What to do when you can't get what you want
by David Atkins ("thereisnospoon")
For those who missed it, Ezra Klein had a long 6,000 word article this past weekend in the Washington Post that has been the subject of much discussion. It's well worth the read, but it can be distilled pretty easily: - The Obama Administration severely underestimated the depth of the economic problems the country faced.
- Even had the Administration known how severe the economic crisis was, there was little more politically they could have done. The needed stimulus would have been $2.5 trillion, but there wasn't enough Congressional support even for the $1.2 trillion the Administration asked for. Congress wanted it under $1 trillion, and even then at $800 billion it was the biggest stimulus in American history.
- A more realistic view of the economic crisis would have led to a slower disbursement of stimulus on longer-term projects that would have had more cumulative second-tier benefit effects.
- The Administration has essentially been playing a "wait for a recovery" game on the economy while tackling a range of other priorities. While that has given the Administration a bunch of "wins" on the scorecard, it has also made them seem politically adrift on the economy.
- Again, however, it was difficult to persuade Congress to do even as much as it did, so the Administration may not have had a lot of choices.
Krugman has responded to Klein with some skepticism about the Administration's total powerlessness to have done much differently, but even so most reasonable observers including Krugman agree that while the Obama Administration could probably have done somewhat better on stimulus, it could not have done too much more considering Congressional political realities.
But few who have written about Klein's article have pointed out that the Administration's biggest problem here wasn't on policy so much as on politics. Meanwhile, those who have focused on the politics have tended to obsess over the "bully pulpit", which is useful in generating popular support but vastly overrated when it comes to moving recalcitrant Senators.
The larger problem has been the Obama Administration's longer-term political strategy regarding the economic crisis. Here I'm leaving aside the Administration's policies vis-a-vis Wall Street specifically, which have been far too coddling. But Wall Street accountability policy and stimulus policy, while connected somewhat especially over the long term, were not directly connected during the Obama Administration's first two years. They are related but separate issues.
The reality is that the Administration probably couldn't have gotten more than a trillion dollars in stimulus through Congress. But what they shouldn't have done is rolled it out to great fanfare with over-optimistic projections, and acted like it would solve the problem. Granted, some of them actually believed the stimulus would solve the problem.
Even then, though, once it became clear that Krugman, Roubini and all the dirty hippies were right that the structural problems with the economy went far deeper than the Administration had given them credit for (partly due to the myopia of the Wall Street "geniuses" giving the Administration economic advice), it was incumbent on the Administration to take a "throw everything at the wall and see what sticks" approach.
That was essentially the approach taken by FDR during the Great Depression. Not everything FDR did worked. But he was willing to try just about anything to help push the economy forward. True, FDR had a much more pliant Congress to deal with. But rhetorically, FDR explained to the American people that he was rolling up his sleeves and trying to do everything in his power. Nor did he promise that his policies would lead to instant recovery. Instead, he engaged the public in an all-hands-on-deck attitude toward economic recovery.
One of the Administration's key challenges as it has faced this crisis is that it has seemed almost aloof. Failure to hold Wall Street accountable has been a problem, of course, but only part of it. The other part is simply that the Administration has never seemed to fully take the economic crisis as seriously as it deserves. It did some major, unprecedented things such as the assistance to the auto industry. But it did not take the comprehensive approach that would have been necessary. Most importantly, it did not make clear to the public the depth of the struggle that would be required to pull us out of the crisis.
Instead, everything the Administration has done has been about building "confidence." Happy talk is supposed to breed confidence. Austerity measures, as mindbogglingly stupid in this context as they are, were supposed to breed confidence among the investor class. The notion that that "confidence" is the only thing the economy lacks is predicated on a very neoliberal view that the economic crisis is simply one of attitude first and liquidity second, rather than a function of an economy that is fundamentally broken and in need of structural fixes. But then, that was Herbert Hoover's attitude as well. His constant refrain that "prosperity was just around the corner" was an attempt to instill confidence in the markets. To be fair, Hoover was very laissez-faire; Obama has not been laissez-faire, and comparisons between the two are deeply unfair in this regard. But where the comparison is accurate is in the fact that both men believed that the biggest missing factor in economic recovery was "confidence" rather than more fundamental changes.
In the end, it may well be that even a more progressive President couldn't have gotten much more stimulus out of Congress. But a more progressive President would have made clear, then, that the stimulus Congress did provide was not enough. A more progressive President would have made clear to the American people that he or she understood the depth the problem, and was pushing for all appropriate means of solving it. He or she would have treated the crisis as more a matter of fundamental imbalance than of confidence.
Ultimately, when you can't get what you want, the best approach is to make clear that you didn't get what you wanted, and that you're seeking to redress the problem in other ways. You don't pretend you got everything you wanted, smile and hope for the best. That's political malpractice.
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