As Economy Has Sputtered, So Has Obama's 'Brand'

Two years ago, the financial meltdown helped cement Barack Obama's win in the presidential race. The economic mess that followed could be his party's undoing next Tuesday.

In November 2008, Democrats were on top of the world. Economist Christina Romer remembers drinking a quiet toast to Obama's victory at her home in California. Then she and her husband followed the sound of honking horns to an impromptu, outdoor celebration.

Then President-elect Obama on Election Day in 2008.

hide captionThen: On Election Night in 2008, a jubilant Barack Obama greeted supporters in Chicago.

Joe Raedle/Getty Images

"There we were, two middle-aged economists, dancing in the streets with the Oakland teenagers," Romer recalled last month in a speech at the National Press Club. "What we didn't realize that November evening was just how large an economic nightmare lay before the new president and the American people."

It would become Romer's job to warn Obama. Until last month, she was one of Obama's top economic advisers. Two years ago, Romer could scarcely imagine that between Election Day and the day Obama was sworn in, nearly 3 million jobs would disappear.

President Obama during a backyard chat in Des Moines on Sept. 29, 2010.

hide captionNow: President Obama in Des Moines, Iowa, last month, during one of a series of "backyard chats" he's been holding with Americans to talk about the economy and other pressing issues.

TIM SLOAN/AFP/Getty Images

To stop the bleeding, Obama and congressional Democrats rushed to approve a $787 billion stimulus package. Many economists credit the stimulus with helping to reverse the sharp downturn.

But while building their case for the stimulus, Romer and her colleagues created a chart predicting that if lawmakers approved the plan, unemployment would stay below 8 percent. In fact, the jobless rate had topped that before the president even signed the bill.

"I would give anything if the unemployment rate really were down to 8 percent or lower," Romer said.

The lowball forecast of unemployment allowed Republicans — who almost unanimously opposed the stimulus — to brand it a failure.

"We've borrowed an enormous amount of money and spent it on the public sector for the last year and a half, and we still have 9 1/2 percent unemployment, and most people feel it's way higher than that," Senate Republican Leader Mitch McConnell of Kentucky said this summer.

Unemployment has stayed at or above 9.5 percent for more than a year now. That, more than anything else, has put Democrats on the defensive.

"Any president would be hard-pressed to do well politically when there's 9 1/2 percent unemployment," says Democratic pollster Geoff Garin. "Having said that, there are different points at which there were forks in the road."

The 8 percent unemployment forecast was one of those forks. Another was the White House decision to structure the tax cuts in the stimulus in a way that was almost invisible. They were dribbled out over time in people's paychecks, because behavioral economists said Americans would be more likely to spend the money if it came to them that way. The move backfired politically, though, since almost nobody noticed the tax cut.

Americans hold up

hide captionMany Americans are frustrated by stubbornly high unemployment, including these protesters outside City Hall in Los Angeles on Aug. 13.

Mark Ralston/AFP/Getty Images

"Would I have liked somebody to knock on everyone's door like the Publishers Clearinghouse guys with the big check and the balloons? Sure," admits White House spokesman Robert Gibbs. "Obviously the marketers got kicked out of that meeting."

But Republican marketers branded the president a big spender. And because voters were just getting to know Obama, that label stuck to nearly everything he's tried to do.

"Life is a lot about first impressions," says Garin. "So the first impression that people had of Barack Obama is somebody who is very much of a big government guy."

So a health care plan that's modeled on Republican ideas came to be tagged as a big government takeover. Of all the choices Obama made over the past two years, perhaps none was more significant than the president's all-in bet on health care.

"In achieving what is, I think, a historic accomplishment, you have to be frank that it came at some cost," Garin says. "Including this perception that we were too focused on health care when we should have been focused on the nuts and bolts of the economy."

All might have been forgiven had the job growth that began last winter continued. But this spring, hiring dropped off sharply. And deficit-wary lawmakers balked at taking additional steps to goose the economy. In Garin's polls, only about a third of voters now believe the economy is getting better. A new report showing an encouraging drop in unemployment claims is likely too little, too late to be much help to Democrats at the ballot box.

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