As Republican presidential candidates intensely jockey for position, the White House is having internal debates over what approach President Barack Obama should take on the struggling U.S. economy. With fifteen months to go until the 2012 presidential election, President Obama must begin to turn things around if he is to be reelected to a second term.
The Iowa straw poll and the Republican debate last Thursday, while showing deep divisions within that party, manifested great unity among the candidates in a common purpose to defeat President Obama. Contenders bashed the president's failure to right the economy and lead the nation toward recovery. They attacked the burgeoning annual deficits the Obama administration has incurred and they slammed the lack of progress on the nation's painfully high unemployment rate, which is still more than 9%.
Of course, Republican candidates blamed President Obama for Standard & Poor's downgrade of the U.S. credit rating. Never mind that S&P did not single out the president in its report:
The prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process.
President Obama did inherit from President George W. Bush the worst recession since the Great Depression. And recent revisions in economic data show that the U.S. economy was declining at a faster rate than previously thought. The unemployment rate was at 7.1% when President Bush stepped down but it was in a nosedive. The former president handed off huge annual deficits, in large part due to the Bush tax cuts, two wars and the Medicare Prescription Drug and Modernization Act, all unfunded. Further, the financial markets had collapsed and the U.S. housing market, heavily over leveraged due to weak oversight, was in shambles.
From the moment President Barack Obama took office, Republicans in Congress have fiercely fought the president on every one of his initiatives. They pushed back hard on a stimulus plan that helped avoid another depression, emergency measures that saved the U.S. auto industry, as well as financial and health care reform. In each case the resulting legislation was demagogued and ultimately watered down. Of course, the very Republicans who criticized the stimulus bill most harshly, including Governor Rick Perry of Texas and Representative Michele Bachmann of Minnesota, used the funds to their political advantage.
Since the 2010 midterm elections, the conservative Tea Party faction that is passionately committed to spending cuts and no new taxes has kept the Republican Congressional leadership in line. Most Republicans legislators have signed Grover Norquist's pledge not to raise taxes. So powerful is that pledge that every GOP candidate in Thursday's debate said they would not approve a compromise consisting of $10 in cuts for $1 dollar in new taxes.
Compromise is a dirty word for Republicans. Cutting government spending and lowering taxes, they say, is the best way to grow the economy. Yet the Bush tax cuts resulted in little job growth during his presidency, and recent government spending cuts, especially at the state level, has resulted in a half million layoffs nationwide.
Many economists believe a balanced approach, that is some increased revenues as well as spending cuts, is the best path to recovery in the short term. Polls show a majority of Americans favor ending the Bush tax cuts for the wealthy. Yet Republicans successfully linked increasing the debt ceiling to more spending cuts. No spending cuts would have meant not raising the debt ceiling. That is like a family going to the bank and saying they are not going to pay all their loans until they are able to cut their household expenses.
This brinksmanship in Congress, the lack of a sustained recovery in the U.S. and the near collapse of the world economy are together creating chaos on the financial markets. That leaves the road ahead uncertain and millions of unemployed Americans with little hope.
The Republicans have President Obama cornered between a rock and a hard place. While some in the White House recommend a middle course, which may appeal to independent voters, it seems most unlikely that such an approach will be enough to assure him reelection. This is especially true when contrasted to GOP political attacks, such as "a failed economic policy," "the first president in history to be downgraded," and "record deficit spending."
While the president remains personally popular among Americans, his job approval ratings are declining. This is the time for bold action on the part of the president. He must go on the offensive with a strong jobs plan, and show he is willing to take the lead in restoring hope for all Americans. That would be change one can believe in.