Obama Now 'Owns' The U.S. Economy
President Obama's continued sequester attacks implicitly admit one thing: He now "owns" the economy. For four years, America's economic ennui was successfully attributed to his predecessor. Now beginning his second term, the "previous administration" is his own... and so is the economy that comes with it.
The recent mediocre economic growth report was worse than it seemed. The first quarter was supposed to be the year's "good" quarter. However coming in at just 2.5%, it was only slightly better than the Blue Chip analysts' 2.2% estimate for full year growth. It will be difficult to meet that annual figure, if the remaining quarters come in lower than the first quarter.
How bad would 2.2% annual growth be? It would continue to be economically tepid, while being politically disastrous. The political problem is it would only match the last three years' average growth rate - the same three years' performance for which the Obama administration has been blaming George W. Bush. If the first year of his second term is no better, doesn't that mean his stewardship of the economy has been no better too?
That is a dangerous question for Obama - and one America already appears to be asking. A recent Quinnipiac poll (of 1,471 registered voters, released 5/1, with a MOE of +/-2.6%) gave Obama just a 48% approval rating, versus a 46% disapprove. Only 27% of respondents were satisfied with "the way things are going in the U.S. today." How much of that dissatisfaction comes from the economy is clear: Obama's "handling of the economy" garnered only a 41% approval - to 53% disapproval.
Not only is Obama now politically exposed on the economy, he is policy-wise as well. Obama's first term resembled Bush's policies in many more ways than his Administration would care to admit. This was particularly true when it came to taxes. He acquiesced in an across-the-board extension of the Bush tax cuts, adding his own "stimulative" ones as well.
However, his second term began with an immediate and definitive break with this past: a whopping $620 billion increase at 2013's beginning. If there is another downturn, or even continued slow growth, Republicans will be quick to press the point that Obama permanently raised taxes on a still fragile economy.
Obama, sensing the economy's fragility and his own vulnerability to it, has cast the sequester that began March 1, as the economy's greatest adversary. Obama fought it vociferously and publicly - in a style reminiscent of his cross-country reelection rallies - before it took place. Even after he lost - a loss that seemed to truly surprise Obama and his advisors - he has continued to attack it.
The day following the disappointing economic growth number, he renewed his attack. On April 27, it was the topic of his weekly radio address. "There is only one way to truly fix the sequester: by replacing it before it causes further damage." Later that week, he again went after it while taking questions from the press: "It's damaging our economy. It's hurting our people. And we need to lift it."
While Congress may be reaching accommodation with the sequester's impact - first in the government funding bill running until October 1, and most recently in the FAA fix - Obama cannot.
It could be disputed how "damaging" the economic impact of an $85 billion cut that amounts to just 2.3% of federal spending and just 0.5% of the nation's GDP would be. However, the political damage of continued weak growth is beyond debate. Even a marginal economic impact could be politically major when the economy is already hovering around levels for which he castigated Bush. Having drawn a line in the sand, he needs the economy to not cross it.
Any hope Obama has of retaking the House and remaking his legacy runs through the economy. The social agenda with which he kicked off his second term has not gained traction and the over-hanging issue from his first term - Obamacare - continues to feel increasingly like a hangover.
In comparison to where he was four years ago, Obama has little with which to counter a weak economy, including the excuse of Bush. Today, Obama owns the economy, and he is increasingly and rightfully worried it may come to own his legacy.