Obama’s trust issues

You never get a second chance to make a first impression, at least not in this economy. As the Obama agenda tanks in the polls, critics rail against the administration’s suit against Arizona’s new immigration law, the healthcare reform law, new financial-services regulation they claim will further stifle credit and therefore the economy and an ill-advised approach to Middle East policy, among other complaints. Yet as the Obama administration nears the 18-month mark and wades into Bushian unpopularity, it is becoming clear that all roads lead back to the stimulus.

After President Obama gets an earful from irate congressional Democrats, takes the measure of polls showing the public’s disapproval with his performance and begins planning his next campaign for reelection, it may help him to rewind the tape and accept just how much the Recovery and Reinvestment Act brought his presidency to a point from which it is now in need of recovery.

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Arguably, some form of stimulus had to be passed to replace a devastating loss in consumer activity that followed the crash of 2008, and on that there was agreement from an ample number of economists on both ends of the political spectrum. The loss of public-sector jobs would have undoubtedly deepened unemployment and cut even more into consumer spending, possibly preventing the small bursts of growth we have seen in the last year.

But tell that to the public. The hurried legislating and foolhardy assurances from the administration that the bill would prevent unemployment from climbing higher than 8 percent have made the Recovery Act the punching bag that it is today. The most recent USA Today/Gallup Poll found that 57 percent of adults claim the stimulus has had no impact on the economy or has made it worse. In the poll, 60 percent of respondents said they doubt the stimulus is going to help the economy later on. Embattled Democrats, trying to run purely local campaigns, try touting construction projects paid for by the stimulus program but cannot mention the law’s name.

In his first days as president, Obama resisted pressure from the left to spend more than $787 billion, but he left Congress to write the bill. Lawmakers predictably stuffed it with funding for contraception, smoking cessation and the prevention of sexually transmitted diseases, and the process became a mockery. Obama raised the stakes with dire warnings, stating at one point, “We know if we do not act, a bad situation will become dramatically worse. Crisis could turn into catastrophe.”

With Gitmo’s-gettin’-shut-down boldness, the Obama economic team made a critical mistake in attaching a promise to unemployment numbers they couldn’t control and had no business attempting to predict in the freefall of late 2008 or early 2009. Furthermore, coming on the heels of the $700 billion Troubled Asset Relief Program (TARP), the president and his team did not appreciate that the public had no patience for additional unprecedented sums, particularly one that would exceed the cost of TARP.

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The combination of promise, process and price tag poisoned the well for the rest of the Obama agenda, from healthcare reform, which passed and remains unpopular, to energy and immigration reforms, which probably won’t pass. Poll show voters don’t trust the president or the Democrats running Congress, and at this point Democrats don’t trust the president either.

Unemployment is hovering at nearly 10 percent, and the political will for deficit spending is drying up in Obama’s own party. Stimulus may have been necessary, but if Obama had understood the cost of its defects, he would probably have done it differently.

Stoddard is an associate editor of The Hill.