CNBC's Cramer: Blame Congress for Obama's Diminishing Popularity

Karl Rove, David Axelrod - look out. CNBC "Mad Money" host Jim Cramer has the political climate figured out.

Since inauguration, President Barack Obama has seen his approval ratings fall by almost every poll and that's historically a normal reaction as the newness wears off a new president.

During his Sept. 30 "Stop Trading" segment on CNBC's "Street Signs," Cramer pointed out that although the prospects of Obama's ideal health care reform package passing are doubtful, health insurance providers are facing fallout from a publicity campaign meant by the administration to push through health insurance reform. That gives the administration a new villain.

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"The last thing they need is still one more chink in the armor," Cramer said. "People don't like [health insurance providers]. They just don't like them. There's the perfect villain. They have replaced bankers as an Obama target and you just don't want to be an Obama target. The guy's too popular."

That will stymie the stock rally some insurance providers have had as Obama's health care reform looks like it will be more and more unlikely to happen. And despite Obama's faltering in the polls somewhat, Cramer maintained Obama is still popular, compared to Congress.

"I think the executive office is very popular," Cramer said. "I think Congress is very unpopular."

The key according to Cramer - if Congress will moderate its push for liberal policies, Obama would see his popularity skyrocket.

"I mean isn't that where a lot of people - I think Obama's still in a grace period," Cramer said. "I think he's trying real hard. I think the perception is that Congress is pulling him far left and that if they would just somehow relent, he would become an extremely popular president."

Since stock market lows in March, the Dow Jones STOXX Americas 600 Health Care Index (DJA1HCR) is up only 28 percent as this debate has raged on versus a 41 percent increase in the Dow Jones Industrial Average (DJIA). However, much of the rally in health care stocks could be traced back to mid-July, when the result of the health care debate started to look uncertain.