Greece Puts Democrats on Skids

June 29, 2010

Wall Street Journal

Gerald F. Seib

Politically speaking, the Democrats' problem at the moment is pretty simple: Confidence in the economy has slumped, and at exactly the wrong time in the election calendar.

Blame it on Greece.

For Democrats' prospects to improve in November's midterm elections, this is about the time voters would have to start feeling better about the economy's recovery under Democratic stewardship. And for a while this spring, it seemed that was starting to happen.

Not now. And, let's face it: It's still the economy, stupid, that matters.

Look inside the latest Wall Street Journal/NBC News poll to see the picture. Americans actually are feeling a little better about this year's big health-care overhaul legislation, which Republicans thought would be the Democrats' Achilles' heel this year. The share of Americans who think the bill was a good idea has ticked up steadily through the year, and a slight majority of voters now say they'd be more likely to vote for a Democrat who argues for giving the plan time to work rather than a Republican who wants to repeal it and start over.

So Democrats are getting about the best they could hope for on health. But they're getting less than they expected on the economic outlook.

In just one month's time, between May and June, the share of Americans who say the economy will get better over the next 12 months fell to 33% from 40%. Last September, the share was even higher, 47%. In other words, even as the U.S. has technically been exiting the recession, optimism about the economy actually has declined—and the decline has become much more pronounced lately.

President Barack Obama is paying a price for this, as presidents always do. Those who disapprove of his handling of the economy ticked up to 50% this month, from 46% in May. That's a big reason—likely the main reason—the Journal/NBC News poll found in June, for the first time, more people disapproving than approving of Mr. Obama's overall job performance. (If it's any consolation to Democrats, former President George W. Bush still is seen as slightly more responsible for current conditions.)

Equally disconcerting for Democrats is the way this economic gloom—perhaps combined with the depressing pictures of the Gulf oil spill—is helping create a bit of a generalized funk less than five months before Election Day. The share of Americans who say the country is off on the wrong track has jumped to 62%, the highest of the Obama presidency.

This is striking in part because confidence in Mr. Obama's handling of the economy actually rose between January and May of this year. If you're looking for a cause of this early-summer downer, the lovely nation of Greece would be a good place to start. Just about the time Americans seemed ready to allow themselves to feel a bit better about economic recovery this spring, the shadow of a debt meltdown in Greece, which might spread across Europe, began creeping over the landscape.

On April 27, Standard & Poor's Ratings Services downgraded Greece's debt to "junk" territory. The Dow Jones Industrial Average, which had climbed above 11,000, fell 213.04 points, and now hovers in the 10,000-point range. There followed some disappointing job-creation numbers in the U.S.

Average Americans certainly don't spend a lot of time worrying about Greece's bond rating, or the status of sovereign debt in the Euro zone. But they can sense fear in the air, and this spring brought a whiff of fear that a nascent recovery might be cut short because of international economic woes. It seems likely we're now seeing the direct and logical reaction to that change in psychology.

Politically speaking, the Democrats' problem at the moment is pretty simple: Confidence in the economy has slumped, and at exactly the wrong time in the election calendar.

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