Barack Obama’s bid to seize the initiative with a second fiscal stimulus is barely a week old and, as the president prepares to make a second announcement on the subject today, already in trouble. As I argued last week, part one of the plan was good and the president’s pitch to a joint session of Congress well received in Washington. The rest of the country was less impressed.
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.
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.
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?
Dismal new employment figures – the worst for a year, threatening a double-dip recession – provide the setting for Barack Obama’s address to Congress on Thursday. With his poll numbers sliding and the US economy getting worse, this might be the most important speech of his presidency. What should he say?
Jonathan Chait offers the president some advice: don’t go all negative on Mitt Romney (as the president’s advisers are reportedly advocating), just remind people he’s a Republican.
Americans turned against the GOP en masse at the end of the Bush administration and never turned back. Republicans won the midterm elections in part by simply escaping public wrath against Democratic-controlled Washington, and in part by exploiting a much smaller, older, whiter electorate than you’d see in a presidential year. But very high-profile, very crazy Republican rule in the House of Representatives has rekindled and actually deepened the public’s distrust.
Today’s CNN poll is quite striking. In October of 2010, both parties were viewed about as favorably by the public (Democrats stood at 46% favorable/47% unfavorable, Republicans 44/42.) The Democratic party today is about the same — 47% view it favorably, 47% unfavorably. But the Republican Party’s favorability has collapsed — 33% of Americans view it favorably, 59% unfavorably. That -26% favorability gap is lower than the party’s rating before the 2006 election (-14%) or the 2008 election (-16%.) The GOP is completely toxic.
I agree that the poll is striking, and I will be glad if it means that the GOP is punished for its recklessness over the debt-ceiling fiasco. But I don’t read the 2010 elections as a case of “simply escaping public wrath against Democratic-controlled Washington” or “exploiting a much smaller, older, whiter electorate than you’d see in a presidential year”. I read them as saying that Obama and the Democrats have to be stopped. The GOP have over-interpreted that victory as a mandate for the radical dismantling of the public sector. But Obama should not make the mistake of under-interpreting it.
In a way it will be puzzling if the S&P downgrade–despite all the blather about its historic significance–changes anything at all. Certainly, the news should not have come as a surprise: the agency has been talking about it for weeks and the rating for US government debt had been under formal negative review before the announcement. If there is a surprise, it is mainly that the agency had the nerve to go through with it.
More fundamentally, what new information did the downgrade and the analysis supporting it provide? None. After their performance of the past few years, rating agency analysts have, or should have, little credibility in any case. Reports of the initial $2 trillion misunderstanding in S&P’s examination of the Treasury’s books (they used the wrong CBO baseline) lend a tragicomic note, and run their reputational capital down even further. And all this would be true even if US Treasuries were arcane instruments that few investors could afford to monitor carefully, forcing them to rely on the agencies for lack of anything better. In fact, of course, US Treasuries are the most widely and intensely analyzed obligations on the planet. What does S&P know about them that you and I don’t? The informational content of the downgrade is precisely zero.
The United States’ fiscal emergency will not be over until a bill to raise the debt ceiling has passed both House and Senate and President Barack Obama has signed it. This can still be done by Tuesday’s deadline. As this column went to press, a deal looked within reach.
If the test was likelihood of swaying the uncommitted, I saw no winner in last night’s broadcast contest. Obama and Boehner were both addressing mainly their own supporters. Neither rose above partisan talking-points.
The “balanced” approach advocated by Obama makes much more sense, though not because taxing corporate jets is a top national priority at the moment. Bearing in mind what is at stake, tirelessly underlining this point is ridiculous. The best thing about the White House’s approach is that it aims to backload the austerity (eg, by extending the payroll-tax cut). The GOP’s biggest mistake is to want to cut spending as much as possible as fast as possible: fiscally speaking, a self-defeating agenda.
So on the substance, Obama has the better plan–but his talk failed to make this clear. Presumably he thinks the argument for gradualism is already lost. Even if it is, though, his comments were odd. Almost in the same breath as “corporate jets” and “millionaires and billionaires”, he endorsed (admittedly without much enthusiasm) the Reid proposal, which includes no extra revenues. It was as though his remarks were written a week ago. Looking at where Congress stands at the moment, Obama’s main theme—we must have revenues as well as spending cuts–was simply beside the point. Congress is no longer even talking about this.