This article was updated at 3:30 p.m. on Friday, June 8.
A day after Federal Reserve Board Chairman Ben Bernanke indicated the Fed was standing pat on its economic recovery strategy, President Obama offered no new proposals for bolstering the economy and bringing down the 8.2 percent unemployment rate. Instead, in a nationally televised press conference, the president criticized congressional Republicans for refusing to pass the bulk of his jobs and economic recovery proposals – including tax breaks for small businesses and mortgage refinancing incentives for homeowners – and to lecture the Europeans on their financial and debt crisis.
On the heels of steadily worsening economic news, including last week’s dismal Labor Department report on the May unemployment rate, Obama insisted that if Congress had promptly approved the jobs proposals he unveiled last September, “The unemployment rate would be lower, our economy would be stronger.”
Instead, said Obama, House and Senate Republicans have blocked most of his proposals for political advantage heading into the fall campaign, while offering up their own austere brand of budget and tax cuts that would only make matters worse.
“The recipes that they’re promoting are basically the kinds of policies that would add weakness to the economy, would result in further layoffs, would not provide relief to the housing market and would result ... in lower growth,” said Obama, who is locked is a close battle with Republican challenger Mitt Romney.
Once considered an almost sure bet to win a second term, Obama is suddenly awash in bad economic and political news, while Mitt Romney is steadily picking up steam after a tumultuous GOP primary season. Last week’s slight increase in the unemployment rate, mounting fears among business people and average Americans about a double-dip recession, the persistent debt and banking crisis in Europe, and the Republicans’ surprisingly solid victory in a Wisconsin gubernatorial recall election on Tuesday have left the president on the defensive.
Polls show Obama and Romney, the former Massachusetts governor, virtually in a dead heat. And for the first time last month, Romney’s presidential campaign exceeded Obama’s campaign in fundraising, collecting $76.8 million to Obama’s $60 million.
“There’s a lot of people in this country having hard times,” Romney said during a fundraiser in Fort Worth, Tex., earlier this week. “And in the light of that, it’s kind of surprising to me that the president has chosen as his campaign slogan, ‘Forward.’ ”
“Forward over a cliff?” Romney asked, to laughter. “Look, I think it’s time for a change, not going forward with our president.”
As concern has grown about an economy that produced a mere 69,000 net jobs last month and some Fed officials said in speeches that it may be time for additional action, some have been hoping Bernanke might signal the Central Bank’s intention of taking new steps to support growth. But in a Thursday appearance before the congressional Joint Economic Committee, Bernanke would say only that the Fed is “prepared to take action” if the economic outlook deteriorates or if the euro-zone debt crisis worsens.
Obama’s approach on Friday morning was much the same, offering commentary and suggestions for others to act, but providing nothing in the way of a major new initiative. The president took credit for helping to dig the country out of the worst recession since the Great Depression. While the private sector is in relatively good shape, he insisted, state and local governments were forced to lay off 450,000 teachers, police officers, firefighters and others government workers. He urged Congress to funnel additional funds to the states to enable them to rehire unemployed government workers.
The president also urged congressional action to help generate jobs for the more than one million construction workers who have been out of work since the housing bubble burst. The House and Senate are at loggerheads over passage of a new highway and infrastructure spending bill. “We’ve got a lot of deferred maintenance in this country,” Obama said. “We could be putting a lot of people back to work rebuilding our roads, our bridges, some of our schools.”
Republicans promptly took issue with the assertion that, except for the construction industry, “the private sector is doing fine.” Mitt Romney called the president “out of touch.” Senate GOP leader Mitch McConnell of Kentucky said Obama is “disconnected from reality.” House Speaker John Boehner, a former small businessman, said, “Take it from me: The private sector is not doing well.” And House Majority Leader Eric Cantor asked simply, “Mr. President, are you kidding?”
Obama, in turn, clarified on Friday afternoon in the Oval Office that it is "absolutely clear" that the economy is not fine.
Obama said this morning that businesses have created 4.3 million jobs in the past 27 months, an average of 160,000 a month. But Republicans countered that that number is not strong enough and had weakened in recent months. Private sector employment grew by only 82,000 in May, according to preliminary Labor Dept. estimates, down from 147,000 in March and 108,000 in May 2011.
“Twenty-three million Americans are out of work,” said Romney at a campaign stop today in Council Bluffs, Iowa. “The median income in America has dropped by 10 percent over the last four years.” He added that Obama’s assertion about the private sector doing “fine” is “an extraordinary miscalculation and misunderstanding.”
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Obama’s stern tone this morning in discussing GOP obstacles softened somewhat as he offered advice and support to European leaders who are struggling to cope with a financial and debt crisis that has been roiling international markets. Obama said he has been in “consistent contact” with European leaders in recent months and urged them to inject more capital into their faltering banking system while fine-tuning a framework for long term budgetary and fiscal restraint.
The president cautioned Greece that withdrawing from the eurozone, as many there favor, would mean even greater economic difficulty than the severe budget cuts and reductions in government services already undertaken. “The solutions to these problems are hard, but there are solutions,” he said. But in addressing a question about the controversy over the wisdom of imposing austere fiscal problems now, while the economy is so shaky, Obama sided with those who favor delaying major deficit reduction until after the economy rebounds.
Romney and many Republican leaders favor pushing now for deeper spending cuts and other austerity measures that are more in line with the views of German Chancellor Angela Merkel than of leaders of Greece, France and other southern European countries.
“I think what we want both for ourselves but we’ve advised Europe as well is a strategy that says, Let’s do everything we can to grow now even as we lock in a long term plan to stabilize our debts and our deficits and start breaking them down in a steady and sensible way,” Obama said. “What I’m saying is let’s make long term spending cuts, let’s initiate long term reforms, let’s reduce our health care spending, let’s make sure that we’ve got a pathway, a glide path to fiscal responsibility. But at the same time let’s not under invest in the things that we need to do right now to grow.”