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Deficit and Jobs Are Key to Obama's Low Rating

President Barack Obama
CNBC
President Barack Obama

The president’s problems with the public when it comes to the economy are as simple as they are perplexing.

High deficits and a lack of job growth underpin his awful poll numbers, but the foul mood is buttressed by a fundamental disagreement with policies the president has pursued that should be winners.

Arecent Rasmussen pollfound that 42 percent of the public blames him and his policies for the economic malaise, compared with 50 percent who blame former President George W. Bush. It’s an improvement from August, when more Americans blamed the current president than the former one. But it’s still a big number.

Monday’s CNBC economic survey explains some interesting reasons for this. Asked who the president’s policies have benefited, the public responds that large banks and Wall Street have made out the best. Small business and the individual have made out the worst.

It is astonishing and perplexing that the policies of a Democratic president whom some Americans accuse of being a socialist are seen benefiting banks and Wall Street more than small businesses and individuals. And many economists from both parties will argue that the president had to take actions to save the financial system.

Without those actions, many agree, individuals would have fared far worse. So what we have here a complete failure on the part of the administration to explain to the public how the administration’s financial policies helped the economy. Of course, it may never be explained to or appreciated by the public.

A big part of the public’s problems with the administration are the combination of deficits and lackluster job growth. It is likely that had the administration brought better job growth with its higher spending, the public could stomach the trade-off.

The trouble is not that the president has been responsible for only about a third of the 8.4 million jobs lost during the recession. The trouble is that about half of the $2 trillion increase in the five-year outlook for the deficit since January 2009 is the result of discretionary spending decisions by the president (the other half is mostly the decline in revenue resulting from the recession) and that the deficit surged while job and economic growth have been anemic.

In fact, assuming that the current recession ended in August 2009, this has been the most anemic recovery of the past three ones. GDP [growth domestic product] growth has averaged just 2 percent in the four quarters since the end of the recession, compared with 4.9 percent after the 1991 downturn and 2.7 percent after the 2001 recession.

Research into the history of financial crises by economists Ken Rogoff and Carmen Reinhart suggests this is often the case. But the public, with a deep concern about the future, takes little solace in lessons of the past.

The 0.2 percent average quarterly decline in private-sector jobs is pretty much on par with the prior two recessions.

The bottom line is that the president can explain away about half the problems in the economy. And, in aggregate, about half the public blames him for the economy’s troubles.

Some political analysts have already concluded it is too late for the president to change people’s minds ahead of the November elections. But that won’t stop him from trying.

It will be interesting to hear on Monday how much he puts the blame on his predecessor, whether he tries to justify his actions relative to Wall Street and whether he nods towards Americans' deep and abiding concerns about jobs and deficits.

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