Daily Archives: January 20, 2010

The message Massachusetts sent Washington tonight was shatteringly loud, but not so clear. A stunning, astonishing reversal for the Democrats. But what does it mean?

Since Brown was a pretty good candidate and Coakley a remarkably bad one, you could argue that it means nothing, really. That is what some Democrats will be inclined to say. (If Joseph Kennedy, nephew of Ted, had run for the seat, Paul Begala said on CNN after the result was announced, the Democrats would have won by a landslide.) Coakley’s awfulness muddles the analysis, but this response smacks of wishful thinking. Obviously, a weak Democratic candidate still ought to have won in such a liberal state. Anyway, even if it were true that this setback is down to one bad candidate, it would be reckless for the party to say so and dismiss it. The Democrats have to show they are paying attention.

The election was all about anger, according to the commentary of the past few days. But what were the voters angry about? The prospect that Democrats in Congress will push through a healthcare bill that a majority of voters (albeit a narrow one) dislikes? This seems less plausible in Massachusetts than it would in most other states, because Massachusetts already has Obamacare lite. Voters there, whatever they may think about the issue – wherever they stand on the pros and cons of mandates and widened coverage, having experienced them – do not have much at stake.

So were they saying they are angry about the economy? Of course. Washington should put its focus on jobs, jobs, jobs. But if that is the message, how are Democrats supposed to respond? More government borrowing, another fiscal stimulus? This cannot be right: polls say voters are also angry about public spending, public debt, and the prospect of higher taxes. The administration cannot create jobs, jobs, jobs, just by saying so. And impotent expressions of concern aren’t going to win many people round.

That leaves anger at the banks and the bail-outs. This is much more promising, and the administration is already on the case. “We want our money back, and we’re going to get it,” the president has said. Just before the Massachusetts contest, Robert Gibbs told reporters that a main theme in 2010 will be asking  voters “whether the people they have in Washington are on the side of protecting the big banks, whether they’re on the side of protecting the big oil companies, whether they’re on the side of protecting insurance companies, or whether they’re on the people’s side.” (Careful, it’s a trick question.)

I’m not sure Obama is cut out for Chavez-style populism. It does not sit well with his calm, intellectual demeanour. It just looks false. And that is not the Obama the country elected. I don’t think it will work.

Instead of listening to the left of the party, which wants him to toughen up his anti-capitalist line, I’d like Obama to listen to the independents who seem to have shifted in droves to the Republican side in Massachusetts. Hear the message this way: “You promised to change the way Washington works. You promised to force the parties to work together, and to make policy in the open. You promised to stop the back-room deals. You broke your word. You gave us Washington as usual, only more so. It’s trench warfare on Capitol Hill, and you surrendered your leadership to partisan Democrats. You went along with their stimulus plans, and you are ready to go along with their healthcare reform. You gave us a crippled, polarised Congress, and political horse-trading at its most squalid. Do something about it.”

Why Massachusetts doesn’t matter. Paul Waldman, American Prospect. File under “Death-Wish Democrats”.

Restoring faith in financial markets. John Bogle, WSJ. Institutional investors and corporate stewardship: a neglected aspect of the financial crisis.

Why America and China will clash. Gideon Rachman, FT

In a recent column, Paul Krugman says:

The conventional wisdom seems to be that President Obama tried to do too much – in particular, that he should have put health care on one side and focused on the economy.

I disagree. The Obama administration’s troubles are the result not of excessive ambition, but of policy and political misjudgments. The stimulus was too small; policy toward the banks wasn’t tough enough; and Mr. Obama didn’t do what Ronald Reagan, who also faced a poor economy early in his administration, did – namely, shelter himself from criticism with a narrative that placed the blame on previous administrations.

If you need a refresher on the opposing view – on why aiming to reform heathcare was a “colossal miscalculation” – see Charlie Cook.

The latest unemployment and housing numbers underscore the folly of their decision to pay so much attention to health care and climate change instead of focusing on the economy “like a laser beam,” as President Clinton pledged to do during his 1992 campaign. Although no one can fairly accuse Obama and his party’s leaders of ignoring the economy, they certainly haven’t focused on it like a laser beam.

Cook is wrong and Krugman is right. Healthcare reform was neither a fatal distraction nor an inessential that can wait. Far from being beside the point in current circumstances, it is especially timely. It confronts a crucial aspect of economic insecurity – the fear that losing your job will also cost you your health insurance. Its rightful place was front and centre in the economic programme. With shrewder marketing, the administration could have put it there.

What policies would a more “laser-like” focus on the economy have produced anyway? Name me one. It wasn’t health reform that blocked a bigger stimulus. (And even with a bigger stimulus, the economy would still have suffered a brutal recession: the politics of a tighter focus yielding no results might easily have been even worse.)

No question, Obama bungled healthcare reform – by turning the project over to Congress, which voters don’t trust to do anything; by failing to make the case for a specific reform; and in general by seeming so passive about where this massive undertaking ended up. His mistake was not too much ambition, but too little engagement. More generally, I think the advocates of reform have failed their cause. They formed no consensus among themselves about what to do, and have spent more time arguing bitterly with each other than presenting a proposal to the public. Obama needed to lead the country on this. He chose not to.

I agree with Krugman about the stimulus. He is right that it should have been bigger. But the fact that it wasn’t is partly the fault of Krugman and other liberals. At the time, they cared more about the mix of the stimulus – they wanted maximum spending increases and minimum tax cuts – than about its overall size. Using bigger tax cuts to enlarge the stimulus could have been politically feasible. It would have brought some Republicans on side. The option was not seriously explored. Too many Democrats were aghast at the idea of co-operating with Republicans to cut taxes.

Whether policy towards the banks was tough enough is debatable. In some ways, again I agree with Krugman. Certainly, a lot of work needs to be done to lessen the risk of another crisis, and the banks will oppose most of it. But so far as stabilizing the economy in the short term goes, the policy has worked after a fashion. When Krugman expressed despair over the Geithner plan last March, saying it was almost certain to fail, he was wrong.

Krugman’s other point – why doesn’t Obama learn from Reagan and Carter, and blame everything on Bush? – I find simply bewildering. Obama is blaming Bush, for heaven’s sake, and no doubt rightly. But how much more could he do it? This is a case not of missed opportunity, but of diminishing returns.

Clive Crook’s blog

This blog is no longer updated but it remains open as an archive.

I have been the FT's Washington columnist since April 2007. I moved from Britain to the US in 2005 to write for the Atlantic Monthly and the National Journal after 20 years working at the Economist, most recently as deputy editor. I write mainly about the intersection of politics and economics.

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