Credit Rating, Stocks, Budget Deal And Jobs Dog Obama In Bad Month

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WASHINGTON — It has been a lousy month for President Barack Obama. And August is not yet two weeks old.

Running for re-election, he’s getting beaten up from the political left for making too many concessions and for abandoning the positions on which he campaigned. And he’s being attacked from the right by Republican conservatives who claim his spending and taxing policies are hampering the economic recovery.

Over the past days, Obama has been confronted with humiliating blows on both the economy and in Afghanistan, while polls show deteriorating public support for both him and Congress amid growing public disillusionment with the nation’s policymaking process.

Usually, August is a steamy, lazy time in the nation’s capital when not much gets done and when both Congress and usually the president go on vacation.

But so far this month, the government avoided – just narrowly – a first-ever default on its financial obligations as it came just hours within beginning to run out of cash to pay its bills. A last-minute compromise with Republicans helped avoid the default but wasn’t enough to keep the government’s credit rating from being downgraded one notch from AAA to AA-plus by Standard & Poor’s.

Americans want their presidents to be problem solvers. But polls suggest that a majority of the public has lost faith in the ability of both the president and Congress to fix the ailing economy. More than two years into Obama’s presidency, the nation’s unemployment rate remains painfully high, and the Federal Reserve warns there’s little chance of major economic growth over the next two years.

“Obama’s trapped. He’s trapped by what happens with the financial crisis in Europe. He faces a Congress where Republicans will stop him dead in the tracks on his economic and jobs proposals,” said Thomas Mann, a scholar at the Brookings Institution. “And there’s a near consensus of pundits that he’s fundamentally flawed as a consequence of his personality.”

“He should be glad it’s more than a year before Election Day and not next August,” Mann added.

In its downgrade, S&P cited the inability of the political parties to find common ground on getting the U.S. financial house in order – and poor prospects for doing so anytime soon.

A Washington Post poll released Wednesday showed that just 26 percent – barely one in four – have even some faith the government can solve its economic problems. And 71 percent see S&P’s political analysis in its downgrade – lambasting the nation’s policymaking process – as accurate.

Obama’s restive Democratic base grumbles about his concessions to Republicans. They cite his failure to allow the Bush tax cuts to expire at the end of last year for the wealthy; his failure to get more education and construction-project spending in the deal that averted a government shutdown this past spring; and his decision to drop his push for tax increases as part of last week’s compromise to raise the government’s debt ceiling.

The stock market has plunged more than 1,000 points from late July as investors worried about the twin economic perils of a financial meltdown in Europe and political near-paralysis in Washington.

The tumble, which continued Wednesday with a 519-point drop in the Dow industrials, along with slower-than-expected U.S. economic growth, reinforces expectations that the economy could be on the verge of slipping back into a new, or “double dip,” recession.

Obama spoke from the White House earlier in the week in an attempt to calm markets, claiming that “lack of political will” – not the nation’s financial status – led to the debt deadlock and the downgrade. But it did not have its intended effect.

Even his comments that “no matter what some agency may say, we’ve always been and will always be a triple-A country” drew some snickers and dismissive comments from both parties.

To many, his performance reinforced fears that Obama has been doing too little to try to fix the economy and promote job creation.

Trying to answer such criticism, the president was going to a battery factory in Holland, Mich., on Thursday to promote his jobs agenda, followed by an economic-themed bus tour through the Midwest next week.

He’s going to Martha’s Vineyard with his family on vacation at the end of this month.

Shouldn’t Obama do something extraordinary, given the severity of the economic problem, such as cutting his vacation short or summoning Congress back into session?

Presidential spokesman Jay Carney, responding to that question at his daily briefing, said the president is “focused on the things that he can do that can be effective. … When you say `extraordinary,’ I mean … if you’re talking about a stunt, I don’t think a stunt is what the American people are looking for.”

Carney said taking hits from all sides comes with the territory. “We don’t spend a lot of time focusing on that. Because if you did, you’d spend all your time focusing on it.”

As if the nation’s economic woes weren’t enough, Obama also had to deal with the nation’s single deadliest day of the decade-long war in Afghanistan.

He flew to Dover, Del., on Tuesday to pay tribute to the 30 Americans who were killed when Taliban insurgents shot down their helicopter in Afghanistan.

Adding to his economic worries: It became clear this week that his former partner in trying to prod the economy, Federal Reserve Chairman Ben Bernanke, couldn’t do much more to help. The Fed has now held interest rates that it directly controls at near zero percent for more than two years. Bernanke and Washington leaders do not have many arrows left in their stimulus quivers.

Bernanke’s Fed, with three dissenting votes, issued a statement Tuesday saying it was leaving short-term interest rates alone for at least two more years. The decision at first lifted financial markets, but then caused them to drop even further by signaling how weak the Fed believes the economy to be, further fueling fears of a new recession.

“Apprehension about the future stems not merely from the constant bickering between Republicans and Democrats on spending and taxes, but more fundamentally on the growing realization that monetary policy is spent – the Federal Reserve has some ammunition left, but it is not likely to be very potent,” University of Maryland business economist Peter Morici said.

Allan Lichtman, a presidential historian at American University, said the pundits and politicians pronouncing Obama dead “aren’t any better than flipping a coin. You absolutely cannot judge a president’s prospects by events of the moment.”

“Anyway, the left isn’t going anywhere,” Lichtman said. “They may be disappointed with Obama, but they find the Republicans impossible.”

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