The Obama administration’s troubles are the result not of excessive ambition, but of policy and political misjudgments. The stimulus was too small; policy toward the banks wasn’t tough enough; and Mr. Obama didn’t do what Ronald Reagan, who also faced a poor economy early in his administration, did — namely, shelter himself from criticism with a narrative that placed the blame on previous administrations.There is a lot more wisdom in Krugman's essay. Go read the whole thing.
About the stimulus: it has surely helped. Without it, unemployment would be much higher than it is. But the administration’s program clearly wasn’t big enough to produce job gains in 2009.
Why was the stimulus underpowered? A number of economists (myself included) called for a stimulus substantially bigger than the one the administration ended up proposing. According to The New Yorker’s Ryan Lizza, however, in December 2008 Mr. Obama’s top economic and political advisers concluded that a bigger stimulus was neither economically necessary nor politically feasible.
Their political judgment may or may not have been correct; their economic judgment obviously wasn’t. Whatever led to this misjudgment, however, it wasn’t failure to focus on the issue: in late 2008 and early 2009 the Obama team was focused on little else. The administration wasn’t distracted; it was just wrong.
The same can be said about policy toward the banks. Some economists defend the administration’s decision not to take a harder line on banks, arguing that the banks are earning their way back to financial health. But the light-touch approach to the financial industry further entrenched the power of the very institutions that caused the crisis, even as it failed to revive lending: bailed-out banks have been reducing, not increasing, their loan balances. And it has had disastrous political consequences: the administration has placed itself on the wrong side of popular rage over bailouts and bonuses.
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So what comes next?
At this point Mr. Obama probably can’t do much about job creation. He can, however, push hard on financial reform, and seek to put himself back on the right side of public anger by portraying Republicans as the enemies of reform — which they are.
And meanwhile, Democrats have to do whatever it takes to enact a health care bill. Passing such a bill won’t be their political salvation — but not passing a bill would surely be their political doom.
It is such a tragedy. Obama could have been a pivotal poltical figure. He might not have achieved the stature of Lincoln, but he had a possibility of being a great president. But he's 25% through his term (and I suspect he will be a one-term president) and there is precious little on which to hang a hat. He is a nice guy. He cares. But he is oddly ineffectual. He is the black version of Jimmy Carter.
2 comments:
I think he will be a one term president and then I read some of the stuff that he has accomplished. He has done a lot in one year, but the Republicans have been very successful in their tactics which should have been countered by Obama's team better. But, even with the accomplishments; he still has not done what could or should have been done. I still come away with the dread that the Democrats are going to lose seats and the presidency.
The reason the Republicans are so effective is that they are an ideological group willing to use the "big lie" propaganda technique. Sadly, negative advertising works more effectively than any positive message.
It is easier to tear down an organization than to build one up. It is easier to undermine collaboration that to inspire collaboration.
I would be delighted if Obama surprises me. I haven't given up hope, but I am bitter about his campaign slogan of "change you can believe in". I've seen too little change.
The one hope with Obama is that he is a smart guy and has shown the ability to learn lessons and change direction. Maybe he will. I hope so.
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