By Daniel Henninger
This could be Americas greatest failed presidency.
Its been a long time since James Carville said the most famous thing he ever said: Its the economy stupid. That famous phrase was in fact part of a sign hung in the Clinton campaign headquarters in 1992. There was a sense among the electorate in the fall of 1992 not entirely accurate that the economy was foundering under George H.W. Bush. Bush lost control of the publics perception of the economy and then he lost the presidency.
Why with unemployment heading above 10 was Barack Obama on TV last night draining a dwindling reservoir of presidential capital on health care? Redesigning the 17 of the economy that is health care appears to be the siren song of Democratic presidencies. Mr. Obamas crew has famously said it wouldnt make the mistakes the Clintons made on health care. How calling forth both houses of Congress in prime time to join him in betting the ranch on health care qualifies as smarter politics than the Clintons is a mystery.
Even more so now than way back in 1992: Its still the economy stupid.
To save himself and his party from enduring another health-care debacle Barack Obama should put his agenda on the back burner bend his efforts to raising the economy and rebuild his political capital by taking credit for the inevitable rebound. That just might minimize the impending loss of House seats and allow him to revisit his wish list in 2011. The alternative is promising big accomplishing little and getting credit for nothing. This could be Americas greatest failed presidency.
The economy is Barack Obamas 9/11. If youre Mr. Obama it must seem a little unfair. One year ago at the Labor Day turn toward the stretch Mr. Obama and his team were on the cusp of one of the most thrilling wins in American presidential history. No matter that many Obama voters were looking past all the state-based initiatives in his politics; the air was filled with possibility.
This was historys moment. Then on Sept. 15 2008 history hit the wall. Lehman Brothers filed for bankruptcy. The next day the Fed said it would lend a stunning $85 billion to AIG. A major money-market fund broke the buck.
This wasnt just a recession a reality already discussed in the summer campaign. There was a sense after the nightmare week of Sept. 15 that the American economy was imploding.
Assets in 401(k) accounts were ravaged. Much of the economy appeared to have fallen into the hands of fools and knaves. Businesses that once were economic beaconsGM Chrysler Lehman much of Wall Streetwere breaking off and falling into the sea.
After its Inauguration the Obama presidency should have been driving a new health-care entitlement into everlasting law on a wave of good will. Instead it had to deal with the stumbling economy and credit system.
Whether what they didstimulus the auto bailout TARP and the restwas the right policy is beside the point for our argument. The administration seemed to think it put a big political problem behind it clearing the way for health care. That was a false dawn.
The most recent Wall Street Journal/NBC poll has 87 of the public somewhat or very dissatisfied with the economy. The unemployment rate is likely to go above 10 for all 2010. Whatever GDP growth may occur there is no evidence of new-job creation. Golds price has risen above $1000 suggesting inflation is swimming below the economys flat surface. China is stockpiling gold and worrying out loud about the weak dollar. A U.N. panel said this week the world should abandon the dollar as the worlds anchor currency.
Just now Barack Obamas mad obsession with arcane health-insurance puzzles looks beside the point.
I dont think anyone fully understands yet how much damage was done to the U.S. economy and financial system by the events of September 2008. Whatever ones belief in the $800 billion Obama-Pelosi-Summers-Romer Keynesian multiplier its reasonable to believe more than rote public spending is needed to restore the American job-creation machine. The public rightly worries that a damaged economy is vulnerable to more blows.
The White House may think it and Democratic incumbents can simply pocket the credit for whatever fly-wheel growth shows up the next six months. Its more likely the public will mark down a president who appears passive to its most pressing concern. A presidency seen leading a genuine agenda for renewed growthoffering at least some oxygen to the private economywould be more likely to earn the broad support it simply does not have now for the agenda of its dreams.
Fat chance it will do that. We opened with the still-good advice of James Carville. We close with an even higher authority to explain last nights odd spectacle before Congress. Its Elwood political director for the Blues Brothers: Were on a mission from God.
