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Currently viewing the tag: "Economy"

This, to put it simply, is not good for Mitt Romney:

Economy Poll

I’m sorry, but in an election centered around the economy, a 1.7% advantage on the question of who’s better going to handle the economy is simply not going to get it done against an incumbent president, especially since that advantage has shrunk and the trend is going the wrong way. It’s bad enough for him that the public sees Obama as a stronger leader and sees him as vastly superior on foreign policy and on middle class issues, which in the first two cases is really freaking rare enough. But the economy question, specifically, being this close is a disaster for Romney, and you have to give the Obama Campaign props for being so effective at sewing doubts as to whether Romney is going to do better on the economy after the past few years we’ve had.

We keep hearing about this blitz of negative advertising that the Romney forces are going to unleash on Obama down the pike. But unless he can put some gap back into this chart, this guy is sunk. And what new information is he going to present the public in order to change our minds? None so far as I see. Maybe we really are winning.


And all it took was a catastrophic midterm election, years of anemic growth, and the economy almost blowing up after the debt ceiling to get them here.

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Lev filed this under: ,  

I liked Mark Schmitt’s comparison of Barack Obama’s electoral brilliance to the often less-than-brilliant strategery we’ve seen from the man as president, but this is a pretty odd thing to say:

But we should also use this opportunity to recognize that being good at campaigns and elections and being good at politics in office are, however unfortunately, very different things. That’s not a surprising insight—spend a little time around Congress, especially the Democratic caucus, and you’ll see dozens of people who have mastered the art of winning elections even in a hostile constituency, but can’t figure out how to do much more when they’re in office than avoid losing reelection. (Consider Senator Max Baucus, for example, who has won six statewide elections in conservative Montana, by an average of 25 points, and yet lives in such constant panic that he’ll lose the next that he’s accomplished almost nothing of significance.)

Oh, but he has. Sadly. Baucus helped shepherd the Bush Tax Cuts through Congress, which is bad enough. More than anyone else, he was responsible for the failed strategy of endless outreach to Republicans long after it was clear it wouldn’t work. Baucus’s career really exemplifies the post-rational embrace of bipartisanship, and the fact that he lent Obama his former Chief of Staff to be White House Deputy Chief of Staff ought to be at least mentioned in a discussion of Obama’s obsessiveness over getting broad bipartisan support when it wasn’t at the time even necessary.

The other thing I think needs to be mentioned here is just how poorly the Administration handled issues related to the financial crisis. I mean, in one sense, sure. The world’s economy hasn’t collapsed, so it was successful. But there was no consideration of social justice, no consideration of the fallout, no straightforward look at the politics of the thing, which would have been helpful. After all, without that albatross, perhaps later stimuli would have been politically possible? But on the TARP and financial reform, the President listened almost exclusively to Sec. Geithner, who not only didn’t understand the political ramifications of just giving money to the banks with no strings attached, but almost thought it was obscene to consider them in light of a possible global collapse. Ultimately passing a financial regulatory reform bill that does little to reform the financial sector, but does a lot to enhance the power of the Treasury Secretary, didn’t fix the political problems associated with the bailouts. By shutting out anyone not trusted by the financial establishment, Obama’s priorities reflected almost entirely what a combination of rich people and centrist policy wonks wanted to see (bailouts and then deficit politics for the former, modest stimulus and healthcare cost-cutting for the latter), and people who had different ideas were not listened to. It’s interesting to think of what the political situation would look like if the Administration had made housing a top priority, but that’s the point (and yeah, I know, the stimulus did help normal people, but not really in any way they’d be able to see themselves, in such a way that Democrats could use to connect with their policies). Not much else to say about this, but I do recommend reading the full article. He talks about a lot of the same things I do, only because it’s Mark Schmitt, it’s even better.


From our most famous stopped clock:

Let’s “pause for two beats” and pay homage to the “ruthless killing machine that is the” Obama campaign, says Mark Halperin at TIME. “They have parceled out their opposition research in a manner both strategic and tactical,” ensuring that the Bain story and the controversy over Romney’s unreleased tax returns remain almost constantly in the news. “And, make no mistake, the Obamans are sitting on even more research that they will unfurl down the road.” It’s no wonder Republicans are complaining.

It has been suggested that the attacks on Romney hearken back to the brilliantly ruthless blows to John McCain in 2008. There’s a similarly thrilling element to them I admit, but overall 2012 just doesn’t feel much like 2008. What I remember most about 2008 was how much fun the general election was. It was fun to watch Obama lay into the dumb, shopworn arguments of McCain, and he seemed to be having fun doing it. Obama’s being barely able to restrain his laughter while mocking Phil Gramm’s “nation of whiners” complaints (ironically, a whine in and of itself) was just the best moment of the campaign for me. To have someone out there saying all the things that you’d been thinking for eight long years, and doing it in a way that didn’t suggest bitterness but rather optimism, was really just this amazing thing. There was nothing like it.

This election is just very, very different. The ruthlessness is still there, but it doesn’t feel the same. There’s just an overwhelming grimness about the whole thing, even though Obama is again saying a lot of things that are, from a progressive perspective, correct and undersaid. But nobody’s having much fun this time. Obama isn’t cracking up while mocking Romney surrogates, his party isn’t jubilant over the prospect of massive change (because the prospect isn’t there, except for an entitlement-shredding “grand bargain” that I don’t even want to think about). But ultimately this isn’t anything new–with the onset of the financial crisis, suddenly the whole situation took on a different air. Obama’s inauguration speech was famously sober and grim, no doubt because he was just becoming aware of how much shit we were in. I’m convinced at this point that the financial-then-economic crisis was what led to Obama’s self-consciously serious and dour attitude during much of the first term, and also what was behind his insistence on working with Republicans. Because, after all, the country comes together during a crisis, don’t we? Like after 9/11 (for like two months). One can understand his Administration’s early, cool disposition toward the left through this lens–don’t these folks realize that we’re in a crisis, and this is no time for politics? To which the general response was, tell that to Republicans. Obama’s self-presentation was what he thought the country wanted to see, but I think it was not that great for morale.

Neither was the crappy economy, of course, and that probably has a lot more to do with setting the nation’s mood than anything else. Just something I was thinking about today.

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I’m struggling to come up with anything new to say about this month’s jobs report. Ezra Klein has some pretty solid facts here. It’s pretty bad. But we’ve seen this already, haven’t we? There’ll be a few months of good job numbers, and everyone starts to get euphoric about the recovery. Then it falls off and everyone starts talking double-dip, until hiring picks up a few months later. We’ve only seen this cycle about a half-dozen times over the past three years, and it seems clear to me that the economy is not weak enough to falter completely, but not strong enough to rebound fully. Eventually I figure we’ll lurch back into normal territory, in a few more years.

What’s interesting about this report is that it’s already seen a few of the more stalwart Obama defenders buckling just a bit. I don’t really have anything against Obama loyalists, used to qualify as one myself, but I think Zandar misunderstands the nature of the situation when he recommends that Obama go the full Krugman. He can’t do this for the same reason he can’t bash the banks, can’t bash the insurance companies or the drug companies, can’t bash the Republicans for ruining the economy. Because he collaborated with all those groups on crafting major policy. If Obama had tried to attach some strings to the blank check Bush and Paulson wrote to the banks, if he had made FinReg a nonnegotiable part of the process, if he’d ignored Tim Geithner, that Tribune of the Upper Classes, then he could legitimately campaign against the banks this year, saying he had refused to accept a bailout without strings attached. But he didn’t do any of those things–he listened to Geithner, who was panicked that even the slightest move against the banks would crash the global financial system. You sort of get why the banks gave him the job running the New York Fed. If Obama pivots from that philosophy to a virulently anti-bank one, he’d look phonier than Mitt Romney. Similarly, Obama can’t talk about how his health reform is the worst nightmare to the drug companies because he included them in the negotiations (the insurers, of course, dropped out late in the process, after having some significant input). Obama has had considerable difficulty in selling his policies to the public because of the process that made them–he can’t just lie about what he did, as he’s not Romney and thus can’t get away with it–so he has to sell them almost entirely on a positive basis, something which is not only inherently harder to do in our media age where pithy attacks are absorbed so much more easily, because Obama can’t tap into the currents of anger and revulsion that the public has toward these industries, currents which drove the reform push to begin with. To do so would ring false. Obama has spent most of 2010, 2011 and bits of 2012 fixated on the deficit and debt rather than growth and employment, this is hard to dispute. He enacted the Budget Control Act after the agonizing debt ceiling imbroglio, a document which couldn’t have been more clear in terms of what Obama thought ought to be the priority in a time of economic crisis: short-term deficits. I don’t see the basis for a pivot toward Krugmanomics here, because Obama simply hasn’t governed in a way that paid more than lip service to the sorts of ideas that Krugman believes in. Even the stimulus was weakened by a bunch of nonstimulative tax cuts, the Alternative Minimum Tax patch, and so on.  How you play the game does matter. In each of these instances, Obama ignored the existing crosscurrents of public opinion on the issues, and the cost of that has been that activists have been irritated and that the public doesn’t understand the bills, or see the point to many of them.

I think this is a big part of why I’ve felt let down by Obama as a leader for a while now. I don’t think he’s been worse than Bush, that’s silly. And in some areas, his record has been great, even inspiring. What I’ve been hearing from him over the past eight months or so has been much better than before, and has been backed up with some solid action, too. But in addition to all this the simple fact is, he called it wrong on the economy. Took his eye off the ball and went for what he thought would be an easier time on the deficit, despite the history of the politics of the issue over the past 22 years. I know, he signed the stimulus, and that helped. But it wasn’t enough, and it got watered down anyway. It did pass smoothly, but the next stimulus wouldn’t have passed as smoothly, so Obama didn’t bother. That is now normal politicians work. But leaders are supposed to push hard when they need to, to do the more difficult thing when doing anything less won’t cut it. Obama did this on health care, to a point. But on the economy, at a point where he had a supermajority in the Senate and a big House majority, it didn’t happen. And I don’t really think that today’s jobs report changes any of this logic.

Lev filed this under: , ,  

Jon Chait, contrary to other voices, insists that the president does in fact have a re-election theme:

The fact that high-information voters like Edward Luce and Paul Krugman seem unaware of it suggests that Obama might need to hit the theme a little harder. But the theme is “We Can’t Wait.” Charlie Savage reports that Obama actually came up with the slogan himself in a staff meeting. The idea is that Republicans are blocking any action to help bolster the economy, and so Obama is going ahead himself, either taking whatever unilateral actions are available, or demanding that Congress act (and thereby exposing them to blame when they inevitably refuse).

Obama has been rolling out pieces of the “We Can’t Wait” agenda for several months now. Today, he’s demanding Congress acts to keep student loans from rising. He met with success with his campaign to extend the payroll-tax holiday and some of the unilateral parts, like his recess appointment of Richard Cordray to the Consumer Financial Protection Bureau. The list of items on Obama’s “We Can’t Wait” agenda is pretty long. Many of the items amount to Keynesian stimulus spending, but defining these proposals in specific terms — infrastructure spending, hiring back laid-off teachers and cops — frees them from the general animus against spending.

This is true and well-taken. But if this is actually The Theme For 2012, I think there are a few issues. Mainly, while I think that this is a good way of distancing Obama from a do-nothing Congress, it’s actually not a very good argument for Obama, since Obama is one of the waitingest presidents we’ve ever had. This is not a criticism–indeed, this strategy has been indispensable to some of Obama’s greatest triumphs. It’s possible to imagine a much quicker Iraq withdrawal, but it’s hard to imagine one as graceful and final. And on Don’t Ask, Don’t Tell repeal, Obama’s patience paid off brilliantly, cementing a signature political win in such a way that the issue is now completely dead, with only a shrinking handful of deadenders even inclined to bother with it. But there were also some issues where waiting was absolutely not a good idea. Health care comes immediately to mind, and the president’s patience on our Afghanistan mission turned out to be misguided. It now seems apparent that leaving rapidly would probably have been the better overall move, and that Obama shouldn’t have waited.

However, the biggest reason, and the one why it would be positively nuts for Obama to make “We Can’t Wait” into a slogan in a contest versus Romney, is the economy. On no other issue has the Obama Administration contented itself to simply wait and see how its policies played out, again and again, rather than continually pushing new arguments, ideas and bills. Admittedly, this isn’t why the economy has stayed poor for so long–part of it is simply the natural cycle of financial crisis recoveries, part of it is a situation vastly worse than decisionmakers anticipated in early 2009–but simply put, Obama has rarely given the appearance of someone singlemindedly focused on the economy (because he wasn’t), nor of someone who did everything he could to fix it. I generally give the Administration some slack on the economic decisions they made in early 2009 because, while an extra $100bn of stimulus or a stand against banker bonuses might have helped at the margins, it wouldn’t have dramatically altered the situation. The team got quite those questions broadly right and after a point it becomes about splitting hairs. But what is less excusable is how quickly the Administration stopped paying attention to the economy as its main legislative concern (this occurred some time before Scott Brown’s 2010 election), presuming it was improving rather than hammering at it until it was proven to be better. This is a complicated debate, for sure, but what isn’t complicated is that Romney could easily say something to the effect of, “President Obama says we can’t wait to implement all his new wasteful spending, but apparently when it came to the economy, he had all the time in the world to wait.” This would, unlike the vast majority of Romney’s attacks on Obama, have some element of truth to it. Which is why it’s not the best weapon to bring to this particular fight.


Image Taken from Barnes & Noble

Of the entire Obama economic team–perhaps even the entire White House staff–the two men who most embodied the sensibility of President Barack Obama were Timothy Geithner and Peter Orszag. As Obama’s treasury secretary and budget director, respectively, they worked closely with Obama over the first two years of his administration and had an enormous impact on a wide variety of initiatives, routinely triumphing over their usual opponents, Larry Summers and Christina Romer. These four were by far the most consequential members of the initial economic team, with Orszag and Geithner ascendant. The two are nearly alter egos for Obama himself–laid-back, drama-free personalities, uber-technocratic, contemptuous of domestic partisan squabbles. Over the nearly two years they served together in the Administration, they worked in unison to shape the course of the Obama Era.

And, aside from the minor accomplishment of keeping the entire world from outright penury, they performed mostly disastrously. Noam Scheiber’s new book The Escape Artists focuses squarely on Obama’s economic team for the first two and a half years or so, right up until the debt ceiling and its aftermath (of which I have already written more than enough, and won’t say much here). Peter Orszag was the driving force behind the Obama Administration’s shift from fixing the economy to trying to tackle deficits, mainly through the vehicle of healthcare reform, which he alone among Obama’s advisers supported taking on. Nearly everyone else thought the timing was wrong, but Orszag saw the issue as key to taming deficits. He did not, so far as I could tell, see it as having any social justice or moral dimensions. This explains one of my longest-standing questions: why did the White House go about selling health care solely in terms of “bending the cost curve”? Sure, the notion that emergency room-centric care amounts to the least efficient single-payer system imaginable is a strong argument to reform the system, but it’s also one that happens to be wildly out of step with why actual voters would support reform. Well, that question is now answered: because Peter Orszag saw the issue in terms of deficits, and he and Obama were certain that if they kept to that line of argument, they could get a big bill with bipartisan support without too much fuss. Because, hey, cutting the deficit is Republicans’ thing, right? Reading this makes quite a bit of sense, actually. The whole strategy was to try to avoid a partisan bill and/or an ideological struggle. As it turned out, not only was that not a possibility, but by not getting their case out there first and getting it out there loudly, opponents of reform mobilized and defined the law to the public. Obama’s speech to Congress defending his plan is iconic, but it was the opposite of how he wanted to accomplish this goal. And ironically, this would be the debate that turned every subsequent debate into an ideological struggle.

Our other major player Tim Geithner is a more complicated commodity. The book, to its credit, takes him and his concerns seriously, and they’re rarely pointless. Geithner saw the ideas of punishing the banks and rescuing them as a binary choice, which it probably was, and his focus for the rescue was that letting the global financial system deteriorate would be a far worse thing than taking on some domestic baggage politically. But the problem with Geithner, really, was that even after this was accomplished, he didn’t ever start taking notice of the political baggage he was accruing on the Administration’s behalf. Scheiber contrasts Geithner with Commodity Futures Trading Commission head Gary Gensler, saying that Gensler couldn’t run a meeting well but he was an amazing politician, almost singlehandedly reshaping the derivatives debate from a perch atop a small subcabinet agency, while Geithner was great in meetings but a crappy politician who almost killed his political career in his first major speech as secretary. Singularly crappy in fact: he delayed financial regulatory reform, softened numerous provisions of it, transferred more authority to regulators under the assumption that giving them more authority would solve the financial crisis (seemingly ignoring the pervasive reality of regulatory capture) when he wasn’t terrified of harming the financial institutions he considered vital to recovery. Geithner is no crook, but he is biased, though subtly so. His fear of harming the banks is almost pathological and had the effect of insulating them from even the most modest attempts at achieving social justice, and his equal faith in regulators (like himself!) kept Dodd-Frank from being nearly as effective as it could have been. He was captured and didn’t even know it. Funny enough, though, he was one of the few who foresaw the trainwreck that the debt ceiling standoff would become, which gives him some credit in my book, though his relentless focus on deficits was also part of what drove Obama to be so desperate in favor of a deal.

The irony of this situation is that, on paper, Obama has little in common with Geithner and Orszag. They’re both finance guys who never faced a voter between them in their lives. Obama, though, shared quite a bit in common with Summers and Romer: all are former professors and intellectuals. But they never managed to have the breakthrough impact with Obama that the others did for a few reasons. For one, Summers fancied himself as knowing the Ways of Washington since he’d spent quite a bit of time there (he’d previously had Geithner’s job), but he never really figured out the Ways of Obama, and his superiority and occasional bullying made a poor impression on the chief executive. Another reason was that Romer was a complete neophyte to D.C. and didn’t really know how things worked there, and her loudness and persistence in arguing for more attention on unemployment and anemic growth became increasingly shrill and undesirable among the core Obamans. But ultimately, as Scheiber notes, the two found themselves simply pushing against an immovable force. Barack Obama came to office with a phenomenally ambitious agenda, which remained entirely intact after the ’08 financial collapse, it just had a few more things thrown atop it. Faced with one clique encouraging him to push forward with what he wanted most to do (health reform) and one clique that wanted him to stop, go back and re-do item number one on the list, I guess it’s not surprising he didn’t do it. Especially since that clique weren’t quite able to click with Obama in the way that Geithner-Orszag did.

And so, finally, we wind up with Obama, who is a minor but obviously important character in the book. I’ve decided that we should be a bit more charitable to Obama. According to the definitive book on the subject, it took Tony Blair about three years to figure out exactly what kind of government he wanted to run, spending the intervening time with fuzzy notions of centrism and reform before deciding to actually take on a real philosophical identity: social democracy. If Obama has in fact figured out who he wants to be–I’m not quite prepared to say the case is closed–it wouldn’t have taken him as long as it took Blair. Actually, he and Blair are remarkably similar characters–young, charismatic, longtime legislators who won huge elections and were in over their heads immediately after taking office. Both had grand dreams of changing the very nature of their political systems–Tony Blair’s “new settlement” vs. Obama’s “new foundation”–as well as a similar distaste for old orthodoxies and old fights. But the problem Obama made was in dismissing all this Washington claptrap while not really understanding the nature of these fights. He preferred to see Republicans as being just as exhausted with pointless bickering as he was, when they were typically the ones starting the bickering. His trust of John Boehner ranks up there with G.W. Bush’s trust of Vladimir Putin, but more broadly he trusted the system that he once called broken–he trusted opposition leaders to be responsible and clearheaded, he trusted the media to faithfully report what was going on, he trusted his party and base to trust his intellect and experience in running a technocratic process, even while he ignored their views and contributions. The truth is that technocratic government is only possible in an environment when there is broad agreement on the issues. For better or worse, we live in an ideologically polarized environment, and to act as though it were possible to somehow sidestep that dimension of our moment in history is doomed to failure. That is where Orszag and Geithner tripped up time and again, from the Gang of Six to handling the banks–and it’s the one lesson Obama couldn’t and wouldn’t learn, at least not until after the debt ceiling. This misreading led to political pyrrhic victories that contributed to an increasing sense that the president was out-of-touch, too focused on transformative visions at a time when people were out of work, and furthermore they were visions that only policy wonks really understood because of all this “cost curve” business being at the forefront. Which, for the record, was a worthy goal, but not the one to use to sell the public with. The irony is that listening to the academics–Romer and Summers–would have actually lessened his Ivory Tower perception during this time. We would have seen more economic assistance, more jobs, and a more balanced view of economic and ideological conflict (admittedly an assumption, but honestly it couldn’t have been any worse). Instead, the disconnect between the president’s focus on cutting health care costs and his other goals created an enormous distance between himself and the public, one which turned out to be somewhat latent (his poll numbers stayed up), but which would be filled by the Tea Party.

Scheiber’s book is well-written and scrupulously thorough. He has a point of view but does everything he can to explain why these people thought what they did, and you do get a sense of them from the book. This is a book that expresses a certain level of criticism of the White House during the bleakest days of the Obama Era but I find it hard to find someone who was obviously the target of a hatchet job. Really, the closest thing this narrative has to a villain is David Plouffe, Obama’s former campaign manager and eventually one of his top White House aides and almost certainly not an economist, who was one of the big proponents of the disastrous debt ceiling negotiations undertaken by the Administration, justifying it by insisting that “independents” demanded huge spending cuts, and quickly. Say what you will about the hollowness of deficit madness, but at least it’s an ethos.

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