Europe debt crisis threatens Obama campaign

@CNNMoney December 1, 2011: 9:39 AM ET

Help me help you, Angela Merkel.

NEW YORK (CNNMoney) -- There's a political drama playing out right now that could make President Obama's path to re-election much more difficult.

And no, it's not the frantic campaigning in Iowa, New Hampshire and South Carolina. It's the debt crisis gripping Berlin, Paris and Madrid.

Europe's long-smoldering crisis has now reached something of a zenith, compelling the Federal Reserve to jump in and say it will work with other central banks to support the global economy.

Already, the economies of Europe have stopped growing. And many observers worry that the sputtering U.S. economy could be adversely affected by the crisis in Europe.

It's a problem Obama is keenly aware of.

"This is of huge importance to our own economy," Obama said Monday. "If Europe is contracting or if Europe is having difficulties, then it's much more difficult for us to create good jobs here at home."

The U.S. exports hundreds of billions in products to Europe each year -- goods that are less likely to be purchased if the European economy is in tatters. American firms have huge sums of money directly invested in Europe, and U.S. banks have significant loans out to European governments and companies.

It could all go south very quickly. And that will translate, at some point, into votes.

"The slower the U.S. economy is growing, the more difficult it will be for the president to make his case for re-election," said Bill Galston, a senior fellow at the Brookings Institution.

Nathan Gonzales, deputy editor of The Rothenberg Political Report, said that the headlines coming out of Europe could have an impact in 2012 if they contribute to a sense that the domestic economy isn't getting better.

"I think as long as a majority of Americans believe the country is headed off on the wrong track, then the president's re-election is in jeopardy," Gonzales said.

Europe's Debt Crisis

Obama and Treasury Sec. Tim Geithner have traveled to Europe, and conferred at length with German Chancellor Angela Merkel and other officials in an effort to cajole more action out of European governments.

But beyond that, the Obama administration doesn't have much control over the situation.

"I don't think the Europeans particularly want our advice right now," Galston said. "We're sitting down at the table with empty pockets. We have nothing to put on the table."

Even if Obama has limited policy options at his disposal, the eventual Republican nominee is not likely to grant the administration a pass, especially with Obama's record on the economy already poised to dominate the campaign.

"If Europeans don't get their act together, and the U.S. growth rate is cut in half, we're going to have a different kind of election," Galston said. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
View rates in your area
Find personalized rates:
Economic Calendar
Latest ReportNext Update
Home pricesAug 28
Consumer confidenceAug 28
GDPAug 29
Manufacturing (ISM)Sept 4
JobsSept 7
Inflation (CPI)Sept 14
Retail sales Sept 14
  • -->

    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.