At Age 3, Stimulus Still Clouds Obama Re-Election Prospects

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Stimulus Anniversary

Chris Stirewalt, Juan Williams and Matt Schlapp discuss the third anniversary of the stimulus

At Age 3, Stimulus Still Clouds Obama Re-Election Prospects

“The American Recovery and Reinvestment Act that I will sign today -- a plan that meets the principles I laid out in January -- is the most sweeping economic recovery package in our history.”

-- President Obama at the Feb. 17, 2009 signing of his stimulus first stimulus package in Denver.

The deteriorating situation in the Middle East may end up making this election an unexpected battle over foreign policy.

Given the new dangers and uncertainties sewn by the Arab Spring last year, particularly the emboldened regime in Iran and the anxiety in Israel, the chances for a regional conflagration are higher now than at any time since U.S. troops, now withdrawn, invaded Iraq in 2003.

That could bring $5 gasoline, economic disruption and a severe testing of old alliances. It would also mean that the preferred foreign-policy platform for the incumbent president’s re-election bid – dead terrorists and troops headed home – would be thrown over.

Maybe the election will be about social issues.

The Obama Democrats are certainly hoping to make the case to suburban female voters that Republicans are hoping to rob women of access to birth control. Republicans, meanwhile, will argue, as they did with Planned Parenthood funding and federal subsidies for elective abortions, that President Obama’s health law compels citizens to violate their consciences.

Perhaps the election will be about income inequality.

That’s the fond hope of the Obama Democrats. Stoking resentments already on display in the Occupy Wall Street effort, the president has staked out a re-election plan predicated on resentment of the super-rich and the deepening anxieties of middle class voters. As with his health law and other initiatives, Obama is arguing that the federal government needs to rearrange costs and benefits so that the very rich have less and the middle gets more. More taxes to finance more spending on infrastructure, government jobs and welfare programs is the idea.

Democrats have been promising for 40 years that government programming can rebuild the blue-collar middle class and reverse the decline of American manufacturing. It may be more or less attractive when coupled explicitly with class resentment.

The mullahs may go nuclear, Health Secretary Kathleen Sebelius may find yet more ways to offend her fellow Christians and the 99 percent may be moved to a paroxysm of anger at rich Republicans, but the only sure bet for the fall election is that it will be, either in part or in whole, a referendum on Obama’s stewardship of the economy.

Obama won the presidency in large part because of the Panic of 2008. Not only did the collapse of Wall Street and the following bipartisan bailout cast the idea of long service in Washington into disrepute, but his Republican opponent was part of the party that got the blame for the catastrophe and seemed personally unable to provide calm, cool management of a large, complex crisis.

The economy blew up in a fashion more abrupt than even the Great Depression and voters rewarded the party out of power with the chance to fix it.

Obama, who had been unknown to most Americans only a year before and without the level of experience common to new presidents, quickly set about the business of projecting authority and command to an anxious nation. Remember the seal of the office of the president elect?

Before Obama took office, he was already working on a massive stimulus package with the newly-expanded Democratic majorities in the House and Senate and finding Republican moderates willing to join him in what was being discussed as a Keynesian bolt never before seen in human history. The central argument was one of the all-time favorites in Washington: We’ve got to do something, even if it’s wrong. On that count, Congress has a long record of achievement.

But, the Obama Democrats, newly swept into power, were anxious about being seen as liberal wastrels. In order to seem fiscally prudent and win nominal bipartisan support, Obama capped the size of stimulus warhead. And after the “t” word had been thrown around with such abandon for months, $800 billion sounded like a bargain.

What resulted from this process and the rookie president was a hodgepodge of pork, tax incentives, state and local government subsidies and Democratic pet projects. Rather than being the big, bold idea -- a nuclear warhead of government spending aimed at the core of the deepening recession – it became a mess. Instead of spending now, it became a two-year “recovery blueprint” composed of turtle tunnels, highway berm expansions, solar panel subsidies and, most famously, cash for clunkers.

Conservatives, of course, hated it. But in time, so did liberals. Those who had hoped for something big and bold found even the largest piece of domestic spending legislation in the history of the republic and mankind to be wanting. Not big enough, not bold enough and too conventional.

Liberals have since repeatedly demanded that Washington take a do-over on the mother of all stimuli, but with a puny job approval rating (exactly 20 points lower by Gallup’s reckoning today than it was three years ago) and a debt-averse electorate, Obama was in no position. There have been several smaller versions, like more state and local government bailouts and the $94 billion payroll tax holiday extension now being extruded by Congress, but Obama had only one magic moment to go bigger and bolder, and he blew it.

Over time, Americans came to view the stimulus negatively. Polls continue to show that the vast majority believes the spending package either hurt the economy or didn’t do much to help it. Part of the problem has been that unemployment has remained perniciously high – higher than promised by the president’s economic team. The other problem has been the growing worries about the federal debt – four years of deficits above $1 trillion, the credit downgrade, the debt-ceiling debate and a string of failures at stimulus recipients, most notably Solyndra.

The other big piece of legislation from Obama’s term, the health law, is unpopular too. While much of that has to do with the legislation itself, some of its stupor comes from the political failure of the stimulus.

On the stimulus, Obama credited himself and his team with “the most sweeping economic recovery package in our history” and then moved on the overhauling health insurance and developing a new welfare program. Remember that this was when Obama was being compared to FDR and Lincoln and Washington was thinking in grandiose terms.

But as the economy continued to sputter, Obama found himself in a year-long battle with members of his own party about the health law. The Obama Democrats pleaded for time to let the stimulus work, but Americans saw the president and his party obsessed with a new social program while the economy and job market were grinding to a halt.

The problem with the health law wasn’t just what it was, but also what it wasn’t: something to spur the recovery.

Democrats now hope that modest growth and voters’ habituation to a less robust new economic normality will get them off the hook for the first three years of their time as the party in power. Maybe so, especially if Republicans finish their primary process divided and dissatisfied.

But if there is another summertime swoon or if gas prices rob consumers of their disposable income or if Europe’s recession accelerates, voters will be quick to remember the stimulus and the health law.

And Now, A Word From Charles

“In the end it is going to end up like negotiations in Paris on the Vietnam War. Here, the Pakistanis will be the fourth element at the table. But the question is in the end when we are out, will we end up with helicopters on the roof of the American embassy in Kabul and nobody knows.”

-- Charles Krauthammer on “Special Report with Bret Baier.”

Chris Stirewalt is digital politics editor for Fox News, and his POWER PLAY column appears Monday-Friday on FoxNews.com.