President Barack Obama and fellow Democrats have run out of time and tools to generate growth as a historic government intervention to rescue the economy runs up against the limits of the November election calendar.
So the contest with Republicans for control of the US Congress has reverted to arguments that have traditionally defined the parties: the role of spending and taxes.
Democrats are reminding voters that their economic problems started under President George W Bush, while Republicans are taking aim at the Obama administration’s handling of record deficits and high unemployment. The Bush administration’s tax cuts, due to expire Dec 31, will be among the points of contention.
“The Republican Party is going to go to the mat to defend the centrepiece of President Bush’s economic agenda, and we know where it got us,” White House communication director Dan Pfeiffer said in an interview, placing the blame for the financial crisis on the Bush administration. The Obama administration wants tax cuts to remain for households earning less than $250,000. The Republicans want the cuts extended for every income level.
The showdown over taxes and policy comes as the economy shows fresh signs of slowing. The Standard & Poor’s 500 Index fell 0.9 per cent to 1,065.92 as of 11:48 am in New York, a second day of losses after reports yesterday showed manufacturing in the Philadelphia area unexpectedly contracted in August and claims for unemployment benefits last week jumped to the highest level since November.
July unemployment
The July unemployment rate in Nevada, where the Senate Majority Leader Harry Reid is struggling to win re-election against a Republican challenge, reached 14.3 per cent, a record in Nevada and the highest of any state, the US Labor Department reported today.
