What can Obama and congressional Democrats do about the bad economy?

Friday’s job growth numbers, reported by the Labor Department, present a sobering picture for President Obama and the Democrats. With the pace of hiring down and the unemployment rate above 9 percent, the report suggests that the nation’s recovery is once again faltering. These numbers only underscore our continuing economic difficulties. And for a mix of political and policy reasons, the federal government has no significant new fiscal or monetary weapons left to deploy. As they head into an election that is certain to focus on the economy, the administration and congressional Democrats have no choice but to put the best face on a bad situation. What can they do?

As it happens, two recently released reports have explored public attitudes on the economy. Taken together, they illuminate the challenges Democrats will face in framing a credible and effective economic message. But they also shed light on surprising opportunities and, read closely, they just might point to the best way forward.

On Thursday, Andrew Levison published a memo asking “Why Can’t the Dems Make Jobs a Winning Political Issue?” His answer: While Democrats’ default response to high unemployment and slow growth is Keynesian, “a very strong anti-Keynesian perspective on job creation is extraordinarily widespread among American voters.” Large numbers of voters don’t think they have to choose between spending reductions and job creation because they see the former as one of the keys to the latter. Not only is government spending seen as a drag on the private sector, but also the most prominent Keynesian stimulus in recent years—the 2009 stimulus package—is widely regarded as a failure. Although a large majority of economists have concluded that it prevented a bad situation from becoming much worse, a majority of the American people believe that it failed. From their standpoint, the fact that unemployment continues to stagnate near 9 percent is proof enough that we can’t spend our way to prosperity. And the Obama administration helped to undermine the credibility of the stimulus early on by issuing an overly optimistic assessment of its likely effects.

To be sure, there are many “ambivalent” voters who are neither Keynesians nor supply-siders but rather are cross-pressured by these competing narratives, and each party needs to win them over. For Democrats to appeal successfully to the ambivalents, Levison contends, they must grapple with four realities:

1. “Simply repeating the traditional Democratic narrative—regardless of how frequently or emphatically—will not produce significant attitude change.” 
2. “Doubts about the ability of government to create jobs reflect not only a disbelief in Keynesian remedies for unemployment but also the profound doubts many Americans have about government in general.”
3. “Attempts to convince the critical group of ambivalent voters have to be based on those voters’ distinct way of thinking about political issues—the desire to find a ‘common-sense’ middle ground.”
4. “The widespread progressive assumption that job creation should necessarily be just as popular today as it was in the 1950s and 1960s is simply wrong.”

Levison concludes that any effective Democratic message must tackle the public’s deep skepticism about government and convince the ambivalent portion of the electorate that the party’s economic prescription reflects common sense rather than obsolete assumptions.

Also on Thursday, a second report was unveiled, this time from Democracy Corps, a group headed by long-time Democratic survey researcher Stan Greenberg and party stalwart James Carville. Based on a new survey, it reaches conclusions that are broadly consistent with Levison’s. The report documents a substantial fall in public confidence that Republicans have the right approach to fiscal and economic policy. But Republican losses have not translated into Democratic gains, either for the party or for President Obama. The mood of the public with regard to the economy is pretty close to “a plague on both your houses.” Neither party has an approach to recovery and growth that the public regards as inspiring or even credible.

A majority of Americans continues to believe that the economy is either stagnating or getting worse, and only 44 percent overall (and 34 percent of Independents) approves of Obama’s handling of that issue. Core economic realities shape these attitudes. Forty-three percent of respondents have experienced reduced wages and benefits; 35 percent have actually lost a job; and 27 percent have lost health insurance for some period of time. Fully 20 percent have fallen behind on their mortgage. For these reasons, talking about progress on the economy—either actual or impending—only weakens the credibility of the speaker. 

The public has clear views about the major economic problems that public policy needs to address. Thirty-seven percent named “high government spending, the budget deficit, and taxes.” The same percentage cited “the middle class and working people facing rising costs and declining income.” Close behind with 32 percent was the “outsourcing of American jobs and China creating rules that block American exports,” followed by a wasteful government dominated by special interests and not accountable to the people (26 percent), falling behind India and China in education and innovation (22 percent), and taxes and regulations that prevent businesses from hiring people and expanding (19 percent).

In the face of these sentiments, what can Democrats do? Democracy Corps tested a number of possible messages. Options that focused on the past—on either what Republicans did to cause the economic mess or what Democrats have done to put things right—fell flat. While Democrats were able to run against Herbert Hoover for decades, the strategy of running against George W. Bush had a much briefer shelf-life, which has now expired. The people are dismayed by current conditions, and they are in a very sober mood. They’re interested in a serious, realistic conversation about the future of the American economy, and they want a credible plan that allows us to make progress in the face of new challenges, including international competition.

In this context, messages focused on economic nationalism (China and outsourcing), on the plight of the middle class, on government reform to reduce the influence of special interest, and on rising inequality all fared pretty well. But surprisingly, the strongest message for Democrats went as follows:

“Half the country blames George Bush for the state of the economy and the other half blames Barack Obama. But that blame game will not help to create new jobs. We face immense problems that will take years to solve. We need to start working together to reduce spending and the deficit and ask the richest to pay their fare share of taxes. We need to support education, innovation, and new American industries.”

This approach beats out all the others among the young, first-time voters who went for Obama in 2008, as well as among Independents, and white non-college voters. It even ranks second among Democrats. Notably, it achieves this result by weaving together bipartisan substance—spending reductions, as well as key investments and taxing the rich—with bipartisan politics—end the bickering and start working together to solve problems. 

Granted, a message is not a plan. But a sustainable narrative can help to identify and shape the policies that a party can successfully emphasize. If Democracy Corps is right, Democrats can go to the people with proposals for increasing taxes on wealthy Americans and bolstering support for education, research, and job-creating innovation—but only if their plan for reducing spending and the budget deficit is seen as serious and credible.

Putting these two reports together points to a clear choice facing Democrats at every level: Either they default to partisan politics as usual, or they find a way of recapturing a key element of Obama’s rise and appeal in 2008—namely, overcoming divisions and reuniting the country. Claiming a monopoly on wisdom and virtue will not serve Democrats well. They must figure out how to say no to Ryan’s budget and other unacceptable proposals while communicating their willingness to meet legitimate Republican concerns halfway. Democrats will have a big problem next year unless the people see the Republicans as the greater obstacle to the united action they want.

William Galston is a senior fellow at the Brookings Institution and a contributing editor for The New Republic.