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Obama's economic record: A half-baked stimulus?

Facing a fiscal crisis and entrenched opposition in Congress, he came up with measures that some economists say weren't enough to get the job done.

September 22, 2012|By Don Lee, Washington Bureau
  • President Obama visits Smith Electric Vehicles in Kansas City, Mo. Many middle-class voters are ambivalent about his economic record.
President Obama visits Smith Electric Vehicles in Kansas City, Mo. Many… (Saul Loeb, AFP/Getty Images )

LAKEWOOD, Colo. — Summer Tangeman embodies the Rocky Mountain lifestyle and the independent spirit of voters in the suburban areas that make up the swing vote in this closely divided state.

A 38-year-old physician's assistant, she runs, loves the outdoors, identifies with neither political party and finds the partisan bickering of Washington disgusting, especially when she looks at her own economic situation. She's been laid off twice in the last 18 months, most recently in May.

Tangeman doesn't blame President Obama. But she's having a hard time getting over the fact that, for her, there's simply been no recovery.

"It's not been so good for me," she says, her face drenched in sweat after a long morning run along the trails of Green Mountain.

Her assessment captures the mood of many voters as they contemplate the central issue of the 2012 presidential campaign: Obama's record on the economy. Republican leaders blame Obama for unemployment stuck at the highest levels in decades. Democrats counter that no president could have overcome the worst economic crisis in more than 60 years in just one term and that Obama's policies prevented the country from sliding into a full-scale depression. Like Tangeman, many voters in the middle express ambivalence.

They have good reason. Obama, facing entrenched opposition in Congress, came up with efforts to stimulate growth and create more jobs that ended up as mostly half-loaves and pared-down programs. The result reduced some of the pain without curing the underlying disease.

That halfway pattern characterized Obama's approach to some of the biggest economic issues he faced.

As Obama took office, at least some of his economic advisors thought the recession so dire that as much as $1.8 trillion in stimulus would be needed to fix it. The president and his top aides thought Congress would never approve anything that large, proposed less and eventually settled for about $800 billion in tax cuts and new government spending. The stimulus was big enough to incite intense political opposition, but in the view of many Democratic economists, not big enough to get the job done.

Similarly, the administration's efforts to help homeowners who owed more on their mortgages than their homes were worth never fully got off the ground. Part of that failure came from fear of political opposition to any plan that might be called a bailout. But part came from putting other priorities higher, including helping rescue big banks and corporations. In the last year, the administration has taken several steps without Congress, which have helped some, but the housing market is only now starting to revive.

Obama struggled to get a grip on the problem of the nation's large and growing debt. He accelerated spending in the short term to boost growth and talked of the need to simultaneously find ways of bringing down the deficit in the long term. But he didn't clearly articulate how to do both, nor did he forcefully lay out a plan to reduce the deficit over the long haul, partly because that likely would involve cuts in politically sensitive areas such as education, Social Security and Medicare.

Administration officials can claim some success with manufacturing, where exports and overall employment have expanded. But their record is poorer on small business, which has been particularly hurt by the problems of the housing market since many owners of small companies use their homes as collateral to get loans.

Many of those effects, for both good and ill, can be seen in this city of 144,000 in Denver's western suburbs. Mayor Bob Murphy said about $2 million from the stimulus program, known formally as the American Recovery Act, went directly into his town, to fix playgrounds and sidewalks and put energy-efficient systems in public buildings. Residents also benefited from $170 million in stimulus money to renovate the Denver Federal Center, a 90-building campus in Lakewood where 6,200 government employees work.

"I shudder to think of the scenario absent the stimulus plan," said Murphy, a registered Democrat although his position is nonpartisan.

Yet things remain tough for many. Unemployment is stuck above 8% in Colorado and for the U.S. as a whole. And with good jobs scarce and housing prices still soft, many families are continuing to lose ground. More than 2,800 K-12 students in Lakewood and other towns in Jefferson County are considered homeless, up from 2,200 two years earlier.

Jared Bernstein, chief economist to Vice President Joe Biden in the administration's first three years, is among those who regard the 2009 stimulus package as a major success despite the continuing problems in the economy. The stimulus law did save the nation from a second great depression, he said.

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