Sunday, September 18, 2011

Bruce Bartlett on Obama's Ills

Here is a bit from the start of an article by Bruce Bartlett in The Fiscal Times:
There is still a deep reservoir of good will among the American people for Barack Obama. Every poll shows that he is well liked personally. But even Democrats are starting to wonder whether he is up to the job of dealing with the most economically challenging environment since the 1930s. I think his lack of focus, more so than the failure of his policies, is responsible for this perception, which may prove to be politically fatal.

Central to Obama’s political problem is the failure of his economic policy, the 2009 stimulus in particular. When I call the stimulus a “failure,” I am not echoing the Republican critique that it was ill-conceived in the first place. There is no question in my mind that the Republican alternative of doing nothing or only cutting taxes would have made matters worse. Rather, I am referring to the size and structure of the stimulus.

By way of analogy, suppose you went to your doctor for an illness and he prescribed the correct medicine. But for some reason, you were given a dosage only half as big as necessary to cure your condition. Consequently, while you got better, you were not cured and continued to suffer. Under these circumstances, it is clear that the problem was not the medicine itself, but the dosage. Had you been given the correct dosage in the first place you would have been cured.

I think this accurately describes the problem with the 2009 stimulus. We now know that Obama’s economic advisers wanted a package twice as large as the $787 billion bill that was enacted. But his political advisers opposed it on the grounds that it would have been impossible to enact anything larger than what they got.
Go read the whole article.

Not only did Obama try to be politically slick and go for an undersized stimulus, he caved to Republican tax cutting and consequently: is now clear that the 2009 stimulus was poorly structured to deal with what appears to have been the economy’s core problem. Too much money was wasted on tax cuts that did no good whatsoever. It’s now forgotten that 40 percent of the stimulus went for the Making Work Pay Credit, which was so ineffective that Democrats jettisoned it for a temporary cut in the payroll tax last December. And much too little of the spending went for public works and other measures that would have stimulated spending and employment.
There is a lot to chew on and think about in the Bartlett article. I agree 100% with what he says. Obama took his eye off the ball. Funny, because the big lesson of Clinton was "It's the economy, stupid".

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