Analysis: Obama pivots to new string of problems

Friday, July 29, 2011, Vol. 35, No. 30

WASHINGTON (AP) — President Barack Obama dodged a debt-ceiling fiasco Tuesday. He reacted with a wiped brow more than a victory lap, and with good reason.

As Republicans gradually weigh a potential challenger, Obama's re-election bid faces daunting problems: high unemployment, a limping economy, lackluster approval ratings and a demoralized liberal base. The last-minute debt agreement prevented a full-blown disaster. But it might do little or nothing to help Obama's campaign.

It cuts spending that might otherwise have produced jobs. And for now, at least, it keeps Obama from claiming he tackled long-festering problems such as Medicare, Social Security and a revenue base that consistently lags behind the nation's spending habits.

Obama has considerable political assets, including robust fundraising and an up-and-running nationwide operation. Also, the Republican primary process is murky, and it's too soon to gauge whether it will produce a top-notch nominee who can match Obama's proven campaign skills.

But job worries are dominating this election, and economists see little likelihood of a serious recovery before the November 2012 election. The man who ran on hope and change in 2008 is hoping voters will decide against change this time, fearing the GOP nominee would be worse.

Obama seems well aware of his challenges. In his Rose Garden speech Tuesday after the Senate completed the deal to avert a national default, a subdued president did not use words such as "victory" or "win" or "success." He seemed eager to pivot away from the unseemly debt-ceiling debate as fast as possible.

"While Washington has been absorbed in this debate about deficits," he said, "people across the country are asking what we can do to help the father looking for work" and "the single mom who's seen her hours cut back at the hospital."

Obama listed several of his stalled proposals, including "patent reform," a payroll tax cut extension and an "infrastructure bank," which would provide loans for companies repairing bridges and roads. But with the economic recovery appearing to lose what little steam it once had, and the 2009 stimulus plan ended and politically unpopular, the president seems to have few effective tools at his disposal.

The Federal Reserve "is out of arrows," said Republican strategist Rich Galen, and Obama "doesn't seem to have any new ideas."

In fairness, the GOP-controlled House has blocked several of Obama's ideas, including his repeated call for ending tax breaks for the wealthy. That has emboldened Republicans and infuriated liberals, who already were peeved at Obama for not ending the Iraq war sooner and for dropping his 2009 push for a government-run health plan to compete with insurance companies.

Galen said he thinks the public is losing confidence in the Obama administration's leadership skills and ideas. He said the Democrats' liberal base suffers "a lack of enthusiasm." Liberals will vote for Obama, Galen said, but they might engage in less volunteering, fundraising and so forth.

Polls give a mixed report card to the president. His approval ratings hover at about 42 percent. That's similar to what Ronald Reagan received at this point in his first term, and he coasted to re-election in 1984.

The three presidents who followed Reagan had higher approval ratings at this stage. Perhaps the polls mean little: the president who had the highest ratings of all, George H.W. Bush, fell far and fast, losing his re-election bid to Bill Clinton.

Americans have a dramatically lower opinion of Congress than they do of Obama. And polls suggest they are paying scant attention to the still-unsettled Republican presidential race, which may or may not help Obama.

His advisers say the 2012 election "will be a choice, not a referendum." It's a recognition that the sluggish economy and the public's coolness to the administration's bank bailouts, stimulus bills and health care overhaul could make it harder for Obama to run on his record than on a theme of "the other guy would be worse."

Obama, of course, realizes he can't hide his record from voters. "I'm probably going to win or lose depending on their assessment of my stewardship," he recently told Missouri-based KMBC-TV.

Republican hopefuls such as Mitt Romney seem happy to lie low for now, letting Obama take hits for a debt-ceiling mess, Washington bickering and a 9.2 percent unemployment rate. Obama adviser David Axelrod says it won't work.

He said Romney spent days "trying to jump and dive and dodge" taking a position on the debt-ceiling compromise bill, finally announcing he opposed it. Romney and his fellow Republicans "have done tremendous damage to their brand," Axelrod said, because they let their conservative activists dictate terms that included no tax increases on even the wealthiest Americans and most profitable companies.

Obama campaign workers in dozens of states are contacting former supporters, urging them to re-enlist in the effort, and sometimes listening to their complaints about broken promises and dashed hopes. Typical of the challenge is the AFL-CIO's critique of the debt-ceiling accord that Obama helped shape.

"Where are the jobs?" the union said in a blog post. The debt deal "is bad for our country, and especially bad for working people."

Obama once had hoped for a "grand bargain" with congressional Republicans. It would have begun reshaping entitlement programs and generated up to $1 trillion in new tax revenues over 10 years, mainly from corporations and wealthy people. Instead he settled for a less ambitious package of spending cuts alone.

Only $21 billion in cuts will occur before the 2012 election. But even that comparatively small amount could somewhat inhibit job creation, economists say. Obama's re-election hopes badly need a stimulative force from somewhere.

Obama's favorability ratings have fallen among all-important independent voters. Axelrod said he thinks the drop will be temporary, and independents are disgusted with everyone involved the loud partisan squabbling over the debt limit.

On Wednesday night, Obama will return to Chicago and to fundraising, where he clearly has an early edge over his GOP rivals. In the Aragon Ballroom, local favorites Herbie Hancock, Jennifer Hudson and the band OK Go will entertain donors who paid $50 to $35,800, the legal maximum.

A few hours in his hometown may let Obama catch his breath after a grueling debt-limit struggle. Then he will plunge back into all the challenges that the near-crisis overshadowed for a while.