It’s the economy, stupid

 

If Democrats required any further evidence that their autumn campaign season is doomed to be a grim slog, sort of a political version of the Bataan Death March, they need only have checked out CNN’s interview last night with Obama economic advisor Austan Goolsbee.
He couldn’t muster even the slightest upbeat spin – a testament to his honesty perhaps, but clearly a fresh indicator that the White House has abandoned hope of boosting the economy prior to election day, and instead is girding for a potential tsunami.

“We have now encountered, you know, a pretty tough spot,” Goolsbee told CNN. He talked about the various “headwinds” that continue to batter the economy. He said, “You just got to keep on climbing your way out. I mean, that’s the only way we got to do it…It’s a huge hole.” When asked whether the jobless rate might soon be in double digits (a new jobs report is due this Friday), he said: “You know, I – I try to stay out of the forecasting game, ’cause the – seems like all you can do is get in trouble.”

When asked whether we might be poised for a double-dip recession, he said: “I don’t think we will have a double dip recession.  But it’s – clearly, anybody should keep their eye on that….It’s clearly something we’ve got to, we’ve got to be mindful, and we’ve got to prevent.”

Feel better now?

And here is Goolsbee’s diagnosis, translated into political terms: Democrats may well be toast in November.

I wrote back in January, “It’s a no-brainer that the Democrats will get beaten up in ’10,” but that the usual midterm losses suffered by a majority party could be mitigated if the voters – particularly independent swing voters – perceived that the economy was on the mend by the end of June. In other words, if people had six months to feel good on the way to the ballot box, Democrats would probably retain their House and Senate majorities. But that June deadline has come and gone – last Friday, Ben Bernanke acknowledged that the second-quarter economic recovery was far more sluggish than anticipated – so the Democratic House may be gone as well. And Frank Newport, the Gallup poll guru, apparently concurs; in a new memo, he talks about “the potential for a ‘wave’ election.”

It’s clear that little of substance will be accomplished on the policy front prior to November; political stasis reigns. Democrats won’t push for new stimulus spending, because many on their own side – particularly those running in swing districts – are worried about deepening the budget deficit. (Former Obama economic advisor Laura Tyson’s weekend argument in favor of a second stimulus has already fallen on deaf ears.) Democrats can rightfully argue that the economy would be deeper in the tank if not for the ’09 stimulus law – most economists generally agree that the jobless rate would otherwise be topping 11 percent – but it’s hard to win on the stump with a slogan like “Hey, folks, things might even be worse!” Few Democrats will tout their pro-stimulus votes in autumn campaign ads.

As for the Republicans, suffice it to say that they are politically invested in ensuring that things will stink as much as possible on election day. President Obama and the Democrats want to move swiftly in September on a bill that would promote lending to small businesses, and we can reasonably assume that the GOP will erect the requisite roadblocks.

Republicans don’t have any fresh ideas of their own about curing the sick economy (unless the extension of tax cuts for the rich constitutes something fresh); the polls report that Americans dislike the congressional GOP just as much as they dislike the Democrats; and the polls consistently report that a bigger share of Americans blame George W. Bush than Obama for the rotten economy. But no matter. The GOP is already running TV ads that make it appear that the great recession began on the day Bush left office. And, in all likelihood, the GOP will get away with it. History teaches us that the majority party typically takes the hit on election day when people are feeling economically vulnerable – and, increasingly, Democrats seem resigned to that fate in ’10.

Groucho Marx, that great comic and cynical sage, once said that “politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.” It’s actually worse than that. At the moment, we have two parties that can’t even agree on what economic remedies are right or wrong. Result, more gridlock. November advantage, Republicans.