Obama’s reelection hangs by a thin thread
By Max J. Castro
majcastro@gmail.com
Last week brought grim news to anyone who believes that a Mitt Romney presidency would be a disaster for this country and the world. The economy, which had been recovering at a snail’s pace for the last two years, has now taken a turn for the worse. The seriously ill but improving patient is now in critical condition
The latest jobs figures from the U.S. Labor Department are dismal. It was James Carville, one of the chief architects of Bill Clinton’s successful 1992 campaign for the White House, who best summed up the deciding factor in most U.S. presidential elections: “It’s the economy, stupid!” And among the sundry indicators economists use to gauge the health of the economy none packs as much political punch as employment.
That is why the Labor Department’s report, released last Friday, showing only 69,000 new jobs were created in May and lowering the estimates for the number of jobs created in recent months, is a heavy blow to Obama’s reelection campaign. The figure is much lower than analysts’ expectations of 150,000 new jobs and well below the 125,000 new jobs needed monthly just to employ new entrants into the labor force. That is why the unemployment rate, which had been slowly but steadily declining, ticked up from 8.1 percent to 8.2 percent last month.
What possible political difference can a one tenth of one percent change in the unemployment rate make? The problem for Obama is that on the economy he had been treading on dangerous ground even before this latest bit of bad news. The sluggish economic recovery played into Mitt Romney’s main – and possibly only – selling point. That’s the claim that the Republican candidate’s success in business, in contrast with Obama’s background in community organizing, law, and the academy, makes Romney more qualified to be a job creator.
Romney’s narrative is rife with fallacies. Mitt’s success in business at the firm Bain Capital was mainly as a vulture capitalist, as one of his Republican primary opponents rightly remarked. It was centered on swallowing up firms that were not yielding as much profit as they could if only management were willing to fire many workers deemed dispensable or who were receiving decent wages and benefits and replace them with low-wage, no-benefits workers here or abroad.
Thus the formula which Romney and his cronies used to increase profits for the owners or stockholders of the companies with which they dealt – and to walk away with tens of millions themselves – was no magic elixir. It was already well known to nineteenth century social critics. To maximize profits, there are many possible avenues but probably the simplest one is to increase the exploitation of labor – demand as much or more work for far less compensation.
That option was to some extent unavailable to employers when the United States had a strong union movement and the government was not as much the handmaiden of corporations as it is now. From the 1940s to around 1980, organized workers and the state provided what renowned economist John Kenneth Galbraith called “countervailing forces” capable of limiting the prerogatives of business.
But in the “greed is good,” relentlessly anti-labor, globalized world that began with the Thatcher-Reagan (counter) “revolutions,” the old-fashioned way of squeezing out every possible ounce of profit became increasingly possible. Romney and the other geniuses at Bain were among the first to figure this out and to impart or impose that knowledge on those in management who had become accustomed to dealing with labor on the basis of such concepts as bargaining, loyalty and seniority. Thus it would be a sorry day indeed for American workers if Mitt’s magic economic potion were to be applied more pervasively than it already is.
The Romney narrative is also fallacious in assigning blame for the nation’s economic woes to Obama. The weak recovery that may now be yielding to another recession was made possible in spite of the fierce opposition of Republicans to any effort to stimulate the economy. If Romney and the GOP had been in charge from 2009 to the present, we would be in even deeper trouble than we are today.
But politics is not based on reason but on results, biases and blinders. When things are going badly, the man in charge gets the blame. Obama might have avoided this fate if upon taking office he had proposed a new, transformative economic program of the scale called for by the depth of the crisis. Undoubtedly, the GOP would have screamed holy murder and torpedoed all or most of the administration’s proposal. But then it would now be the Republicans suffering the blame for the faltering economy and Obama would be in a position to say: “I told you such a lame economic stimulus wouldn’t work.”
Obama instead tried to compromise with the uncompromising, who handed him just enough rope with which to hang himself in the form of a paltry and to some extent misguided stimulus package. The malnourished turkey the Republicans were willing to give the president they can now throw back at him as “Obama’s failed economic stimulus.”
It’s a neat trick, and it seems to be working. The game is not over yet, however. The economy might show some life in the coming months. But it could also tank and sink Obama with it. Obama’s main political assets are his likeable personality and the fact that Romney is his polar opposite, a man intensely disliked even by many members of his own party. Yet the perception that Mitt Romney is just not a very nice guy, an opinion with which even his own dog might agree, is an awfully thin reed on which to hang the future of the most powerful nation in the world.
