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Tuesday, October 6, 2009

Wall Street Journal Predicts Midterm Difficulties for Congressional Dems

As President Obama's stimulus package continues to flounder, Congressional Democrats who bought the program hook, line and sinker as the only way to save jobs and revive the economy will be tied to its success or failure come the mid term elections, reports the Wall Street Journal:

Congressional Democrats and the Obama White House have plenty to fret about as they eye the 2010 elections: rising deficits, the Afghan war, public fears over expanding government, the fate of the health-care brawl.

But one item may prove key: the national unemployment rate, which hit a 26-year high last month at 9.8%. On that front, economists and political pundits say, the majority party looks increasingly wobbly.

The incumbent Democrats are facing an uphill climb in the 2010 elections. With the jobless rate nearing 10%, President Obama could lose more than 20 seats in the House. WSJ's Neil King explains.

"Unemployment is the leading economic indicator when it comes to politics," said Democratic pollster Peter Hart. "Anytime unemployment hits double digits, it's hard to see the party in control having a good election year."

Economists generally predict that the number of people out of work will continue to inch up next year, even if the economy begins to rebound. Most see the jobless rate peaking at around 10.5% in the summer. Former Fed Chairman Alan Greenspan said Sunday that his own hunch was that the economy would turn around over coming months, but that unemployment would "penetrate the 10% barrier and stay there for a while before we start down." ...

President Barack Obama and the Democrats are all the more exposed on the jobs front because they touted the $787 billion economic-stimulus bill as a way to curb job losses. The Obama team asserted in January that the recovery plan would keep unemployment below 8% and push it down to nearly 7% by the end of 2010. Obama aides have since said that they didn't grasp how sour the economy was at the time.

Economists now generally believe that the stimulus package has cushioned the economic fall. But Republicans argue that it was a waste of money, and it isn't clear whether the Democratic argument -- that things would be worse without the stimulus -- will sway many voters.

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