Oklahoma Republican Sen. Tom Coburn will seek to offset federal aid to victims of a massive tornado that blasted through Oklahoma City suburbs on Monday with cuts elsewhere in the budget.> more ... (0 comments)
The Democrats’ staggering inability to extol the inarguable virtues of the 2009 stimulus package is on my top-20 list of the worst instances of political malpractice in the 21st century.
Sometimes a graph really makes the entire argument for you.
One of the more interesting questions of the Obama era is: could Obama somehow have gotten along better with Republicans, or was it a doomed cause from the outset? Jon Chait looks at the question from a few angles and basically concludes he couldn’t have, which I think I agree with. Obama could hardly have offered the right any more of a carrot to cooperate with him, as we now know that the Administration even worried about what right-wing talk show hosts thought about them. Such obsessive carefulness might actually have made bipartisanship less likely–Republicans learned quickly that they could walk all over Obama and suffer no consequences. As soon as Obama figured out that he couldn’t let them do that anymore, his position and public standing improved immediately.
To me, the most painful failures of Obama’s tenure have been failures of pragmatism, far more so than failures of liberal ideals. The latter you expect to some extent, as it’s the nature of governing. I honestly was fine with dropping the public option if that was what was needed for the bill to pass, and I still feel that way. Of course, I would rather have had a cap-and-trade bill be priority #1–it actually got eight Republican votes in the House and the problem was more urgent, the benefits easier to sell, and the timing was right for the issue. I don’t think you can really get wholesale health reform until the current system has gotten much more broken than it is now. Too many people don’t want the status quo to be changed or even threatened. But that’s not what happened, and despite the lousy political spadework that led to it I like the ACA just fine.
If moderation just to get things done were the predominant paradigm I’d probably be more unreserved in my support of Obama, but I don’t really think that’s the theme of the man’s presidency. Really, the overarching theme has been that Obama is trying to do two different types of reform at the same time that are fundamentally incompatible. He’s tried to reform policy while also trying to reform the process, and has seemed to be equally invested in fixing both. But generally speaking, you can only do one or the other, at least at once. In the stimulus, in healthcare, and in the debt ceiling–which I’d argue are the three defining moments of Obama’s presidency to date–what you see are on one hand a commitment to solve big, real policy problems of varying degrees of immediacy, coupled with an equal commitment to fix the process by renewing bipartisanship, fixing problems together, adopting a civil tone, avoiding attacks and hardball tactics and all that. The thing is, pursuing the procedural goal made the policy more difficult, in some cases, much more difficult. Obama has tried to have it both ways, pursuing an incredibly ambitious reform agenda while somehow not worsening partisan divisions or irritating established interests. At times it’s almost been as though no conflict was expected to arise from all this activity, and when it came, paralysis set in. I don’t see how very smart people convinced themselves repeatedly to see possibilities that weren’t there–perhaps just wanting to have these opportunities was enough. And so we actually lose popular, important policies because there is a strong desire not to have to play a partisan role, rather than just accepting that some level of partisanship is unavoidable. That is not pragmatic, it’s desperation to avoid the practical reality that Obama has no choice but to work in. And the effect on morale was devastating, as the 2010 results and the president’s standing for most of last year showed.
The point I wish to make here is that this isn’t pragmatism. In fact, I don’t see Obama as a particularly pragmatic figure. A pragmatist would have given up on cooperation from Congressional Republicans ages before Obama did, probably after the stimulus, and just figured that the only way to get Republican support would be to either shame or strongarm Repubs into backing his policies. Really, what we’re dealing with is a reformer whose idealism, attention to process and distaste for partisan argument frequently has led him in decidedly nonpragmatic directions. Republicans savvily realized this and capitalized on it, so that the conversation was all about them even when they were a small minority. Really, that covers most of what’s been going on the last three years. Let’s hope it doesn’t define the rest of Obama’s time in office.
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.
Turns out Texas was the state that depended the most on [funds from the federal stimulus bill] to plug nearly 97% of its shortfall for fiscal 2010, according to the National Conference of State Legislatures. Texas, which crafts a budget every two years, was facing a $6.6 billion shortfall for its 2010-2011 fiscal years. It plugged nearly all of that deficit with $6.4 billion in Recovery Act money, allowing it to leave its $9.1 billion rainy day fund untouched.Yep, you read that correctly. God-fearing, gun-loving Texas used eeee-vil stimulus funds to plug 97% of its 2010-2011 budget shortfall. All this after possible secessionist Governor Rick Perry when on a big whinefest in the national media about how Texas could take of itself, thank you very much:
When he made a show of rejecting some Recovery Act money, Perry said “this was pretty simple for us…We can take care of ourselves.” As The Wonk Room explained, in addition to filling nearly his entire budget gap with Recovery Act funds, Perry also used the Build America Bonds program — created as part of the Recovery Act — to fund billions of dollars in infrastructure projects. He also grandstanded against — and then promptly accepted — federal funding meant to prevent teacher layoffs.
A year ago, in one of my first guest posts here, I cited a Cato blog criticizing the stimulus’ Cash for Clunkers program as one of the dumbest ever. Some objected to the critique–for instance the first commentator termed it “right wing whining” and asked for an automated way to skip reading my posts.
Unfortunately this week the data are in, and the predictions were correct. For those of us living in the world of reality-based economics, Cash for Clunkers is a classic government folly.
I’ve always been a fan of E.D. Kain. I discovered him over at The League of Ordinary Gentlemen and he now writes for my favoritest blog eva, Balloon Juice. He’s one of the few remaining lights of sanity in the otherwise inky blackness of conservative thought these days.
Just to illustrate for you how neat I think he is, consider the fact that today he exposed me to a new idea that I had never come across . That so rarely happens! Check it out – very thought-provoking:
Essentially Krugman is arguing for a larger stimulus. The one we got, he argues, wasn’t big enough. All it did was patch some holes in state and local budgets rather than go the next step and actually stimulate the economy. This is true as far as I can tell. I would gladly support more stimulus spending especially. I think we’re in essentially a balance-sheet recession. More spending makes sense especially at the interest rates Krugman is talking about. During a recession high levels of government spending can help turn around the economy; I think that keeping taxes as low as possible during a recession makes sense for similar reasons.
What worries me is that there really are structural problems that may get swept under the proverbial rug when stimulus dollars come in to bail out state and local governments.
Take Arizona, for example. Like Colorado Springs, Arizona has been under the sway of a bunch of anti-tax zealots. (They’re zealots for other reasons, too, but we’ll talk about that some other time.) In any case, low taxes are much more important to the legislators in Arizona than actually governing. So we get laws allowing concealed weapons to be carried without permits, but we can’t manage our budget even well enough to remain in possession of our own Capitol building. Our legislature refuses to raise taxes even though it means we have to let a bunch of state parks go to gravel – despite the fact that state parks are a major part of the tourist industry in Arizona. And while some states face real problems with overly powerful and entrenched teachers’ unions, Arizona is not one of them and yet still plans to cut millions from public education.
The anti-tax ideology is so deeply ingrained here that Jan Brewer, of all people, had to lead an effort to get a measly 1-cent sales tax passed by voter ballot – which it did, by a reasonably wide margin. There is some disconnect, I suspect, between the voters and the legislators here. I’m not sure it’s enough to throw the bums out, but I hope it is.
So I take Krugman’s point on the anti-government rhetoric being a driving force behind some of the structural problems facing the country. What I worry about in these instances is that all these stubborn, ideological lawmakers who refuse to raise taxes will end up taking a bunch of stimulus money and not having to own up to their own politics. They get bailed out. They get to slash spending on basic services, keep taxes low, and still get the money they need. Then what? They get reelected and do it all over again.
What an interesting point. I can definitely see where he’s coming from, although it kind of strikes me as a case of punishing a girl after she gets pregnant. Done deal, right? My first inclination would be to deal with the pressing problem at hand and then worry about the long-term ramifications afterward. I must ponder on it some more.
More responsible conservatives calling for tax increases please!
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