Obama on the Economy: Leading or Cheerleading?

The president told Midwesterners this week that the nation remains strong, despite scarce jobs and low confidence. It's a tough sell.

Obama talking in Iowa - AP Photo:Carolyn Kaster - banner.jpg

"There is nothing wrong with our country'' except for the "broken" political system, President Obama declared at many stops on his Midwest bus tour this week. "We've still got the best workers in the world. We've got the best entrepreneurs in the world. We've got the best scientists, the best universities."

Well, fine. Presidents have to profess confidence about the country and its long-term prospects, even when the news is bleak. But in repeatedly insisting that there is "nothing wrong,'' Obama put himself at odds with current reality and with what most people think is true.

It's not just that unemployment and underemployment are sky-high. It's also that the economic recovery is sputtering and in serious danger of slipping into a second recession. A wide variety of polling shows that about 75 percent of Americans think the country is on the "wrong track." Consumer confidence is at the lowest level since 1980, and consumer spending is depressed. Global stock markets, which plunged again on Thursday, are more volatile than at any time since the depths of the financial crisis in late 2008. Gasoline prices are still near $4 a gallon, and gold prices have now pushed above $1,800 an ounce.

Obama's line is eerily reminiscent of John McCain's infamous remark during the 2008 presidential campaign -- during the same week that Wall Street was imploding - that "the fundamentals of the economy are strong."

McCain, like Obama, was simply trying to project an underlying confidence that this, too, would pass. For political and economic reasons, it's not a good idea for a president or presidential candidate to trash the state of the nation. It both deepens the crisis of confidence and projects a lack of leadership.

But McCain's comment seemed so utterly at odds with the financial collapse that he came across as clueless and disingenuous. Obama's comments this week had a similar ring. It's one thing to assure voters that the country still has underlying strengths and will eventually recover. It's something else to say, as the president did on numerous occasions, that only political gridlock was to blame. And Obama didn't just say it once. It was a central line he repeated at his bus stops in Minnesota, Iowa and Illinois.

Does that inspire confidence? It's true that the debt-ceiling fight highlighted a political standoff, and that Standard & Poor's cited the stalemate as the primary reason for downgrading the United States' AAA credit rating.

(RELATED: The Recent White House Strategy Shift)

But it's also true that the economy has real problems. On Wednesday, Morgan Stanley sharply lowered its economic forecast for the United States through 2012 and warned that both the U.S. and Europe were "dangerously close to a recession." Among the reasons: declining business and consumer confidence; weak investment and hiring; and "policy errors'' on both sides of the Atlantic in the form of premature budget austerity.

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Edmund L. Andrews is the deputy magazine editor for National Journal.

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