America’s fragile, high-unemployment, debt-ridden economy is looking shakier than ever, threatening Barack Obama’s chances of a second term and boosting support for the GOP’s drive to sharply cut government spending.
That is the clear conclusion from two bombshell reports this week. One is from a respected credit-rating agency that shifted its economic rating of the United States from “stable” to “negative,” warning that it could lose its AAA rating if Congress doesn’t get control of runaway spending.
The other from the latest Washington Post poll that said 57 percent of Americans surveyed now disapprove of the job President Obama is doing on the economy - and that he is doing worse among independents.
The negative rating from Standard & Poor’s shook the White House’s high command at a time when Mr. Obama is traveling the country, trying to boost support for his much slower deficit-reduction plan. The big difference from the House Republicans’ budget plan: His calls for much higher taxes on the economy when most Americans are struggling to cope with $4-a-gallon gasoline, higher food prices, flat or slow wage growth, a declining stock market, and, for many, the difficulty of finding a good paying full-time job.
Nearly two dozen states still have unemployment rates of 9 percent or higher.
“We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013,” the S&P warned. “If an agreement is not reached … this would in our view render the U.S. fiscal profile meaningfully weaker.”
Public anger over excessive government spending has always been an issue in political campaigns but the unprecedented deficit and debt levels experienced in the past two years, and worsening this year, have propelled the issue into the top tier of voter concerns, according to most polls.
This year’s budget deficit under Mr. Obama’s spending policies will be a monstrous $1.6 trillion in a sky-high $3.8 trillion budget, pushing total public debt well beyond $14.3 trillion and climbing.
Republican leaders appear to have successfully tied their plan to cut spending and rein in unprecedented debts with job creation, arguing that the more money government takes out of the economy through taxes and borrowing, the weaker it will be.
Mr. Obama’s declining numbers seem to suggest that the voters are buying into that argument and the latest S&P warning only reinforces their belief that out-of-control spending and increasing government debt is at the core of the economy’s continuing weakness.
“Half of all Americans disapprove of his overall job performance,” and 37 percent “strongly disapprove,” the Post said - a shift that is clearly tied to the nation’s economic and fiscal illnesses.
The White House was especially shaken by Mr. Obama’s declining support among independent voters, who had strongly backed him in 2008, but now 55 percent of them disapprove of the job he’s doing, a near-record level.
Equally ominous for the president at this early stage in the two-year election cycle: In a hypothetical matchup with Mitt Romney, Mr. Obama edges out the former governor by a precarious four-point margin, 49 percent to 45 percent.
But as hard as the president tries to paint the economy as doing better, the bleak reality is that unemployment shot up above 9 percent in 2009 and 2010, and is still over 10 percent in many states like Oregon, South Carolina, Kentucky, California, Missouri, Florida, Rhode Island, Michigan and Georgia. Even in other states where unemployment was in the 9 percent or higher range, it still felt like the recession wasn’t over.
“For the first time in available data, more than half the whites without college degrees see the economy as deteriorating,” the Post reported Tuesday.
Mr. Obama and his advisers had hoped to make the 2012 election all about his “win the future” policies on education, research, health care reform implementation, improving the environment, and sustainable green energy and biofuels.
But the economy remains weak and may be getting weaker under his stewardship. Many economic analysts have lowered their earlier quarterly growth forecasts to the high-to-mid-2 percent range as a result of $100-a-barrel oil and $4-a-gallon gas that is slowing down the nation’s economic growth rate.
It is also fueling higher prices across the economy and reigniting inflation fears. The Labor Department last week reported that prices rose by 0.5 percent in March, pushed up by 3.5 percent and 0.8 percent increases in energy and food prices.
“This is the fourth straight month of large gains in consumer prices,” writes University of Maryland economist Peter Morici in has latest analysis. “The U.S. economy is headed for stagflation,” he warns.
With nearly eight in 10 saying that inflation is getting worse, and more than seven in 10 saying gas prices have resulted in financial hardship, Mr. Obama’s growing economic problems are reaching critical mass and he is seen as doing nothing about them.
He can’t blame his failed policies on George W. Bush anymore. The 4.6 percent and 5.8 percent unemployment rates in the last two years of Bush’s presidency are looking pretty good at this point.
Donald Lambro is a syndicated columnist and former chief political correspondent for The Washington Times.