THE US economy is still stumbling, creating a severe problem for President Barack Obama’s hopes for re-election in November. In June, the private sector created an abysmal 80,000 new jobs. Unemployment remains high at 8.2 per cent, and there’s little prospect of it dropping any time soon.
With 117 days to election day, America’s ongoing economic malaise remains Obama’s greatest electoral liability, a problem the President threatens to exacerbate without a clear and concise message for a second term. The jobs numbers, according to the President, symbolised a “step in the right direction.” The White House asked voters “not to read too much into” the latest figures, a statement now beyond ridicule; it’s the advice used in 30 previous press releases. David Plouffe, Obama’s senior campaign adviser, remarked that the jobs figures were “what everybody expected.” That’s the problem.
The economy is now a no-go area for the President. Unable to run on his record, Obama’s re-election is entirely focused on negative campaign advertisements, tokenistic policy gestures and personal attacks on Mitt Romney. A full 76 per cent of Obama’s campaign advertisements are now negative, a startling jump from 50 per cent in a matter of weeks. If economic growth remains sclerotic, these attacks will continue, especially surrounding Romney’s tenure at Bain Capital and his apparent lack of tax transparency. Both lines of attack are reportedly gaining traction in key swing states and, thus far, Romney has failed to launch a comprehensive fight-back. The economy has already defined Obama, and now Romney is running out of time to prevent the President’s attacks from defining him.
Obama is now seeking to gain similar momentum as that garnered from last year’s showdown with the Republican Congress. But rather than debating the debt ceiling, this sparring match surrounds Obama’s plans to extend tax cuts for those earning less than $250,000 (£161,000). This is Obama’s ongoing crusade for tax “fairness,” a not so subtle dig at his multi-millionaire opponent. Others would call it classic identity politics. However, there is also a great deal of concern in Democratic circles that the President could alienate higher earners and small business owners. Significantly, 75 per cent of small business owners, who create 65 per cent of the country’s new jobs, file as individuals. A tax hike on job creators? The Republican counter-attack writes itself.
The President’s tax cut extension is only for 12 months – an electoral gimmick. Romney’s alleged opaque tax arrangements are extremely damaging and will continue to face scrutiny, but Obama’s politicking is nakedly transparent. With the economy on the precipice a few years ago, one politician counselled that “you don’t raise taxes in a recession.” For the time being at least, that same politician continues to reside in the White House.
Ewan Watt is a Washington DC-based consultant. You can follow him on Twitter on @ewancwatt