There's been no pivot. It's been a straight line from the very beginning. The rhetoric's exactly the same as it was the week before the inauguration. And to the extent they've changed it's only in some snall details --- carbon pricing, for instance, has been jettisoned in return for asking for a tax on corporate jets.
Obama's anti-ideological talk is not just a vehicle for progressive inclinations but the real deal. Obama regularly offers three telltale notions that will define his presidency -- if events allow him to define it himself: "sacrifice," "grand bargain" and "sustainability."
To listen to Obama and his budget director Peter Orszag is to hear a tale of long-term fiscal woe. The government may have to spend and cut taxes in a big way now, but in the long run, the federal budget is unsustainable.
That's where sacrifice kicks in. There will be signs of it in Obama's first budget, in his efforts to contain health-care costs and, down the road, in his call for entitlement reform and limits on carbon emissions. His camp is selling the idea that if he wants authority for new initiatives and new spending, Obama will have to prove his willingness to cut some programs and reform others.
The "grand bargain" they are talking about is a mix and match of boldness and prudence. It involves expansive government where necessary, balanced by tough management, unpopular cuts -- and, yes, eventually some tax increases. Everyone, they say, will have to give up something.
Only such a balance, they argue, will win broad support for what Obama wants to do, and thus make his reforms "sustainable," the other magic word -- meaning that even Republicans, when they eventually get back to power, will choose not to reverse them.
Back at the end of 2008, our questions (at least my questions) were: "What if the downturn is bigger than we currently think it will be? What if worries about a jobless recovery and the absence of labor-market mean-reversion turn out to be true? What if--as has happened in the past--this financial crisis turns into sovereign crises and the world economy gets hit by additional shocks? Then your polices will not be bold enough. What is Plan B?" And the answers were all along the lines of:
You are a pessimist. We are already doing unprecedented things to stabilize the economy--and odds are that in a year we will be worrying about inflation and unwinding the stimulus rather than about unemployment.
Obama is genuinely post-partisan, and won't have anything like the trouble Clinton had negotiating with Republicans: our policies will evolve as the situation evolves.
Back in the late summer of 2009, our questions (or at least my questions) were: "You aren't getting any cooperation from Republicans--they appear to have doubled down on the Gingrich-Dole strategy that you win the next election by making the Democratic President a failure. The economy really needs more stimulus. What are you going to do? Isn't it time to use the President's powers more aggressively--to use Fed appointment powers and the Treasury's TARP authority and Reconciliation to do major stimulus?" And the answers were:
We are doing all that we can.
This is really hard.
Things will probably still work out all right.
If worst comes to worst, we will trade long-run budget balance via a spending cut-heavy package of long-run spending cuts and tax increases for short-term stimulus to get us out of the short-term unemployment mess.
By the late summer of 2010, our questions (or at least my questions) were: "You are in a total war with the Republican Party. They aren't giving you anything. It is time to seriously push the envelope of executive authority to put policies in place that will reduce unemployment." And the answers were:
The best policy is to achieve long-run fiscal discipline so that the confidence fairy will show up.
And now it is the late summer of 2011. Our big question still is: how is Obama going to use executive branch authority to reduce unemployment? There are lots of options: adjourn congress and do some recess appointments to get the Federal Reserve more engaged in actually pursuing its dual mandate, quantitative easing via the Treasury Department, shifting Fannie Mae and Freddie Mac from their do-nothing position by giving them a microeconomic stabilization mission, talking about how a weak dollar is in America's interest.
And this time what I am hearing back is only:
It is difficult to read this in any way but as a group of people inside a bunker who (1) have been wrong about the situation, (2) are scared to use the powers they have to try to make things better, and (3) really do not like being reminded that they were wrong about the situation.
That seems to me to mean that the Obama administration right now has one and only one macroeconomic policy idea: hope that the country gets lucky.