Ben Bernanke's cold comfort for Democrats

The federal reserve chairman may have steadied markets, but will hardly have settled Democratic nerves for the midterms
Ben Bernanke, Jackson Hole, Wyoming, federal reserve conference


There's certainly no longer any pretending that there's any kind of recovery going on. Those "green shoots" of March and April have curled back under the soil. Growth is slow enough – about 1.7% on an annual basis – that the risk of unemployment going higher, getting back above the politically important 10% figure, is very real.

So it's good that Bernanke offered a reassuring message, but it's difficult to feel all that reassured. Usually, on economic matters, laypersons like me can read the predictions and analyses of the doomsayers (usually on the left) and the predictions and analyses of the optimists (in the administration) and split the difference and be about right. But the Obama administration, in the person of Christina Romer, the outgoing chair of the president's board of economic advisors, predicted that 2009's stimulus package would keep unemployment around 8%. The doomsayers' case is looking stronger with each month.

The political ramifications are obvious. Back in April, when growth seemed to be starting to gather some momentum, the Democrats were revving themselves up for a summer and fall of recovery. If they could have headed into the November elections with five or six straight months of positive job growth, they could plausibly have argued to voters that a recovery was well underway.

Now, there is no chance they will able to make that argument. The reality of September's and October's economic numbers might be grim indeed.

What argument can Barack Obama and his party make instead?

They will scramble to say two things: it could have been much worse; and the Republicans have been obstructionists, hurting not helping. Both of these arguments are true, according to the best objective information we have. This Newsweek article sums up the first point well: Republican plans would have yielded fewer jobs and a higher deficit. And on the second point, a larger stimulus back in early 2009 would have done more for the economy (this wasn't solely the fault of Republicans, as several moderate Democrats also balked at a larger number).

But it's too late for those arguments to take hold. The Democrats should have been making them aggressively from the start. Instead, they banked on the current moment being recovery summer. And now that that isn't the case, they're seen as incompetents.

In the battle between incompetents and obstructionists, the obstructionists are going to win. And things may get even worse, since the GOP's goal is not to help lower the unemployment rate, but to raise it by one: a certain Barack Hussein Obama.

We're some distance from being able to forecast that. Bernanke said Friday that the "preconditions" exist for a good 2011. But right now, to unemployed Americans, that's just another happy prediction from someone who has a job.