Obama’s fiscal responsibilty summit was first-class theatre, but did not advance the discussion very far. Mind you, I don’t think that the theatrical aspect is bad or unimportant. On the contrary. As I’ve argued before, a big part of what Obama has to do is speak to the general public over the heads of Congress about what needs to be done. That is what events like yesterday’s are about. Treating political opponents courteously and radiating calm non-ideological pragmatism are the way he gets the country behind him. But he has to align opinion behind the correct, challenging, substantive policies, not merely behind a mood of can-do co-operation. If you do that and nothing else, you are Tony Blair.
On long-term fiscal consolidation, I don’t see much honesty as yet on what it will take to deal with the problem. Obama’s thinking seems to boil down to greater efficiency and higher taxes on the rich. That will be insufficient even to close the current-policy deficit, let alone pay for all the big new things (universal health care, affordable college for all, etc, etc) Obama wants to do.
I also think it is a mistake to promise to halve the deficit by the end of the first term–even supposing he could do it. If this is an unusually prolonged recession, as it may well be, this timetable is much too fast. He needs to retain the flexibility to keep fiscal policy loose for as long as necessary. You move to fiscal consolidation when the recovery looks solid, not according to the demands of some pre-arranged schedule. You show you are ready to do it when circumstances allow, rather than promising to do it regardless.