Obama Defends Stimulus Amid Calls For Round Two

President Obama is being forced to wade into a domestic economic debate that just won't go away: As the unemployment rate rises, there have been calls for a second round of stimulus spending.

Obama is in a difficult position. He has to defend his $787 billion economic stimulus package at a time when there are few visible signs that it has had an effect. Unemployment is at 9.5 percent, even though the White House predicted in January that with the stimulus bill, it would rise to only about 8 percent.

The White House had to justify its response to the recession again this week after Vice President Biden, with his trademark candor, told ABC's George Stephanopoulos: "We and everyone else misread the economy. The figures we worked off of in January were the consensus figures of most of the blue chip indexes out there."

So while he is overseas at the G-8 summit in Italy, the president engaged in a familiar ritual: walking back the vice president's words.

"Rather than say 'misread,' " he said on NBC, "we had incomplete information. In some areas, we're seeing the economic engine turn. But what we always knew was that (a) this recession was going to be deep, [and] (b) it was going to last for a while."

The Right Medicine

But if the administration did misread the problem, does that mean it misdesigned the solution? The stimulus bill has been criticized for not being stimulative enough, for not getting more money into people's pockets faster. After all, only 14 percent of the $787 billion has been spent so far.

But the president told ABC on Tuesday that even if his diagnosis was wrong, he still believes the medicine was right.

"There's nothing we would have done differently," he said. "Now, the question that some have argued is, 'OK, what's next? Maybe you've stopped the free fall, but you still have close to 10 percent unemployment.' And, you know, this is something we wrestle with constantly."

Unemployment Numbers Vs. Deficit Numbers

What the president is wrestling with is whether to borrow even more money for a second round of stimulus, something liberal Democrats say he should do. But at the same time that voters are increasingly unhappy about unemployment, they are also increasingly concerned about rising deficits. And that puts the president in a tight spot, says Democratic pollster Geoffrey Garin.

"If you want to describe the president's challenge in pure numbers terms, there are two numbers that they have to weigh against each other: One is what the unemployment rate is going to be next year, in the spring and beyond; and what the deficit and fiscal condition of the country will look like."

The official White House line on a second stimulus plan is that the president isn't ruling it in or out. However, White House aides acknowledge that passing another stimulus bill at a time when Congress' agenda is already overloaded with energy and health care is unrealistic.

Obama's Approval Rating

So that leaves the White House with the less-than-satisfying argument that although the economic situation is bad, it could be a lot worse.

"Were it not for this recovery plan, you would see states in a much, much more difficult place, with far deeper holes to dig out of in terms of state budget deficits," White House press secretary Robert Gibbs said Wednesday morning on Air Force One. "You'd have even greater job loss."

Obama's approval ratings, while still healthy, are dropping as unemployment rises. And in the all-important blue collar swing state of Ohio, a new poll shows his job approval numbers skidding from 62 percent to 49 percent in the last two months alone — a warning sign for a White House that's asking voters to be patient while it tries to turn the economy around.