Bloomberg News

Jobs Data Gives Romney Opening as Obama Shifts to Tax Debate

August 03, 2012

Jobs Data Gives Romney Opening as Obama Shifts to Tax Debate

Mitt Romney holds up a "presidential accountability scorecard" comparing himself to President Barack Obama, as he campaigns at the Jefferson County Fairgrounds in Golden, Colo., on Aug. 2, 2012. Photographer: Charles Dharapak/AP Photo

Today’s monthly unemployment report provides Republican Mitt Romney a fresh chance to highlight discontent over the economy even as President Barack Obama pre- empted him with a swing-state ad campaign attacking the challenger’s tax plan.

While payrolls rose by 163,000, more than forecast, the jobless rate increased to 8.3 percent from 8.2 percent, a five- month high, the Labor Department reported. Neither number is likely to sway many voters, said Dan Schnur, a campaign adviser to Republican presidential candidate John McCain’s first bid for the White House.

“Voters already know what they think about the economy,” Schnur, director of the Unruh Institute of Politics at the University of Southern California in Los Angeles, said yesterday before the figures were released. “What’s left is for them to decide who can do something to make it better.”

Private forecasters had expected the unemployment rate to hold steady at 8.2 percent and payrolls to increase by 100,000 after an 80,000 gain in June, according to the median forecast of economists surveyed by Bloomberg News.

U.S. stocks rose following the Labor Department report. The Standard & Poor’s 500 Index (SPX) advanced 1.3 percent to 1,383.34 at 9:39 a.m. New York Time, after dropping 1.5 percent in four days. The Dow Jones Industrial Average added 163.55 points, or 1.3 percent, to 13,042.43.

Top Issue

The economy is the dominant issue in the presidential race and the two campaigns are taking divergent approaches to framing the debate.

“Today’s increase in the unemployment rate is a hammer blow to struggling middle-class families,” Romney said in a statement released by his campaign today. “President Obama doesn’t have a plan and believes that the private sector is ’doing fine.’ Obviously, that is not the case.”

Romney said his economic proposals would help raise household incomes. He vowed to create 12 million new jobs by the end of 2016 if elected.

Alan Krueger, chairman of the White House Council of Economic Advisers, said the jobs numbers show the economy is “continuing to heal from the very deep wounds” of the recession.

Pitch to Congress

“The unemployment rate is too high,” he said in a Bloomberg Television interview. He repeated the administration’s call for lawmakers to extend tax cuts for middle-income Americans and act on Obama’s proposals for spending on infrastructure and aid to state and local governments to spur hiring.

Congress has started its August recess and any action before the November election is unlikely.

The Obama campaign fired its latest television ad barrage yesterday, targeting Romney’s finances and his tax proposal a day in advance of the jobs report.

Running in swing states including Florida, Virginia and Colorado, where the two candidates campaigned yesterday, the ad cites a study by the independent Tax Policy Center that concluded Romney’s plan would shift more of the tax burden to those making less than $200,000 a year.

“Chances are you pay a higher tax rate than him,” the ad’s narrator says as a picture of Romney flashes on the screen. It says he paid a tax rate of 14 percent on income of $20 million in 2010. “Now he has a plan that would give millionaires another tax break and raises taxes on middle-class families by up to $2,000 a year,” the ad says, concluding, “He pays less, you pay more.”

Obama’s Strategy

In Florida yesterday, Obama kept up that line of attack, saying the tax proposal forms the centerpiece of Romney’s economic plan and calling it “trickle-down fairy dust” that would add to the deficit and favor the wealthy over middle- income Americans.

Obama is pursuing a strategy of pleading for patience on the economy while accusing Romney of favoring wealthy taxpayers at the expense of middle-income Americans. Romney is trying to keep the focus on the state of the world’s largest economy and an unemployment rate that has been stuck at more than 8 percent for more than three years.

Tax Message

Obama plans to underscore his tax message at a White House event today with middle-income families in which he will criticize congressional Republicans for “holding hostage” tax cuts that benefit the middle class. Congressional Republicans want all of the tax cuts passed under George W. Bush extended while Obama wants the tax cuts extended only for families with income under $250,000.

The Romney campaign issued a “white paper” yesterday written by four of the candidate’s economic advisers arguing that the U.S. economy is “stuck in a low-growth trap” because of Obama’s “economic errors and poor choices” such as an economic stimulus financed by government debt.

Campaigning in Golden, Colorado, Romney said Obama has failed on every promise he made in 2008 on unemployment, the housing market, family income and cutting the deficit.

He held up a “report card” designed by his campaign that contrasts the Massachusetts economy while he was governor from 2003 to 2007 with that of the nation since Obama took office in 2009. Referring to economic indicators on the report card, Romney said he would “get all those arrows green again” if he is elected.

“My policies will work, and I know that because they have worked in the past,” Romney said.

Employment Gains

The increase in payrolls for July was boosted by a pickup in employment at automakers as they kept more plants open during annual retooling related to the new model year. Chrysler Group LLC and Ford Motor Co. are among companies that said they would idle fewer plants.

Employment at private service-providers increased 148,000, the most in five months and reflecting more jobs in education and health services. Construction companies cut payrolls by 1,000 workers and retailers added 6,700 employees.

Government payrolls decreased by 9,000 for a second month.

Obama has an edge over Romney in national polls. He led the challenger 51 percent to 41 percent in a July 16-26 poll of registered voters conducted by the Pew Research Center in Washington. The survey has an error margin of plus or minus 3.2 percentage points.

He also leads in some key swing states. A Quinnipiac University/New York Times/CBS News poll in Ohio and Florida showed Obama with a six-percentage-point advantage in each state and 11 points in Pennsylvania.

Torrent of Ads

The poll of likely voters conducted July 24-30 indicated that a torrent of television advertising appears to be resonating in Obama’s quest to define Romney before many voters are very familiar with him. The polls found that more likely voters say Romney’s experience was too focused on making profits at Boston-based Bain Capital LLC, rather than the kind of experience that would help create jobs.

Both men are ultimately appealing to a small fraction of the population, the polling found. Just 4 percent of voters in the battleground states surveyed say they are undecided, and about one in 10 who have picked a candidate say they might change their minds.

The dwindling number of undecided voters also diminishes the political impact of new economic data such as the unemployment figures, said Christopher Wlezien, a political science professor at Temple University in Philadelphia and co- author of the forthcoming book “The Timeline of Presidential Elections.”

“As time goes by, more voters have made up their minds,” Wlezien said. “Because of that, what happens in the future has less marginal impact.”

To contact the reporter on this story: Mike Dorning in Washington at mdorning@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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