Good news could spell trouble for GOP

By Patrick O'Connor
|  Wednesday, Oct 6, 2010  |  Updated 10:16 AM EDT
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Good News Could Spell Trouble for GOP

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President Obama should be sweating -- the GOP is hot on his heels to exploit economic success, and failure, to its advantage.

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Don’t expect Republicans to credit President Barack Obama for the recent signs of life in the long-ailing U.S. economy, but don’t expect them to applaud more bad news either – at least not publicly.

The still-reeling economy is riding a rollercoaster of economic indicators these days. A better-than-expected jobs report sent stock markets higher earlier this month. But Friday’s lower-than-expected consumer confidence number sent those same markets lower, and employers are continuing to shed hundreds of thousands of jobs each month, albeit at a slower pace than earlier this year. Many economists are predicting a jobless economic recovery over the next of year, as businesses begin to get back on their feet, but hold off on adding jobs.

The rising unemployment rate may be politically perilous for Democrats right now, but Republicans don’t want to look like they're cheering for failure. So their playbook is: Downplay the effect of the stimulus and talk up its cost, and respond to positive economic signs by arguing that Republican solutions would have worked faster and cost less.

"The most important thing for Republicans is to differentiate between job creation and the economy growing,” said John Feehery, a longtime aide to former Republican Speaker Dennis Hastert.

The administration has advocated plenty of policies that could prove to be a drag on small businesses, Feehery argued, citing an increase in the minimum wage and a mandate in the House health care bill that would require businesses with a combined payroll exceeding $500,000-a-year to provide their employees with health insurance.

"You're not talking down the economy by saying we need more job creation,” Feehery said. "There are plenty of ills the Obama administration has made worse."

For months, Republicans have asked the Obama administration, “Where are the jobs?” And the economy is still a long way from adding any, according to most observers. But the job loss rate has slowed dramatically, and a number of economists are raising their growth projections for the end of this year and the first few months of 2010, suggesting happy (or at least happier) days might be right around the corner.

These so-called “green shoots” will make it harder for the GOP to convince voters it’s time for a change at the ballot boxes next year if they sprout into a full-blown recovery. So Republicans are making the case their fiscally conservative remedies would have worked quicker and saved the government spending in the long run.

“My constituents won’t be coaxed into accepting the notion that ‘less bad’ news is good news," said Illinois Republican Rep. Peter Roskam. "We were promised much better than this: better economic conditions and outlook and a new era of bipartisanship."

"You can't pump $1 trillion into the economy and not get some positive returns somewhere,” said Georgia Rep. Tom Price, an outspoken critic of the stimulus who chairs the conservative Republican Study Committee, referring to the lump sum of the stimulus and the extra borrowing costs to pay down the interest. "The problem is that it's $1 trillion we don't have.”

"It's not a good idea for Republicans to go overboard," warned Ron Bonjean, a former spokesman for Republican leaders in the House and Senate who ran the press shop at the Department of Commerce during George W. Bush’s first term. "If the jobs numbers are declining, it's important to talk about... but just focus on long-term problems and be thoughtful. The American people will be the ones who go over the top if there isn't progress."

 

While the recession technically began in 2007, the economy really fell off a cliff last fall, with the failure of one major bank and the near-death collapse of others. It continued to contract during the second quarter of 2009, but at a much lower rate than in the six months preceding it, according to a report this month from the Bureau of Economic Analysis. Likewise, the most recent employment report showed the U.S. shedding nearly 250,000 jobs, far less than had been projected.

Many economists and investors lauded both reports as welcome evidence the country might be reversing its slide. But while Obama said last month that "As a result of the swift and aggressive action we took in the first few months of this year, we’ve been able to pull our financial system and our economy back from the brink," the White House has been careful to stress that averting collapse hardly means that the economy is back on its feet.

Instead, Obama reacted to the latest unemployment numbers by telling reporters “we may be seeing the beginning of the end of the recession” before adding, “But that’s little comfort if you’re one of the folks who have lost their job, and haven’t found another.”

The president’s cautious remarks are a sign that the White House is trying to balance taking credit for stabilizing the economy with stressing that there's still more work to be done, and demonstrating their sympathy for families who are still struggling.

“They have found language that allows the President to sound optimistic and look good if things gradually improve over the next few months,” Keith Hennessey, the director of the National Economic Council under Bush, recently wrote on his blog. “That doesn’t get him in too much trouble if things go south, and doesn’t make him look out of touch with the painful employment picture.”

Likewise, Republicans don’t want to downplay good news, but aren’t ready to give Obama, or his congressional allies, credit for turning things around.

“Look, no one is saying that they’re going to spend a trillion dollars and it won’t create a single job,” said Michael Steel, a spokesman for House Minority Leader John Boehner. “But the fact is that government spending is inherently slow-moving and wasteful.”

"We all share a common goal of turning the economy around and getting people back to work,” said Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.). “But we just disagree on the best way to do that."

Bonjean warns his party's leaders not to seem too dour if the good news picks up, and the public gives credit for the turnaround to the president.

"You need to have a balanced point of view and preserve your credibility,” said Bonjean. "You don't want to look like an attack dog all the time. You want to look like a measured, thoughtful policymaker."

And neither party should ever play the stock market game by pegging the overall health of the economy to Dow Jones Industrial Average or the S & P 500, he said.

“The market might be down one day, but up the next,” Bonjean said. “Politicians get trapped that way, especially newer ones."

 

Democrats, for their part, argue that Republicans will eventually pay a price for their opposition to the president’s key initiatives, suggesting that GOP lawmakers hail programs back home that they deride in Washington, like the stimulus.

“While Republicans in Washington complain about the recovery package, they can’t wait to go home to talk about its benefits in their districts,” said Nadeam Elshami, a spokesman for Speaker Nancy Pelosi (D-Calif.). “The facts are clear: we are working with President Obama to right the wrongs of eight years of fiscal and economic mismanagement, provide businesses with the tax breaks to create the jobs America’s depend on and help Americans get back to work.”

And Doug Thornell, press secretary for the Democratic Congressional Campaign Committee, said, “It is a little hard to take serious Republicans lecturing on the economy when they spent the last 8 years supporting the Bush policies that squandered our surplus, busted the budget, and left us with and economy on the brink of a depression. You have to wonder what Ronald Reagan would say about the state of the GOP today."

But most Republicans see genuine anger in the country over the size and scope of government in the aftermath of last fall.

"Folks are mad," Price said, adding, "It's not just a pointless anger."

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