White House Moves into “Crisis” Mode on Economy

William Daley, the new chief of staff for President Obama, declared that the current economic situation was a crisis, far from the "bumps in the road" that the president had previously claimed. Expected growth or next year is weak and is getting weaker.

By Chris Stirewalt
Published June 23, 2011

On Economy, “Bumps in the Road” now a “Crisis”

“Now, we must invest in America’s greatest resource –- our people. We must unleash innovation that creates new jobs and industries, while living within our means. We must rebuild our infrastructure and find new and clean sources of energy… America, it is time to focus on nation building here at home.”

-- President Obama in his speech on a future drawdown of U.S. forces in Afghanistan.

You could tell where the president’s head is these days when he found a way to talk about green energy and domestic stimulus programs in a speech on the Afghan war.

While the White House team insists that the president didn’t consider public opinion when making his decision on the war, the strategy seems to be one designed to mute critics on the left and right and muddle through until November 2012. Obama’s Afghan strategy is a compromise plan that could survive almost any focus group.

Provided there is no catastrophe in Central Asia, Afghanistan is unlikely to be much of an issue for the upcoming election. But the state of the economy surely is. And having struck out with a “stay the course” attitude on bad economic news, the administration is shifting to a more engaged message.

What had been “sustainable growth” is now “a crisis.”

While official Washington was poring over the long-known details of Obama’s prospective, partial Afghan drawdown, the administration continued to shift its message on the economy.

The last several weeks have seen a concatenation of bad economic news: Unemployment up, home prices down, GDP growth slowing, inflation rising, manufacturing dipping and public confidence plunging.

The administration’s response has been to stay the course, talking about “bumps in the road” and lamenting the speed of the recovery but not the trajectory of the economy. But they now know that’s not going to feed the bulldog.

When the president got caught on camera laughing about the ineffectiveness of his 2009 stimulus spending program, Republicans attacked. The message to America from Congress and from the Republican 2012 field: You are miserable and this guy doesn’t care.

Obama is now in the process of replacing his old economic team, the one that told him to stimulate, bail-out, nationalize and then sit back and wait for the good news to come rolling in.

The transition began with a new chief of staff, a former Democratic door opener in the banking industry, William Daley, and continues as Obama gears up for an election-year push intended to show that he is pro jobs and pro-business.

The Obama team has been saying for more than a year that the president’s policies had rescued the nation from a crisis (including during the now infamous “Recovery Summer”), but on Wednesday at a forum on jobs and the economy, Daley nonchalantly declared that the current economic situation was a crisis.

“We are in a crisis, we are trying to get some people to understand that this is a real crisis, and the ways in which things happen in this town have got to be jump-started based upon the difficulty we're in,” Daley said.


Daley’s predecessor, Rahm Emanuel, famously said to “never waste a crisis.”

Obama followed Emanuel’s advice and used the disruptions from the Panic of 2008 to pass a host of legislation, including an unpopular health care law and bulky bank regulations that weren’t directly aimed at recovery and job creation. Daley’s task is to salvage the reputation that the crisis exploitation strategy helped Obama to earn.

The president has long known what Federal Reserve Chairman Ben Bernanke confirmed Wednesday: the expected rate of growth for next year is weak and getting weaker. Obama is looking at running for reelection with a base unemployment rate of more than 8 percent and only slightly better than stagnant GDP growth.

Obama experienced a political fairy tale in 2008, but 2012 is shaping up as an incumbent’s horror story. Obama and Daley are looking to rewrite the ending.

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