The Dog Days of Recovery Summer

The new jobless figures are out. The US lost another 54,000 jobs, pushing unemployment from 9.5 percent to 9.6 percent. There should be no real surprises here. (See the WSJ coverage). Following the release of the job numbers, the President remarked the economy is moving in “the right direction; we just have to speed it up” and promised  “a broader package of new ideas next week.”

The “broader package of new ideas” has been under consideration for some time. According to Glenn Thrush (Politico): “Administration officials have been huddling almost continuously during the past week, brainstorming for ideas that would boost employment without hiking the massive federal deficit.” Regardless of the outcome, Thrush predicts: “the administration will have a tough time selling nearly any package to terrified, Obama-phobic Hill Democrats who increasingly blame the president – and his ambitious, expensive legislative agenda – for their dismal prospects this November.”

A piece by Anne E. Kornblut and Lori Montgomery in yesterday’s Washington Post conveyed a similar sense of crisis. As the administration weighs its options—including a pay-roll tax holiday—“panic is setting in among many Democratic candidates who fear it is too late for Obama to convince voters that he understands the depth of the nation’s economic woes and can fix them.”

Yet, even if the administration can steer additional stimulus through the Congress, it is doubtful that it will make a difference by the elections.

If administration officials can agree on a policy path, it is not clear that it would be approved in the current environment on Capitol Hill. And even if Congress did approve new measures to bolster the economy, they would probably come too late to make a difference in the lives of recession-weary voters before the midterms. “Substantively, there is nothing they could do between now and Election Day that would have any measurable effect on the economy. Nothing,” said the Brookings Institution’s William Galston, who was a domestic-policy adviser to President Bill Clinton.

Regardless of the administration’s “broader package of new ideas,” all of this may be moot. At this point, there would seem to be few incentives for House and Senate Republicans to cooperate with the administration given their rather stunning lead in recent polls.  Absent some exogenous shock, the GOP seems on a glide path to electoral victory.

Of course, two things should temper Republican elation. First, there is evidence that current voter preferences are best interpreted as being as much a rejection of incumbent Democrats as they are an embrace of the GOP.  As a new Gallup Poll reveals: “Among voters backing Republican candidates, 44% say their preference is ‘more a vote against the Democratic candidate,’ while 48% say it is ‘more a vote for the Republican candidate.’” The implications: “negative voting may be the pivotal factor.”

Second, if the GOP prevails in the elections it will have to do something other than rely on worn talking points.  It will have to prove that it is capable of governing and delivering a set of policy outcomes that are superior to those provided by the current Democratic majority. Those of us who remember the last  GOP majority might find this  to be a tall order. Unfortunately for the GOP, the most detailed proposals to date have focused on serious entitlement reform that will be

(1) difficult to sell in the midst of a deep recession, and

(2) all  too easy to portray as part of a “reckless privatization  plan” designed to force old people to eat dog food while favoring big business (I can already imagine Krugman’s columns).

Absent serious progress on the economy, the same fickle majority that votes against the Democrats in 2010 may well vote against the Republicans in 2012.

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