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Sadly for Obama, his economic gains are yesterday’s story

If you are a journalist these days, and you find yourself with U.S. President Barack Obama, you are going to end up talking about the economy, whether you want to or not.

When Mr. Obama met reporters at the White House Friday, he spent the entirety of his opening remarks on a recent spate of positive economic indicators and all the things he thought Congress could do to make the economy grow even faster. The first question from the press corps: the situation in the Middle East.

The President fielded half a dozen questions without once being asked to react to that day's jobs report, which showed American employers had created more than 200,000 for the sixth consecutive month, or an early estimate from earlier in the week that put the second-quarter growth rate at an annualized 4 per cent. So he went ahead and answered the question he thought he should be getting.

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"I think it's useful for me to end by just reminding folks that, in my first term, if I had a press conference like this, typically, everybody would want to ask about the economy and how come jobs weren't being created, and how come the housing market is still bad, and why isn't it working," Mr. Obama said. "Well, you know what? What we did worked and the economy is better."

This wasn't an isolated attempt to set the agenda. A couple of days earlier, Mr. Obama had given an interview to the Economist, a transcript of which the magazine published on its website over the weekend. The subject of the interview was Africa because the President this week is hosting almost 40 African leaders in Washington for a summit on investment. As the Economist's editors exhausted their questions on Africa, the conversation began to drift to U.S. foreign policy. After answering a question about whether he feels "let down" by Russian President Vladimir Putin, Mr. Obama sought to get the interview back on track, or at least his track: "Anything on the U.S. economy? I noticed the occasional cover story saying how unfriendly to business we are."

It's clear what Mr. Obama is trying to do. The legislative calendar, such as it is in the Tea Party era, is over. Congress this week began its five-week summer recess, leaving only a few weeks' worth of legislating between now and the midterm elections in early November. At stake in those elections is control of the Senate, which many forecasters say will slide to the Republicans. If Mr. Obama and the Democratic Party are going to the beat the odds, they need to counter the Republican narrative that the Obama administration has been a failure. If Mr. Obama can convince enough voters that he deserves credit for the economy's recent strength, he may be able to save just enough Democratic incumbents to hold the Senate. It's probably the only play he has.

The Democratic strategy of wrapping the President in gross domestic product and hiring statistics will depend on the extent to which voters are willing to suspend their faculties of disbelief. Mr. Obama hasn't done much of anything since he bullied the Republican-led House of Representatives into accepting relatively minor tax increases in the wake of his 2012 election win.

That's not necessarily the President's fault, but it still means there's a significant time gap between this year's evidence of stronger economic growth and the last time voters witnessed politicians do anything positive for the economy. Mr. Obama will need to summon all of his considerable powers of persuasion to disassociate himself from the political inaction of gridlock that has crippled the economic recovery.

But let's say some voters are willing to cut Mr. Obama some slack and consider the President's assertion that "what we did worked." To what extent does he deserve credit for the economy's strength? He correctly identified that a big fiscal stimulus was needed to arrest the Great Recession and he avoided needless economic destruction by saving General Motors and Chrysler.

The near-term budget crisis that the United States appeared to be facing has been averted, but it's unclear who deserves the credit: Mr. Obama for forcing tax increases on Republican lawmakers, or Republican lawmakers forcing deeper spending cuts on Mr. Obama. The housing market is stronger, but sales have levelled off short of their pre-crisis peak. Stock prices are at record levels, but that has more to do with the Federal Reserve's extreme efforts to keep interest rates low, forcing investors into equities if they want any amount of yield.

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During the Economist interview, there were jokes about how Mr. Obama could have done more if he had been an autocrat. The transcript says there was laughter. The reality, though, isn't funny. America's elected officials largely have let them down. Fortunately, its unelected officials have performed better. If Mr. Obama wants to claim credit for the U.S. recovery, he needs to put at the top of his list his decision to reappoint former Fed chairman Ben Bernanke for his second term.

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About the Author
Senior fellow at the Centre for International Governance Innovation

Kevin Carmichael is a senior fellow at the Centre for International Governance Innovation, based in Mumbai.Previously, he was Report on Business's correspondent in Washington. He has covered finance and economics for a decade, mostly as a reporter with Bloomberg News in Ottawa and Washington. A native of New Brunswick's Upper St. More


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