NYT: Constraints on economy hurting Obama

WASHINGTON ?? The bleak jobs report on Friday predictably had heads snapping toward the White House, looking to President Obama to do something. Yet his proposed remedies only underscore how much the president, just five months before he faces voters, is at the mercy of actors in Europe, China and Congress whose political interests often conflict with his own.

That day, Mr. Obama continued his weekly travels around the country, prodding Congressional Republicans to pass his ?to-do list? of temporary tax cuts and spending initiatives to help create jobs. The Republicans only mock him, which leaves Mr. Obama free to blame his opponents and their presidential standard-bearer, Mitt Romney. But in doing so, he telegraphs a message of powerlessness that no leader likes to convey ? least of all one who ran for office four years ago vowing to bridge Washington?s partisan gulf.

Developments overseas have not helped either. American officials have complained as Beijing began letting its currency devalue again, making its exports cheaper and those from the United States to China more costly. And administration officials, and Mr. Obama himself, have lobbied leaders in Europe for more forceful action to promote growth or at least contain the threat of financial contagion there.

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In his weekly address on Saturday, recorded on Friday at a Honeywell International plant near Minneapolis, the president cited the global woes buffeting the economy. But he singled out Congress for rebuke.

?While we can?t fully control everything that happens in other parts of the world, there are plenty of things we can control here at home,? Mr. Obama said. ?There are plenty of steps we can take right now to help create jobs and grow this economy.?

Without mentioning Republicans, Mr. Obama said Congress had not passed measures he had proposed to get jobless construction workers rebuilding roads, bridges and runways; to give small businesses a tax break for new hires; and to help states pay teachers, firefighters and police officers. The steady elimination of public sector jobs has offset increased hiring in the private sector for more than two years.

?So my message to Congress is: Get to work,? he added.

Alan J. Auerbach, an economist at the University of California, Berkeley, said, ?Frankly, I don?t see what President Obama can do right now other than to forcefully present a detailed plan for action and challenge Congress to take it up.?

But ?short of a real crisis,? as in 2008, Mr. Auerbach, an expert on fiscal policy, added, ?I doubt that there is anything he can do to spur meaningful legislation before the election.?

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Yet even in 2008, with the financial system near collapse, most Congressional Republicans rejected the rescue plan of a Republican president, George W. Bush. And now, despite their own record-low numbers in the polls, they have next to no incentive to help an embattled Democratic president lift the economy.

Continued economic anemia plays to Mr. Romney?s call for new stewardship, and to Republicans? demands to extend and deepen the Bush-era tax cuts for the wealthiest Americans rather than let them expire, as Mr. Obama and Democrats want. And they figure that if Mr. Romney succeeds, it will probably help them win close House and Senate races, while Mr. Obama?s re-election could do the opposite.

By emboldening Republicans, the report on Friday that the economy added only 69,000 jobs in May seemed to dash the hopes of some in the White House for a replay of 1996. That summer, as President Bill Clinton sought re-election with the economy improving, Republicans in Congress decided that their party?s weak presidential nominee, Senator Bob Dole, was doomed. To Mr. Dole?s chagrin, they compromised with the Democratic president to notch some significant achievements and ensure their own survival.

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Gene Sperling, the chief White House economic adviser, said, ?There is no question that had Congress acted on the president?s proposals nine months ago to prevent teacher layoffs, put construction workers back to work and cut small-business taxes, our job situation today would be notably stronger and unemployment would be lower.? Analyses by macroeconomic firms and nonpartisan financial analysts agreed.

While Mr. Obama seeks to make Republicans the villains when it comes to the economy, he is also, more diplomatically, blaming Europe. In Minneapolis and Chicago on Friday, he cited the impact of the continent?s travails on the American economy.

Citing the jobs report, Mr. Obama said, ?A lot of that is attributable to Europe and the cloud that?s coming over from the Atlantic, and the whole world economy has been weakened by it.?

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As lackluster as the American jobs data was, with unemployment inching up one-tenth of a percentage point to 8.2 percent, the news from Europe was far worse: the jobless rate in the euro zone hit 11 percent, the highest since tracking began in 1995. ?There?s really nothing the U.S. can do,? said Charles Calomiris, professor of finance and economics at Columbia Business School.

On Wednesday, Mr. Obama had a video conference call with Chancellor Angela Merkel of Germany, President Fran?ois Hollande of France and Prime Minister Mario Monti of Italy to discuss developments in Europe and plan for this month?s G-20 summit meeting in Mexico. Treasury Secretary Timothy F. Geithner continued to trade calls with Germany?s finance minister, Wolfgang Sch?uble. And late Friday, Mr. Obama?s Treasury undersecretary for international affairs, Lael Brainard, returned from a week of consultations in Athens, Frankfurt, Madrid, Paris and Berlin.

Mr. Obama ?emphasizes that what happens in Europe is of global concern,? said Michael Froman, the White House adviser for international economic affairs. ?We want to be of help, whether in providing ideas or lessons from our experience as they work through these issues.?

For more than two years, Mr. Obama and Mr. Geithner have prodded Europe, led by Germany, to do more to revive the region?s weakest economies rather than push budget cuts, which have resulted in more losses of jobs and consumer spending power. Their results, however, have been limited at best.

Germany has shown some willingness to bend. Officials in Berlin have signaled that they could accept higher wages at home and inflation above the euro zone?s average. Last week, a finance ministry spokesman said Germany could be more flexible about the timing of budget cuts in Spain ? after Greece, the source of greatest anxiety now.

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But Germans are deeply concerned that supporting big transfers of aid to troubled countries within the euro zone will create a precedent and the expectation in other countries that they, or their banks, will be bailed out whenever necessary. Germans also believe that issuing debt jointly with other European countries, known as euro bonds, which the United States supports, would be struck down as unconstitutional by their high court.

And they routinely dismiss any criticism from across the Atlantic as election-year politicking.

?Germans do not think Americans have anything to offer at the moment in terms of helping us with the euro crisis,? said Thomas Risse, professor of international politics at the Free University in Berlin. ?Everyone thinks it?s just about Obama?s re-election here, which is wrong, but they think it.?

After the United States said this spring that it would not increase its contribution to the International Monetary Fund, its influence in Europe was blunted.

Even so, ?the I.M.F. appears to not be having the influence it usually does,? said Franklin Allen, a professor at the University of Pennsylvania?s Wharton School. ?It seems like Berlin is making all the decisions at the moment.?

Jackie Calmes reported from Washington, and Nicholas Kulish from Berlin.

This article, "Weak Economy Points to Obama?s Constraints," first appeared in The New York Times.

Copyright ? 2012 The New York Times

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