It was supposed to be the summer of recovery. But the recovery isn’t happening, and consumers, employers, and investors have registered their votes on Obamanomics: thumbs down. The drop-off in housing sales tells us that despite historically low interest rates and available credit, consumers are nervous and lack confidence about the future. Better not to buy now. The stock market, the best indicator we have about expectations for the economy, has nosedived as well:
The Dow Jones Industrial Average stumbled back below 10000 on Thursday, an unwelcome milestone as worries about the U.S. economy increase. The blue-chip index erased early gains to finish down 74.25 points, or 0.74%, at 9985.81. The close is its first finish below the psychologically important level since July 6. …
Thursday’s stock declines came as the latest economic bad news—a stalling of manufacturing activity in the Kansas City district of the Federal Reserve Bank—added to a pile of economic warning signs in recent weeks.
Trading volumes were anemic, with less than four billion shares changing hands—below the daily average this year of 5.1 billion.
There is a political and economic way forward for Obama — not in time to spare him and his party bruising losses in November but to salvage the last two years of his presidency. First, and no easy thing for a man with a messiah complex, Obama needs to stop telling us that what he’s done has worked. It hasn’t, and it makes him look foolish. Second, he should listen to Douglas Schoen:
Mr. Obama and his Democratic colleagues also need to stop their phony populist campaign emphasizing that they have taken on the banks and Wall Street. Populism—particularly of the left-wing type that seeks to expand the role of government with redistributive fiscal policies and increases in government spending, intervention and ownership—rarely if ever works. In the absence of a successful argument for the administration’s overarching policy approach, a populist campaign would be as fruitless as blaming George W. Bush for every ill America now faces.
Beyond that, the administration must emphasize that it understands the electorate’s concern about fiscal prudence, the deficit, the debt and the need to balance the budget. The independent voters who hold the fate of the Democrats in their hands are looking for candidates who champion, in a bipartisan context, fiscal discipline, limited government, deficit reduction and a free market, pro-growth agenda. If Democrats don’t offer this, they will be branded liberal tax-and-spenders.
They are already branded the liberal tax-and-spenders, but that is smart policy and smart politics.
In the wake of the November election, there will be time for reflection, one hopes. If Obama wants to rescue his presidency and assist rather than encumber our recovery, he has to stop doing what he has been and start doing what his critics urged. After a summer of brutal economic developments and a decisive electoral defeat in November, maybe he’ll be ready. We’ll see.