This will be my last post on ft.com. I am moving on. Thanks for reading. If you wish to keep following my commentary you can do so on my blog at The Atlantic.
On Monday the Obama administration has promised to spell out its thinking on long-term deficit reduction. Something to read while you’re waiting: “What we hope to see from the Super Committee,” courtesy of the Committee for a Responsible Federal Budget. “Go big” sums it up. Might support for that actually be building? A news conference with Alan Simpson and Erskine Bowles from earlier in the week is worth watching.
An event at the Brookings Institution launched a new report, Rethinking Central Banking, by a team of economic eminences including Barry Eichengreen, Raghu Rajan, Eswar Prasad, Carmen Reinhart, Kenneth Rogoff, and others. I’ve only skimmed it so far but the presentation was interesting and the report looks valuable. The basic thesis is that central banking has become a lot more complicated than it used to be, and the “dominant framework guiding central banking practice” therefore needs to change.
Barack Obama’s economic policy address to a joint session of Congress last week lived up to the billing. It was an ambitious and impressive speech – an attempt to reset his presidency. Nothing less is required if Mr Obama is to recover his standing with US voters and move economic policy, insofar as he can, in the right direction.
I found Peggy Noonan’s piece for the Wall Street Journal very moving. She says something at the beginning which is obvious as soon as it is drawn to your attention, but which you might otherwise not notice.
New York saw the buildings come down.
That was the thing. It’s not that the towers were hit—we could have taken that. It’s not the fire, we could have taken that too. They bombed the World Trade Center in 1993 and took out five floors, and the next day we were back in business.
It’s that the buildings came down, in front of our eyes. They were there and proud and strong, they were massive, two pillars at the end of the island. And then they groaned to the ground and there was a cloud and when people could finally see they looked back and the buildings weren’t there breaking through the clouds anymore. The buildings were a cloud. The buildings were gone and that was too much to bear because they couldn’t be gone, they couldn’t have fallen. Because no one could knock down those buildings.
Yes, I thought, that was it. That was the stunning incomprehensible part. I was in London that day. Colleagues called me in to watch the news on TV after the first plane hit. At that point it was an inexplicable accident. Then we watched as the second plane hit, and the meaning became clear. Yet it was possible, just, to take in even that. Watching the first tower fall, with all those people still inside, simply shut me down. I had no reaction. “It’s not there,” somebody said. It was paralyzing.
President Obama’s speech to Congress was impressive. Good to see some leading from the front, for a change. The tone was commanding, confident, and purposeful. Crucially, he took the initiative and presented a detailed plan. No more, “I’m willing to consider this.” No more, “I’d like to see that.” Instead, again and again, “Pass this bill.” They won’t, but the point of last night’s speech was not to persuade the House that this or any other new jobs plan makes sense. The House isn’t listening. The president’s goal was to regain public support, and hence make the GOP’s fiscal-policy defeatism harder to sustain. Making the case for specific proposals was a vital part of that. Scored with this in mind, I think it was a fine performance.
In my column this week I say Obama should propose a big, bold stimulus–but I say he should disappoint progressives at the same time, by getting serious about longer-term deficit reduction. He needs both elements, I argue. “Forget those imaginary fiscal constraints, stop urging compromise, and just be a liberal,” is bad advice.
He cannot restore his authority just by talking tough. He also needs to say the right things. Elections have consequences, the Democrats said after 2008. Indeed they do. In 2010 the party was routed, and the president’s ratings have fallen since then. Was this because the Democrats were too gentle and accommodating? Only a fantasist could think so.
If Mr Obama does what many in his party advise – stop giving way and advance an unflinching progressive programme – the GOP will finish the job in 2012. Republicans pray (literally, I expect) for Mr Obama to show more spine on behalf of an uncompromising liberal agenda. That would give them undivided control of House, Senate and White House next year.
For an instance of the fantasy-analysis I had in mind, consider this: Matt Stoller, calling for a Democratic primary challenge, devotes fewer than 100 words out of 1500 to why Obama has failed. Here they are:
[His] failures have come precisely because Obama has not listened to Democratic Party voters. He continued idiotic wars, bailed out banks, ignored luminaries like Paul Krugman, and generally did whatever he could to repudiate the New Deal. The Democratic Party should be the party of pay raises and homes, but under Obama it has become the party of pay cuts and foreclosures. Getting rid of Obama as the head of the party is the first step in reverting to form.
Reverting to form? Would that mean listening to progressive voters the way, say, Bill Clinton did?
It’s not every day that you see the editors of the Wall Street Journal agreeing with the leaders of the AFL-CIO on an issue of economic policy. Both authorities deplore the Justice Department’s action against AT&T’s takeover of T-Mobile. The Journal objects on standard “let the market have its way” grounds; AFL-CIO objects because it says the merger would create jobs (and, as AFL-CIO president Richard Trumka put it when the deal was first announced, because of “the pro-worker policies of AT&T, one of the only unionized U.S. wireless companies“).
In yesterday’s column I discussed some of the arguments for and against additional monetary stimulus. On balance, I’m for it–and I wouldn’t bet against it happening in the next month or two. The August 9th FOMC minutes released today confirm what we already knew: since QE2 ended in June, the Fed has learned that the recovery is slower and more fragile than it previously thought, and that inflationary pressures have eased. There you have it: what else does the Fed need to know before it embarks on QE3?
Apple’s share price shrugged as though the resignation of the company’s visionary leader hardly mattered. That surprised me. Of course it helps that Steve Jobs will still be chairman–though how active a chairman, and for how long, remain to be seen. And the top of the company is full of exceptionally talented people: that’s clear. But it seems to me that Jobs’s personality and the astonishing success of his company are as tightly integrated as…well, you know what.