WASHINGTON — At his inauguration in January, President Obama warned that times would get tougher before they got better. He has been proved correct.

Cities Lose Out on Road Funds From Federal Stimulus (July 9, 2009)

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With unemployment already at 9.5 percent and likely to exceed 10 percent, much higher than White House officials predicted back in February, Mr. Obama has been facing attacks that his $787 billion stimulus program was either too timid or wrong-headed or both. Now, just five months after Congress agreed on the plan, with only a fraction of the money actually out the door, Washington is debating the need for a second round of stimulus amid economic and political crosscurrents.

In Ohio, where unemployment is above 10 percent and where Vice President Joseph R. Biden Jr. will visit on Thursday, Mr. Obama’s popularity has dropped sharply. In a poll by Quinnipiac University earlier this week, 48 percent of respondents said they disapproved of Mr. Obama’s handling of the economy, while 46 percent approved, down 11 percentage points since May.

“People are soured on the system, and that’s understandable,” said Senator Sherrod Brown, Democrat of Ohio. “People want to see more money for water and sewers. They want to see more manufacturing growth. They want to see what we’re going to do beyond that.”

For the moment, Mr. Obama and his top economic advisers are fending off calls for more action, combining a message of hard-headed realism about the magnitude of the economy’s problems with more cheerful predictions about an imminent boost as the government spending begins to hit the streets.

“The stimulus is on track,” Lawrence H. Summers, director of the White House National Economic Council, said Wednesday in an interview. “We planned for a program that would stimulate the economy over a two-year period, with a force that increases significantly over calendar year 2009. The implementation is on track to deliver that.”

Administration officials say a job market recovery usually lags behind the economic recovery itself. Indeed, most forecasters had predicted that unemployment was likely to keep rising through the end of 2009 and would not start to edge down until 2010.

“People know that problems of this seriousness cannot be turned around in six months or nine months,” Mr. Summers said. “One of the president’s strengths is his extraordinary candor. The president has been honest with the American people about the enormity of the challenge and the amount of time it will take to turn things around.”

But political pressures may not give the administration two years to show that its plan is working, especially if Democrats in Congress begin to conclude that continued bad economic news is putting them at risk of losing seats in the 2010 midterm elections.

Mr. Obama has bought time by casting the struggling economy as the legacy of President George W. Bush, but as time passes it increasingly becomes his problem and his party’s.

Administration officials had predicted that the stimulus program would save or create 600,000 jobs by summer. But the economy has lost more than two million jobs since Mr. Obama took office, and officials now estimate that the program has saved only about 150,000 jobs.

Republicans say that Mr. Obama’s recovery plan is failing and proves that government spending is an inefficient way to help the economy. Some Democrats fret that the program may be either too small or too slow.

Laura Tyson, a former economic adviser to President Bill Clinton, told an investor group in Singapore on Wednesday that the stimulus program was a “bit too small” and that the United States might need a second effort.

A top House Democrat, Representative Steny H. Hoyer of Maryland, told reporters on Tuesday that policy makers needed to be “open” to the possibility of a second program.

Administration officials acknowledge that their initial forecasts, which anticipated that unemployment would peak at 8.5 percent, were too optimistic, although they were in line with Federal Reserve and most private forecasters. On Sunday, Mr. Biden acknowledged that officials had “misread” the economy.

The looming political battle is about how to respond, and three camps are forming. The first includes the White House and most Democratic leaders in Congress, who champion a wait-and-see approach until more of the stimulus money hits the streets.

White House officials estimate that the government has committed $158 billion for spending around the country, but only about one-third of that has been spent. Temporary tax cuts have totaled about $43 billion thus far, according to White House estimates.

A second camp, consisting of nervous Democrats and some economists, argues that the government must spur the economy with another round of spending, tax cuts or a mixture of both.

The third camp is led by Republicans, many of whom argue that the spending program was wrong from the start and that the government should focus on tax cuts.

But Mr. Obama and Democratic lawmakers face difficult political and economic constraints if they try any kind of midcourse correction.

The budget deficit for 2009 will hit $1.7 trillion, according to the Congressional Budget Office. That equals 12 percent of the nation’s gross domestic product and is far higher than any deficit under any president since World War II.

Regardless of whether a second round of stimulus came from higher spending or lower taxes, the added kick to the economy would take months to arrive and would push the deficit even higher.

One risk facing policy makers is that bond investors around the world, already jittery about the flood of new Treasury debt being issued, would become even more nervous about future inflation and demand higher interest rates. Higher rates would probably push up the cost of mortgages as well as business borrowing, offsetting any lift that came from an additional stimulus program.

But the other risk is that the economy sinks even more than expected right now, compounding the problems policy makers already have. Waiting too long could heighten that danger.