As the Dow plunged more than 630 points Monday, with an address by President Barack Obama seeming only to stoke the uncertainty in the financial markets, observers said his political survival is equally precarious if the sputtering economy continues to tailspin.
Obama attempted damage control following the news Friday that Standard & Poor’s was downgrading the U.S.’ stellar credit rating.
“No matter what some agency may say, we’ve always been and always will be a triple-A country,” Obama said.
His pep talk, however, failed to assuage Wall Street investors, already skittish over the European debt crisis and Washington gridlock that nearly derailed the U.S.’ handling of its own debt deal last week.
Perceptions that Washington is incapable of addressing rising debt, slowing growth, sagging employment and no stimulus plan contributed to the panicked selling that resulted in the S&P 500's worst day since December 2008.
The economic turmoil has been an albatross around Obama, observers said, and while he inherited it, he also squandered opportunities to significantly change course.
“He started with a large elective mandate and both houses of Congress, and then really spent all of his capital trying to fix the health-care system … [meanwhile] people were out of work,” said Stephen Hess, a presidential scholar with the Brookings Institution.
The Obama administration’s inability to invigorate the economy with a “shovel-ready stimulus package” – greater than the $800 billion dispensed in 2009 – was part of his perceived misstep, Hess said.
Obama remains vulnerable against a Republican challenger in 2012, he said: “You can’t run on hope. You have to run on your record.”
Observers said Obama’s job performance will remain tethered to the economy, so he must endorse policies that encourage job growth, including extending payroll tax cuts, to better his chances at reelection.
However, Obama’s lack of a clear, focused agenda to direct the country will hurt him with voters, said Mark Rozell, professor of public policy at George Mason University, especially when people considered him “an amazingly articulate and charismatic candidate” in 2008.
A CNN/ORC International Poll released Monday and conducted last weekend found that 44 percent of Americans approve of the president’s job, down from 45 percent in July. Similar polls conducted before Friday show him under 50 percent – a benchmark for electability.
“You can’t really call him a do-nothing president,” said Kyle Kondik, political analyst with the University of Virginia’s Center for Politics. “He has the will, but he doesn’t have the absolute power to make things happen.”