Economy Alarm: Run For Cover Summer

Obama Promised He Was On Track to Improve the Federal Debt, Revive the Economy, and Save Millions of Jobs

“Obama focused on the $787 billion stimulus plan, an ambitious package of federal spending and tax cuts designed to revive the economy and save millions of jobs…. The stimulus package was a huge victory for Obama less than one month into his presidency. Still, he declared, ‘We have begun the essential work of keeping the American dream alive in our time.’… The only thing certain is that Obama is on track to boost a federal debt that stands at $10.7 trillion. Clearly mindful of that, Obama said: ‘We will need to do everything in the short term to get our economy moving again’ as well as ‘begin restoring fiscal discipline and taming our exploding deficits over the long term.’” (“Obama: Stimulus lets Americans claim destiny,” The Associated Press, 02/17/2009)

Credibility Crash: Democrats Are Forced to Own Up to Their Failed Policies as Economic Recovery Stalls:

The string of bad news about housing, employment and economic growth has led Democrats to an inescapable conclusion: the economy is not likely to improve in time to help them in the fall elections.

Congressional Democrats and the White House will continue their attempts to enact policies they believe will boost the economy—and which are also aimed at persuading voters they are working to make things better. But some officials acknowledge it is too late for these initiatives to change the economic situation ahead of the Nov. 2 elections.

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Democrats won big in 2008, partly because they were able to blame Republicans for economic woes. And while the economic situation remained dire when President Barack Obama took office in January 2009, most Democrats assumed that the economy would rebound by the time they stood for office this year.

A series of disappointing economic reports has made clear that won’t be the case. The most recent one came Friday, when the government reported that the economy grew at a much slower pace in the second quarter than previously estimated. The gross domestic product, a broad measure of economic output, grew at a 1.6% annual rate, down from an initial estimate of 2.4%, and slower than 3.7% in the first quarter.

Republicans say the Democratic agenda is to blame for the bad economic news.

“Today’s disappointing GDP report caps off another week’s worth of evidence that President Obama must change course and abandon his job-killing policies to end the uncertainty that is keeping people out of work,” House Minority Leader John Boehner (R., Ohio) said Friday.

Amid the continuing economic weakness, some nonpartisan analysts now believe there is a good chance Democrats will lose their majority in the House. Last week, the Rothenberg Political report downgraded the re-election chances of five House Democrats, and the Cook Political Report did the same with 10 House Democrats.

Early next week, the Cook report expects to downgrade the ratings of an additional 10 Democratic candidates, said David Wasserman, the report’s editor for House races. The Cook report would then list nearly 80 seats as at “substantial risk,” Mr. Wasserman said. Republicans need to capture a net 39 seats to take control of the House.

These trends are driven almost completely by the bad economy, Mr. Wasserman said.

“As the window of opportunity for recovery before the election closes, more Democrats are entering the danger zone,” he said. “Most voters don’t believe there is any recovery under way.” (Laura Meckler, “Democrats Face Economic Facts: Updraft Unlikely,” Wall Street Journal, 8/28/10)

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