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Special Report

President Obama's Re-election Challenges, Vulnerabilities

This is a rush transcript from "Special Report," August 3, 2011. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: The economy is still weakened, partly because of the things we couldn't control, like the Japanese earthquake and the situation in Europe as well as the Arab Spring and its effect on oil prices. So I am meeting with my Cabinet here to make sure that even as they have been throughout these last several weeks, they are redoubling their efforts to focus on what matters most to the American people.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: As the president heads to Chicago for a big fundraising effort and a celebration of his birthday, he is facing some tough headwinds as far as the economy. ADP, the private sector payroll processor, says that layoffs are up 60 percent, a 16-month high. We'll get a new jobs report on Friday and that will be very interesting.

We are back with the panel. The challenges, Steve, for the president's re-election and remember after the killing of Usama bin Laden there were many pundits out there who said he is going to cruise.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Yeah, well that was a little premature, I think. The bin Laden killing will have some effect on the Republicans' ability to talk about foreign policy and national security. But clearly this is an election that's going to be won and lost -- in all likelihood -- on the economy and on size and the scope of government.

He is going out now to the Midwest because he can't actually challenge the economic number numbers. They are what they are, and they are not good. So what he's going out to do now is try to be the empathizer in chief. He wants to say, I understand your concerns. I'm here. We're listening to you. We're out among you. I'm not sitting in Washington -- that horrid place where we've just seen this month-long debacle unfold. I here am listening to you and your concerns.

The reason he is doing this, I think, is largely because he's interested to winning back independent voters. If you look at what the president did in states that he's hitting, back in 2008 when he won the presidential election in 2008, he won the independents and he won them by a good margin in states like Ohio. In 2010, that flipped entirely. The Midwest went red. Senate candidates in Ohio, Rob Portman, won independents going away. I think that is what the president is concerned about.

BAIER: A.B., the White House press secretary says they don't believe there will be a double dip recession. But his former chief economic adviser, Larry Summers wrote this -- quote -- "The indicators suggests the economy has a one in three chance of falling back to recession if nothing new is done to raise demand and spur growth."

You hear the president with this "refocus." They try to not to talk about the pivot but refocus on jobs.

With not too many arrows in that quiver, how will this White House capitalize on that message?

A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: It's going to be so tough for them. They know they have a very small window. And we've talked this week in the debt ceiling debate about the permanent state of a budget fight that the Congress and the White House are going to be in. The entire fall is going to be taken up with fighting over the budget for 2012 -- that will take us into October. And then the super committee that is set to resolve this final chunk of debt savings that the debt deal promised, that's going to go into November and December.

The president is not going to be able to talk about jobs. He has a couple of weeks right now. He's going to tour the Midwest and try to focus on jobs. But he knows that at the end of December -- some, the payroll tax cut and the unemployment insurance benefits that were passed last December are set to expire. It's going to be a huge hit to consumer spending and a real knock to the economy at large.

He sees all these numbers about slow to no-growth. He sees all the layoffs. He knows there's not -- there's not arrows in the quiver and there's no hope in the indicators.

BAIER: You mentioned a bus tour they plan for the Midwest -- it's a bus tour. The politics of that offer some, you know, picketing or whatever about the economy, one would think.

STODDARD: Well, he thinks that Sarah Palin's bus tour was a smashing success.

(LAUGHTER)

STODDARD: So he's going with the bus. I don't know.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Joe the plumber still in Ohio? He will find the bus, I'm sure.

Look, I think it's very interesting that one presidential spokesman today said the president now that he is leaving Sodom and Gomorrah of Washington will be talking about jobs and deficits. It's interesting he added deficits. That wasn't in the mind of Obama and the Democrats six months ago or a year ago. They are forced to defend administration on two grounds: Jobs is about stewardship, deficits is about ideology -- big government expansion and all that.

Ironically, I think, what A.B. is talking about, the fact that there's going to be so much argument in the Congress and monopoly of the news over the issue of the extension of the budget, October 1, and then over the debt, the commission that we will be talking about debt, which ironically I think helps the president because he doesn't have anything to offer on jobs. All there is Larry Summers and others like him who say, you know, another gigantic stimulus increase demand. I don't think it's a good idea, but even if it were it has no chance to be enacted.

So he doesn't have anything. He has no proposals on jobs of any significance. So in a way he is spared having to be exposed by having no proposals on jobs by having to talk about debt. On the other hand, he's accumulated a lot of debt. I think he loses on that argument as well.

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