President Barack Obama and his economic team are changing their tone on the economy. Gone are Obama’s bleak descriptions of crisis and catastrophe. In their place are “glimmers of hope” of a turnaround.
The question is: why now?
It’s a tricky balance. The White House doesn’t want to hang a premature “Mission Accomplished” banner on the economy ala President Bush’s speech about Iraq. Obama’s recovery talk Tuesday was couched with warnings of “more job loss, more foreclosures, and more pain before it ends.”
But through all that, Obama is highlighting an economy on the mend. Here are five reasons for Obama to make that rhetorical pivot now:
1. Real “glimmers of hope”
There are a few in the economic data, as the president has noted twice in the past week.
The Dow notched five consecutive weeks of gains heading into Easter weekend, prompting Wall Street analysts to celebrate the fleeting return of a bull market. Wells Fargo reported billions of dollars in first quarter profits, a recent rarity for the beleaguered banking sector.
Even investment house Goldman Sachs said it felt so good about the market that it would sell shares of its own stock to raise money – then pay back the $10 billion in taxpayer bailout money it took last fall.
Fed Chairman Ben Bernanke made the same point at a speech at Morehouse College Tuesday, citing new numbers on housing and consumer spending. “Recently we have seen tentative signs that the sharp decline in economic activity may be slowing,” he said.
Roger Altman, CEO of Evercore Partners and former deputy Treasury secretary in the Clinton administration, believes the U.S. is in for a “slow, painful climb-out” from the recession but says Obama is onto something when he talks about an end to the downward trend. “There are signs of what I would call ‘bottoming,’” Altman said. “We have two months of additional data and information now.”
Republicans pushed back. “Our economy will improve,” said House Republican Leader John Boehner. “But it will be because of the ingenuity and hard work of American workers and small businesses, not because of the Washington Democrats’ misguided policies that rely on recklessly spending taxpayer dollars.”
2. The 100-Day Clock is Ticking
There are political realities at work, too. Obama’s speech came on Day 85 of his presidency, and after the spate of media attention to come when he hits the 100-day mark, Obama will own the economy in a very real political sense.
After that, voters are likely to hold Obama more responsible for their economic suffering, and patience for blaming the Bush Administration will wear thin.
The president touched on this theme Tuesday, sounding almost as if he wished the clamor for results wasn’t so intense, with a “24-hour news cycle that insists on instant gratification in the form of immediate results, or higher poll numbers.”
Still, White House officials believe Obama’s window of patience from voters could last as long as two years, if the public continues to see him as someone who is being straight with them about the problems and working to solve them.
A recent Public Strategies Inc./POLITICO poll suggests Obama does have some leeway. The survey of 1,000 registered voters found that two thirds of the respondents trust the president “to identify the right solutions to the problems we face as a nation.”
But if job losses continue, at some point, voters will expect results. Says one Senate GOP aide, “If the White House is right and the job numbers continue to go south through the end of the year, people are going to start asking where the hell the jobs are that they were promised.”
3. They’ve done it all
There’s also a practical reality facing the Obama Administration, which is that they have largely done everything they set out to do to fix the economy.
Obama ticked through a list of items in his speech -- the $787 billion stimulus bill, the Wall Street and auto bailout programs, a housing recovery plan, a boost to non-bank credit markets and even his efforts to get the G-20 nations to do more. All, he said, have “been necessary pieces of the recovery puzzle.”
The White House knows that it doesn’t have another trillion-dollar program ready to go – though officials there surely would try to find one if the economic numbers grew worse -- so now is the time to begin talking about the results of this intense period of activity.
Already, the federal government has, by some estimates, committed more than $7 trillion toward the problem, much of that in loans or other temporary outlays. The scale of that spending, along with the AIG bonus scandal, have created a sort of bailout fatigue in Washington. So for Obama, this political moment is better spent talking about what he’s already done, rather than proposing to do something new.
4. Boosting his credibility
The president has two key decisions coming up, so this week marks an opportune moment to bolster his credibility with the public before he needs to make politically difficult calls.
At the end of this month, the Obama administration will have to decide what to do about the results of the bank “stress tests” – designed to see which financial institutions can withstand the economic downturn, and which need a government lifeline. Obama also must decide whether to ask Congress for more bank bailout funds.
At almost the same time, Obama will have to announce the fate of automakers Chrysler and General Motors, which could involve the politically agonizing decision of letting one of America’s most storied companies fail without a new lifeline from the government.
Meanwhile, there’s speculation that Obama will prompt the firing of a bank CEO once the stress test results come in, which will provoke as much of a furor as his termination of GM CEO Rick Wagoner did in March. It will help his case if the public accepts that the steps he’s taken so far are working.
5. Boosting the public’s confidence
And finally, consumer confidence hit its lowest reading since 1967 in February. Obama’s hoping he can translate his popularity and trust into getting consumers feeling good again.
Altman cautioned that consumer confidence alone cannot drive a recovery, but said, “I think he’s doing the right thing and that he’s trying to instill confidence in the American people that we’re on our way to recovery.”
Obama explained his thinking in his remarks at Georgetown: “When this recession began, many families sat around the kitchen table and tried to figure out where they could cut back. And so have many businesses. And this is a completely reasonable and understandable reaction,” Obama said. “But if everybody -- if everybody -- if every family in America, if every business in America cuts back all at once, then no one is spending any money, which means there are no customers, which means there are more layoffs, which means the economy gets even worse.”
Like everything else, Obama has to be careful not to oversell it – and risk getting lumped in with President Bush, who urged Americans to go shopping as a way to boost the economy after 9/11. But Obama is clearly hoping some people who’ve been holding off on buying a car, or even going out to dinner, might crack open their wallets if they hear their president say things are getting better.