WASHINGTON — The White House on Thursday predicted that unemployment will remain at 9 percent next year, a gloomy scenario for President Barack Obama’s re-election campaign.
The bleak figures from the Office of Management and Budget, which also projected overall growth this year at just 1.7 percent, serve as further confirmation of a sputtering economy while dramatizing the challenge Obama will face in making his case for re-election. The 1.7 percent growth rate is a full percentage point less than the administration predicted at the beginning of the year.
The economy promises to be the leading-edge issue of the 2012 White House sweepstakes, and Obama already is facing a host of Republican rivals challenging his financial policies. No president in modern times has won re-election with unemployment as high as 9 percent. Obama’s poll numbers have suffered in recent weeks amid a steady drumbeat of bad economic news.
On the deficit, the White House report projects red ink totaling $1.3 trillion for the budget year coming to a close Sept. 30. That is slightly higher than last year’s deficit but more than $300 billion less than the record sum that the White House predicted in February.
Tax receipts are up unexpectedly and spending is down from the administration’s earlier predictions, in part because of GOP-mandated cuts to the day-to-day operating budgets of Cabinet-level departments and agencies.
Of Thursday’s report, White House budget director Jacob Lew said, “We need to get back on a sustainable fiscal path” and “invest in long-term economic growth and job creation.”
Obama plans to outline his ideas for jump-starting the economy and creating jobs in a prime-time address to a joint session of Congress and the nation Sept. 8.
That date was negotiated only after the White House and House Speaker John Boehner, R-Ohio, disagreed over Obama’s request to give the speech a day earlier, Sept. 7 — when the Republicans had scheduled a presidential debate.
The White House report said that higher oil prices, an economic slowdown in Europe, continuing weakness in the housing sector and the disruption in global supply chains after the devastating earthquake in Japan have dragged down the economy.
Uncertainty over raising the U.S. debt ceiling hurt as well, the report said.
“In sum, economic growth and job creation, while positive, have not been strong enough to bring the unemployment rate down to an acceptable level,” the budget office reported.
The grim report was expected, and it comes a week before Obama reveals his new jobs initiative. The nationally broadcast address from the Capitol will put Obama face to face with Tea Party Republicans who are sure to fight any new “stimulus” spending he might propose.
White House spokesman Jay Carney said the president’s job initiative would lower unemployment and help spur a faster economic recovery than what the budget office forecast Thursday.
