Obama Faces Political Concern on Jobs After Election Setbacks
By Nicholas Johnston and Heidi Przybyla
Nov. 5 (Bloomberg) — Voters delivered the unmistakable message two days ago that they are worried about the U.S. economy, and tomorrow they could have even more reason to fret.
The unemployment rate for October is expected to notch up to 9.9 percent on its way to punching through the 10 percent mark early next year, according to the median forecast of economists in a Bloomberg survey.
A 10 percent jobless rate would be the highest in 26 years, ensuring that the economy remains a top issue in the midterm Congressional elections next November, and a political headache for President Barack Obama.
“The number one goal every day, the president walks in every meeting and it’s all about the economy and jobs,” said Chief of Staff Rahm Emanuel said in a telephone interview.
Exit polls from the Nov. 3 elections showed the economy was the primary concern for the vast majority of voters as they turned out Democratic candidates for statewide office, with 89 percent of voters in New Jersey and 85 percent in Virginia saying they were worried about the direction of the nation’s economy. The elections “said the economy was a top priority,” Emanuel agreed.
The Democratically controlled Congress could hand the president a well-timed legislative gift as early as today by approving a $45 billion plan to extend jobless benefits for millions of unemployed through the winter holiday season, expand a tax credit for homebuyers and provide tax refunds to money- losing companies.
The president’s advisers are casting about for additional ideas to spur job creation without increasing the deficit. Obama convened a public meeting about the economy on Nov. 2 and pledged “bold, innovative action.”
Infrastructure Bonds
Under consideration is creation of a government-backed bond program to encourage infrastructure projects, government support for weatherizing and retrofitting buildings, and trade policies that would encourage manufacturing. The White House already announced plans to open up credit for small businesses.
Obama and his economic advisers in February pushed for approval of a $787 billion economic stimulus package, which they said would hold the unemployment rate below 8 percent. The rate reached 9.8 percent in September, bringing total job losses since the recession began in December 2007 to 7.2 million.
The administration, not wanting to look like it’s downplaying joblessness, has been predicting for months that unemployment will worsen. Obama said in a June interview with Bloomberg News that it could hit 10 percent by yearend.
‘Overriding Focus’
“This is my administration’s overriding focus,” Obama said at the Nov. 2 meeting. “Having brought the economy back from the brink, the question is how are we going to make sure that people are getting back to work and able to support their families.”
The day after Obama spoke, Republicans swept governors’ races in New Jersey and Virginia as Democrats were rejected by voters concerned with high unemployment.
In last year’s presidential elections, Obama carried both states, New Jersey by 15 points and Virginia by five — the first Democrat to do so since 1964.
Unless the jobless rate begins to come down by next November, when the entire House of Representatives, 34 Senators and 37 governors will be elected, Democrats may face political fallout, said Peter Hart, a Democratic pollster.
“While the Obama administration has a thousand different things on their radar, unless they get jobs under control, they’re going to end up paying a price in 2010,” Hart said. “If you want to know how the 2010 election will turn out, all you have to do is look at the unemployment numbers. If it’s over 10 percent, it’s going to be a huge loss.”
Bloomberg.com
