Trouble is, it’s bad news for America.
There was so much bad news of such an important economic scale in the first days of June 2011, it’s not looking good for a U.S. recovery anytime soon. Or the president’s approval ratings or his re-election bid.
This caught my attention on the front page of the Times on June 2:
No American president since Franklin Delano Roosevelt has won a second term in office when the unemployment rate on Election Day topped 7.2 percent.
The unemployment rate, meanwhile, edged up to 9.1 percent from 9.0 percent in April.
“The economy clearly just hit a brick wall,” said Paul Ashworth, chief United States economist at Capital Economics. “It’s almost as if it came to a complete standstill.”
Bad news all over.
“The prospect of economic growth getting up to a point and unemployment getting down to a point that is comfortable for an incumbent are declining by the month, and are now not very high at all,” said William Galston, a policy adviser in the Clinton White House and a veteran of Democratic presidential campaigns.
He added, “I hope there’s someone on the inner circle with the standing and the guts to tell the president that, if things continue the way they’re going, despite everything he’s done, he’s going to be in trouble.”
But then, someone else who saw that Times article on presidents and unemployment and re-election sees its potential.
Ironically, an inert federal government might just be the thing the economy needs to begin recovering and reducing the unemployment rate. If the current impasse over raising the debt ceiling leads to a compromise that actually cuts federal spending, it might inject a sense of confidence in the economy.
That’s an awfully big if. Nobody seems to be moving off brinkmanship mode right now.
As this piece from the Cato Institute argues, Washington’s efforts to prop up the housing industry ended up just prolonging the fall in prices that has now taken hold. That’s typical of the effect of all government efforts to stimulate the economy with tax money.
If gridlock forces government to get out of the way, Obama might win in spite of himself.
Here are a couple I’ll add: If the focus were sincerely on what’s best for the future of American citizens instead of the politicians, and if government actually tried to work on the principle of subsidiarity instead of expansion, we may all win.