.
“In rank order, it may be that a functional Washington is best, a chronically dysfunctional Washington is second best, and then an episodically dysfunctional Washington is the worst case, where people get tempted that things are going to be solved and then they aren’t,” he said.
Still, the economy affects people directly and its linkage to politics is inescapable.
Obama this past week issued an aspirational call to correct the nation’s income disparities and to adopt policies that help Americans move up the economic ladder. Longer term, he has called for an increase in the minimum wage, an overhaul of higher education and increased training for a high-tech workforce.
More immediately, he asked for an extension of jobless benefits noting that 1.3 million American would lose the assistance just days after Christmas if Congress does not act
“That economic lifeline is in jeopardy,” Obama said Saturday in his weekly radio and Internet address. “All because Republicans in this Congress — which is on track to be the most unproductive in history — have so far refused to extend it.”
Democratic operatives say Obama needs to use such populist appeals to distinguish himself from Republicans and thus help the Democratic brand. That’s a shift from the outreach Obama tried with some Republicans this year.
“Just make it a blatant out-and-out choice,” said Tad Devine, an adviser to past Democratic presidential nominees Al Gore and John Kerry. “He has to identify them, call them out on it, and he has to run against them.”
Anderson, the Republican pollster, says Obama has his work cut out for him.
Anderson notes that what always vexed Republicans was regardless whether voters approved of Obama’s job or not, more than 6 in 10 voters still trusted him.
“He’s upside down now,” he said. What’s more the health care law still faces a number of potentially troublesome milestones, including a March 31 deadline to avoid the law’s tax penalties for those who remain uninsured.
“Even if the economy starts to grow in the manner that people believe it should, in a more robust manner, the million dollar question is will that overcome the debacle that is Obamacare,” Anderson said.
“And here is why it might not,” he added, “because of the trust issue.”
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