The the two articles that I find to be the most embarassing Public Displays of Affection for Obama’s conservative record are The Most Important Passage from the Secret Larry Summers Memo in The Atlantic.
Constructing a package of this size, or even in the $500 billion range, is a major challenge. While the most effective stimulus is government investment, it is difficult to identify feasible spending projects on the scale that is needed to stabilize the macroeconomy. Moreover, there is a tension between the need to spend the money quickly and the desire to spend the money wisely. To get the package to the requisite size, and also to address other problems, we recommend combining it with substantial state fiscal relief and tax cuts for individuals and businesses.
and The Obama Memos in The New Yorker.
Obama didn’t remake Washington. But his first two years stand as one of the most successful legislative periods in modern history. Among other achievements, he has saved the economy from depression, passed universal health care, and reformed Wall Street. Along the way, Obama may have changed his mind about his 2008 critique of Hillary Clinton. “Working the system, not changing it” and being “consumed with beating” Republicans “rather than unifying the country and building consensus to get things done” do not seem like such bad strategies for success after all.
An administration filled with top banking executives would never come up with the solution of nationalizing the banks and cutting the principle that people owed on their mortgages. They were giving away trillions anyway. Why not aim some of that to clear away the housing debt overhang and prevent homelessness? Because bank executives think they are entitled to bailouts from the treasury. When they are faced with a catastrophe not of their own making, maybe they are entitled to a bailout. However, when the catastrophe is brought on by their own fraud, they deserve to be nationalized and put out of business.
If the President had advisers who were not trying to save their own vested interests, there could have been ideas for effective stimulus. There were dozens of top ranked economists advising a different strategy. Obama chose to listen to the bankers who got us into this mess instead of the people who had no axe to grind.
He still does not see the error of his ways. When one ex top banking executive leaves his administration, he replaces him with another. He will never be able to solve the problem until he understands that he is getting his advice from all the wrong people.
No rush to publish fawning articles in The New Yorker, nor in The Atlantic is going to get this country on the right track.
You have to wonder where the authors of these articles are getting their economic knowledge by which they judge Obama’s behavior. They probably consult the ex-banking executives from the same club.
January 24, 2012
The New Yorker article is pretty long. I must admit that I skimmed it rather than reading it closely before I made my original post.
Giving a closer and complete reading, it sometimes gives a mostly unbiased view of what the President did and why he did it. From my vantage point, sticking with the facts paints a very negative view of the president. It does confirm some of what I have believed to be true about the president’s performance.
Axelrod and other Obama political advisers saw anti-Keynesian rhetoric as a political necessity. They believed it was better to channel the anti-government winds than to fight them. As much as it enraged Romer and outside economists, the White House was on to something. A President’s ability to change public opinion through rhetoric is extremely limited. George Edwards, after studying the successes of Franklin Roosevelt, Lyndon Johnson, and Ronald Reagan, concluded that their communications skills contributed almost nothing to their legislative victories. According to his study, “Presidents cannot reliably persuade the public to support their policies” and “are unlikely to change public opinion.”
I believe that the president is ill served by choosing to listen to the advisers that explain that nothing can be done and it would be a waste of time to even try. Following the advice to try nothing has at least one benefit. Such a try nothing policy is guaranteed to get the results of nothing accomplished that the policy predicts. I don’t know what satisfaction the president can derive from that.