5 reasons Obama sounds optimistic

Eamon Javers Eamon Javers, Politico 

President Barack Obama and his economic team are

changing their tone on the economy. Gone are Obama’s

bleak descriptions of crisis and catastrophe. In their place

are “glimmers of hope” of a turnaround.

The question is: why now?

It’s a tricky balance. The White House doesn’t want to

hang a premature “Mission Accomplished” banner on the

economy ala President Bush’s speech about Iraq.

Obama’s recovery talk Tuesday was couched with

warnings of “more job loss, more foreclosures, and more

pain before it ends.”

But through all that, Obama is highlighting an economy on

the mend. Here are five reasons for Obama to make that

rhetorical pivot now:

1.  Real “glimmers of hope”

There are a few in the economic data, as the president

has noted twice in the past week.

The Dow notched five consecutive weeks of gains

heading into Easter weekend, prompting Wall Street

analysts to celebrate the fleeting return of a bull market.

Wells Fargo reported billions of dollars in first quarter

profits, a recent rarity for the beleaguered banking sector.

Even investment house Goldman Sachs said it felt so

good about the market that it would sell shares of its own

stock to raise money – then pay back the $10 billion in

taxpayer bailout money it took last fall.

Fed Chairman Ben Bernanke made the same point at a

speech at Morehouse College Tuesday, citing new

numbers on housing and consumer spending. “Recently

we have seen tentative signs that the sharp decline in

economic activity may be slowing,” he said.

Roger Altman, CEO of Evercore Partners and former

deputy Treasury secretary in the Clinton administration,

believes the U.S. is in for a “slow, painful climb-out” from

the recession but says Obama is onto something when he

talks about an end to the downward trend. “There are

signs of what I would call ‘bottoming,’” Altman said. “We

have two months of additional data and information now.”

Republicans pushed back. “Our economy will improve,”

said House Republican Leader John Boehner. “But it will

be because of the ingenuity and hard work of American

workers and small businesses, not because of the

Washington Democrats’ misguided policies that rely on

recklessly spending taxpayer dollars.”

2.  The 100-Day Clock is Ticking

There are political realities at work, too. Obama’s speech

came on Day 85 of his presidency, and after the spate of

media attention to come when he hits the 100-day mark,

Obama will own the economy in a very real political

sense.

After that, voters are likely to hold Obama more

responsible for their economic suffering, and patience for

blaming the Bush Administration will wear thin.

The president touched on this theme Tuesday, sounding

almost as if he wished the clamor for results wasn’t so

intense, with a “24-hour news cycle that insists on instant

gratification in the form of immediate results, or higher poll

numbers.”

Still, White House officials believe Obama’s window of

patience from voters could last as long as two years, if

the public continues to see him as someone who is being

straight with them about the problems and working to

solve them.

A recent Public Strategies Inc./POLITICO poll suggests

Obama does have some leeway. The survey of 1,000

registered voters found that two thirds of the respondents

trust the president “to identify the right solutions to the

problems we face as a nation.”

But if job losses continue, at some point, voters will

expect results. Says one Senate GOP aide, “If the White

House is right and the job numbers continue to go south

through the end of the year, people are going to start

asking where the hell the jobs are that they were

promised.”

3.  They’ve done it all

There’s also a practical reality facing the Obama

Administration, which is that they have largely done

everything they set out to do to fix the economy.

Obama ticked through a list of items in his speech -- the

$787 billion stimulus bill, the Wall Street and auto bailout

programs, a housing recovery plan, a boost to non-bank

credit markets and even his efforts to get the G-20

nations to do more. All, he said, have “been necessary

pieces of the recovery puzzle.”

The White House knows that it doesn’t have another

trillion-dollar program ready to go – though officials there

surely would try to find one if the economic numbers grew

worse -- so now is the time to begin talking about the

results of this intense period of activity.

Already, the federal government has, by some estimates,

committed more than $7 trillion toward the problem, much

of that in loans or other temporary outlays. The scale of

that spending, along with the AIG bonus scandal, have

created a sort of bailout fatigue in Washington. So for

Obama, this political moment is better spent talking about

what he’s already done, rather than proposing to do

something new.

4.  Boosting his credibility

The president has two key decisions coming up, so this

week marks an opportune moment to bolster his credibility

with the public before he needs to make politically difficult

calls.

At the end of this month, the Obama administration will

have to decide what to do about the results of the bank

“stress tests” – designed to see which financial

institutions can withstand the economic downturn, and

which need a government lifeline. Obama also must

decide whether to ask Congress for more bank bailout

funds.

At almost the same time, Obama will have to announce

the fate of automakers Chrysler and General Motors,

which could involve the politically agonizing decision of

letting one of America’s most storied companies fail

without a new lifeline from the government.

Meanwhile, there’s speculation that Obama will prompt the 

firing of a bank CEO once the stress test results come in,

which will provoke as much of a furor as his termination of GM CEO Rick Wagoner did in March. It will help his

case if the public accepts that the steps he’s taken so far

are working.

5.  Boosting the public’s confidence

And finally, consumer confidence hit its lowest reading

since 1967 in February. Obama’s hoping he can translate

his popularity and trust into getting consumers feeling

good again.

Altman cautioned that consumer confidence alone cannot

drive a recovery, but said, “I think he’s doing the right

thing and that he’s trying to instill confidence in the

American people that we’re on our way to recovery.”

Obama explained his thinking in his remarks at

Georgetown: “When this recession began, many families

sat around the kitchen table and tried to figure out where

they could cut back. And so have many businesses. And

this is a completely reasonable and understandable

reaction,” Obama said. “But if everybody -- if everybody --

if every family in America, if every business in America

cuts back all at once, then no one is spending any money,

which means there are no customers, which means there

are more layoffs, which means the economy gets even

worse.”

Like everything else, Obama has to be careful not to

oversell it – and risk getting lumped in with President

Bush, who urged Americans to go shopping as a way to

boost the economy after 9/11. But Obama is clearly

hoping some people who’ve been holding off on buying a

car, or even going out to dinner, might crack open their

wallets if they hear their president say things are getting

better.

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