'Private sector is doing fine'? Obama retracts as GOP mocks

President Obama's remark that the sagging economy is due to cuts in public-sector jobs riled Republicans in Congress, who pledge to extend the Bush tax cuts and repeal health-care reform.

As soon as the words "the private sector is doing fine" slipped from President Obama's lips Friday morning, congressional Republicans went berserk.

"My question to the president would be: Are you kidding? Did you see the jobs numbers that came out last week?" House majority leader Eric Cantor (R) of Virginia told reporters. "The private sector is not doing fine."

In the Senate, Sen. Roy Blunt (R) of Missouri called the president's statement "ridiculous."

Later, the president walked back his remarks during a brief appearance with the president of the Philippines. "It is absolutely clear the economy is not doing fine,” Obama said.

But what, in fact, did Mr. Obama say and – retracted or not – how is it likely to play in the ongoing standoff with Republicans in Congress?

"We've created 4.3 million jobs over the last ... 27 months, over 800,000 just this year alone. The private sector is doing fine," he said in a press conference Friday. "Where we're seeing weaknesses in our economy have to do with state and local government, oftentimes cuts initiated by, you know, governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don't have the same kind of flexibility of the federal government in dealing with fewer revenues coming in."

The latter half of the president's statement points to what Obama would like Congress to do to help support the economy: Pass his plan to provide more federal funding to state and local governments to hire or maintain public employees such as teachers and firefighters. But the chief thrust of his statement was to outline troubles in the European economy and how they are negatively affectng America's economic fortunes.

Republicans slammed Obama for not taking responsibility for ongoing economic turbulence. 

"Just because Europe has problems doesn't mean we can't begin to solve our problems," said House Speaker John Boehner (R) of Ohio. "There's no excuse."

Mr. Boehner said the House would be doing two things to help solve America's economic problems in coming weeks: voting to extend all the Bush tax cuts and moving to repeal the entirety of the president's signature health-care reform law.

Such actions would lift uncertainty in the US economy, said both Republican House leaders. The economy generated a meager 69,000 new jobs in May, and the US Labor Department recently revised prior months' gains downward.

Of course, just because both parties rattle their political sabres at each other about taking action doesn't mean anything significant will get done. Obama has insisted that the Bush tax cuts be extended only for those making less than $250,000 a year, while congressional Republicans insist on an extension of lower taxes for everyone. Obama pushes more federal funds for state and local governments, while Republicans argue the already $1 trillion-plus annual deficit can't stand any more spending.

With critical policy lines drawn so starkly – and elections pending – there's little prospect of a grand bargain on jobs or the economy, at least in the short term.

And so Obama's description of America's role vis-à-vis troubled European governments – "what we can do is to prod, advise, suggest" – goes for Republicans in Congress, as well. Both sides will do plenty of prodding and advising but, almost all observers agree, little compromising to get things done before November's elections.