Obama reelection prospects brighter with deal to renew tax cuts?

While causing President Obama problems with his liberal base, the tax-cut compromise the Obama administration has reached with Republican lawmakers is likely to improve the president's chances for reelection, say political and economic analysts.

Democratic pollster Peter Hart, who co-directs the NBC News/Wall Street Journal poll, said Wednesday “the president can do START treaties and everything else. If he can’t get unemployment down and he can’t get the economy moving, he will not be reelected.”

Speaking at a Monitor-sponsored breakfast for reporters, Mr. Hart said, “I can’t tell you ...that 8 percent unemployment means he can’t get reelected. I can tell you if it is 10 percent unemployment, he will not be reelected. If you look at this [tax-cut] agreement, if it helps to get employment, that is the only thing that counts.” The compromise legislation, if approved by Congress, would retain existing tax rates for everyone for two years and extend unemployment benefits for 13 months, among other provisions.

Many economists say the agreement will, in fact, help to reduce the jobless rate. Writing on the “Dismal Scientist” website, Augustine Faucher says, “The tax cut deal announced Monday, particularly the payroll tax holiday, will provide a substantial boost to economic growth in 2011 and bring down the unemployment rate relative to the status quo of just a few days ago."

Declining state jobless rates, coupled with low inflation, “points to a victory for President Obama, should he run for re-election,” wrote Mr. Faucher, director of macroeconomics for Moody's Analytics, an economic forecasting firm.

Said Hart at breakfast Wednesday, the jobless rate is “the single most important number. The judgment on the president comes down to the economy.”