"You should pass this bill now." -- President Obama, in presenting his jobs bill to Congress Sept. 8.
Just over a week after President Barack Obama's jobs speech to the Congress, prospects look dim for passage of his related jobs bill and, on many fronts, things have taken a downward turn for Obama and the Democratic Party. A tough week.
The situation for Obama is not unlike that which President Jimmy Carter faced toward the end of 1979, before his one-sided defeat in 1980 by Ronald Reagan. Will a Democratic challenger for the nomination emerge, as Sen. Ted Kennedy did in late 1979? Will Republicans nominate next year a prospective winner, a la Reagan in 1980, or loser, like Sen. Barry Goldwater in 1964?
First, about the jobs bill: There, of course, was no jobs bill at the time Obama made his congressional speech. It has now been submitted but House Democratic Leader Nancy Pelosi and Senate Majority Leader Harry Reid both have suggested that it be broken apart and offered in separate legislative pieces, some of which may never emerge from committee. Some of the package's proposals were offered in 2009 and defeated in what was then a Democratic Congress. Even adherents of Stimulus II do not argue for its job-creating potential.
Mainly, the supporters argue that it will stem further job loss in the public sector in particular. Republicans now have introduced their own version of Stimulus II. The whole enterprise has been threatened by the unfortunate disclosure that a major early recipient of Stimulus I's funds, solar-company Solyndra, now in bankruptcy, ate $535 million in taxpayer-backed loan guarantees without ever having a viable business plan. Obama had visited a Solyndra facility, Vice President Joe Biden had addressed the opening of a plant, and the business's principals had been generous donors to the Obama presidential campaign. The company is now the target of a federal criminal investigation; the FBI has seized its records. This, in turn, has brought attention to the whole "green jobs" component of Stimulus I and the reality that, even by the most optimistic estimates, jobs created in the program cost in excess of $640,000 taxpayer dollars per job.
Some parts of the Obama Stimulus II proposal may survive, notably the extension of payroll-tax relief and of unemployment benefits. Had it not been for the Solyndra and green-jobs revelations of recent days, the outloook would have been better.
There are a number of other factors in play.
On the overall economy: I've noted here before that no incumbent president except Franklin Roosevelt has ever been re-elected with an unemployment rate exceeding 7.8 percent. The administration this past week conceded that the rate is likely to linger around 9 percent for most of 2012. The true rate, if you count those only partially employed or who have given up looking for work, is somewhere between 18-20 percent. Most economists now concede that the current economic downturn, which still has a way to run, will prove to be the longest and deepest since the Great Depression of the 1930s.
Republicans will have ample economic ammunition to fire next year beyond the unemployment numbers. In the Obama years the U.S. has undergone the first sovereign-debt downgrade in U.S. history; federal spending as a percentage of Gross Domestic Product (GDP) is at 25 percent, the highest since the end of World War II; federal budget deficits similarly are the highest since the end of World War II; job growth coming out of recession is the lowest since WWII; the home-ownership rate is the lowest since 1965; the percentage of taxpayers paying income tax (49 percent) is the lowest in the modern era; and the percentage of Americans receiving government benefit payments (47 percent) is the highest in modern history. Nothing in any of these categories will change importantly before election day, 2012.
Long-term debt reduction: Faced with falling public-approval numbers and two unexpectedly large congressional special-election losses, the Obama White House has backed away from its earlier expressed intention to propose significant entitlement-program (Medicare, Social Security, Medicaid) reforms for the bipartisan congressional Gang of Twelve, co-chaired by Sen. Patty Murray, to consider in framing its proposals due on Thanksgiving. If the Gang's proposals are not submitted and passed by Christmas, automatic cuts will take place, which are sure to enrage key constituent groups. Meantime, after their first official meeting, several Democratic and Republican members emerged mouthing the usual partisan reservations about cutting entitlement spending (Democrats) or raising taxes (Republicans).
A week ago I was mildly optimistic regarding the framing and passage of bipartisan proposals from the Gang of Twelve — in substance, approximating the proposals of the Obama deficit commission's bipartisan proposals of a year ago. Now I fear an even nastier December replay of the partisan ordeal which surrounded the lifting of the federal debt limit earlier this year.
Congressional-election shock: Republicans won one-sided victories this past Tuesday in New York and Nevada congressional special elections which were expected to be close. Republican Bob Turner, a retired communications executive, won the New York race to replace resigned New York Rep. Anthony Weiner by a whopping margin. Obama had carried the Queens/Brooklyn district by 11 percentage points in 2008. Registered Democrats outnumbered registered Republicans in the district by 3-to-1.
In Nevada a former state Republican chairman, Mark Amodei, beat Democratic State Treasurer Kate Marshall by 28,000 votes in a congressional district Republicans had carried by only 800-odd votes in 2008. Marshall had been favored to win.
Events like this spook the herd. Even before that, congressional Democrats were running scared because of Democratic House losses in 2010 (63 seats giving Republicans control of the chamber) along with lesser losses in the Senate where Republicans could take control in 2012 (when more than twice as many Democratic as GOP incumbents will be on the ballot). Add the Tuesday results to the current dismal economic outlook — as well as Obama's falling approval numbers — and the incumbents will be looking for ways to separate themselves from the president and his policies. Nothing is more important to an incumbent than his or her own survival. Take it from there.
The question of a Democratic challenger to Obama: If an obvious alternative, such as Kennedy in 1979, presented him or herself, the race already would be getting underway. But the only obvious alternative at this point is Secretary of State Hillary Clinton, narrowly defeated in the 2008 nomination race by Obama. She has foresworn any 2012 candidacy and, moreoever, already has expressed her intention to leave the Cabinet at the end of next year. No other Democrat at this point seems willing to mount a challenge.
The history of such intra-party challenges, in any case, is not promising for the incumbent party. In the end, for instance, Carter defeated Kennedy in 1980, although Kennedy entered the contest the favorite. But Carter was weakened sufficiently that his loss to Reagan was of landslide magnitude in November. Democrats may be restless or even angry with Obama, seeing Tuesday's congressional losses as referenda on his presidency, but in the end they will have no option but to rally behind his re-election and to sink or swim with him.
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