>By Alex Spillius |8:39PM GMT 23 Jan 2012 |As the president prepares his State of the Union address, the future looks more hopeful – the US economy is recovering, Republicans are weak and he is untainted by scandal.
The conventional wisdom in Washington decrees that Barack Obama should not have a prayer of re-election this year. Since the Great Depression, no United States president has won a second term when unemployment has been above 7.4 per cent.
For each of his three years in office it has been well above that, peaking at 10 per cent in 2010. But crucially for the White House, and for the country, this most vital indicator, the release of which unemployed workers and Washington’s army of pundits alike anticipate keenly every month, is moving in the right direction.
Unemployment is now at 8.5 per cent, the lowest since February 2009, Mr Obama’s first full month in office. And it is not the only encouraging number. Gross domestic product is creeping up, the stock market is nearly double the low reached following the financial debacle of autumn 2008 and consumer confidence is returning.
Republican activists and voters caught up in the excitement of their party’s primary campaign tend to assume rather gleefully that the sluggish economy will doom Obama to the ignominy of a single term. They lap up candidates’ routine denigrations of the president as a “radical” driving the United States to “European-style socialism”, and harp on the danger of the world’s most powerful economy facing a Greek-style collapse.
With the national debt at a record $15 trillion, the housing market stagnant and unemployment high, it is an easy argument to make. To the Right, Obama is the king of bailouts and subsidies and big government waste, the progenitor of a $787 billion stimulus that didn’t work and a rescue of the car industry that handed over ownership to the trade unions, which is only partly true.
To his supposed friends on the Left, he has been a let-down. With the big banks back on their feet and back in profit, the White House is seen as a Wall Street stooge. Obama’s major reforms – health care and financial regulation – are dismissed as too weak. They ask why a liberal president couldn’t fulfil a promise to close the prison at Guantanamo Bay and took so long to repeal the “Don’t Ask, Don’t Tell” rule for gays serving in the military. They wonder if he was too timid to reintroduce higher tax rates for the rich and too feeble under attack from Republicans.
It is not unusual for a president to be bashed from both sides, in particular a Democrat. Some on the Left still haven’t forgiven Bill Clinton for the landmark welfare reform he passed in 1996. But both the scorching rhetoric of the Right and the hand-wringing of the Left ignore the reality of a creeping regeneration of the US economy that goes deeper than mere positive indicators.
American manufacturing is undergoing a quiet renaissance. In Ohio, a crucial swing state in the industrial Midwest, four major car companies have recently announced investments in new plants worth hundreds of millions. GM is investing $2 billion at 17 facilities in eight states. Chrysler will create 1,100 jobs in Toledo on a new truck production line that is repatriating jobs from Mexico. Airbus announced on Friday that it will establish a aerospace research and development consortium in Dayton.
“I don’t want to over-promise and overstate it because there are still too many people not working, but the growth is starting to happen,” says Sherrod Brown, a Democratic senator for Ohio. “As we come out of national recession we are going to see a lot more growth in Ohio in manufacturing.”
The White House last week held a rather unsexy and unreported forum on “insourcing” jobs, hosting company directors who were relocating employment from overseas and listening to how any bureaucratic obstacles could be lifted.
Among those present was Bruce Cochrane, the owner of a furniture-making business in North Carolina, who last week resumed production of high-quality wooden beds, tables, chairs and cabinets in his home town of Lincolnton. He had sold the firm in 1996 to another that outsourced production to China, but with the costs of shipping and Asian labour rising, and American workers proving themselves three or four times more productive, he said reopening a works that had been in his family for five generations made good business sense.
“The ‘Made in the USA’ label is very important right now. Consumers realise that it means jobs in America and a better America, and it doesn’t necessarily mean more expensive,” he says.
Economists warn that the recovery will be slow and that many low-skilled, well-paying manual jobs will never return. American education and high-skills training lag behind some other developed countries. The numbers of unemployed or partially employed people is, moreover, much higher than the official statistic.
But when President Obama delivers his State of the Union address to the nation tonight, he will be able to present what he has called a “hopeful trend”. He will portray the overarching objective of his presidency as building a lasting economic recovery from the ruins of the mess he inherited, based on manufacturing, improved education and energy independent of the Opec nations – a goal of at least four of his predecessors which, according to new BP forecasts, is now achievable within 20 years.
When he begins campaigning in earnest for election day on November 6, the president will be able to boast about saving the car industry, stopping a financial collapse and keeping taxes low for the middle classes. Having run as a change candidate in 2008, his task will be to convince Americans that change would now be too risky.
“The sell will be that change is dangerous,” says Morris Reid, a Washington consultant and a Democrat. “He will say, ‘My policies are working, now give me more time – it didn’t take four years to get into this mess and it will take more than four years to get out of it’.”
Obama’s key challenge will be connecting to the deep anxiety of middle-class America, which has always felt that tomorrow would be better for its children, but is now not so sure.
President Obama is not great at Clinton-style empathy with the less fortunate, but nor is either of his likely Republican opponents, Mitt Romney and Newt Gingrich.
As ever in politics, luck will play its part and the pace of the recovery will be crucial. “The economy is improving, by any objective measure it’s turning. It’s just a question of how fast,” says Reid, who sees parallels with George Bush’s re-election bid in 1992, which was also attempted in an economic downturn.
The elder Bush could see the economy was mending but it wasn’t happening quickly enough for voters to appreciate. It was only felt in the second or third quarter of the year after the election, by which time Bill Clinton was in the White House and soon taking all the credit for the decade’s wonder boom.
Obama has made plenty of mistakes, but he will be facing a weaker candidate than Bush faced in Clinton, and will not suffer from the distracting presence of a third party candidate like Ross Perot.
The president has retained his personal popularity with the public and remains unblemished by scandal. His temperament is also better suited for campaigning than governing and he will have a war chest approaching $1 billion.
Just as his election in 2008 broke with the past, the first black US president could succeed in being the first since Franklin Delano Roosevelt to be re-elected when the country is still getting up off its knees.