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.
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.
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?
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“).
There’s a lot to digest about Rick Perry and the Texas Miracle/Unmiracle. ProPublica has a nice reading guide on the topic. It mentions Paul Burka’s indispensable advice to Yankee journalists and National Journal’s thorough review of Perry and the Texas economy.
The Economist’s Erica Greider has written a good piece on the state’s record of job creation. I agree with her: it’s a complicated story but the achievement is striking nonetheless. In general, the Texan economy has a lot to boast about, and some things (notably its healthcare system) to be ashamed of. Perry’s significance on both sides of the ledger is less than his biggest admirers and critics maintain.
Paul Krugman gives Texas credit for an intelligent land-use policy which keeps housing cheap, and for effective regulation of mortgage lending which avoided the worst of the housing bust. Later in the same article, though, he says any state could do what Texas did and steal jobs from elsewhere with “weak regulation”. What weak regulation is that–the strong regulation of mortgage lending he just mentioned, or the light zoning regulation he just praised? Confusing. Still, you can’t quarrel with his observation that people are moving to Texas for the climate. The sparkling lakes and lush verdant forests are also quite a draw.
Commentators have been unable to agree whether the appointments to the fiscal supercommittee suggest compromise or deadlock. I think National Journal’s Ron Brownstein has it right: the appointees are disinclined to compromise, though not incapable of it. I leave you to decide whether that is a good or bad outcome by current Washington standards.
Both Senate leaders, Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., pointedly excluded any member of the chamber’s bipartisan “Gang of Six,” which has already proposed a balanced plan to tame the deficit by limiting entitlement spending and raising revenues. House leaders picked loyalists, not mavericks. All of the GOP appointees have publicly indicated opposition to raising taxes, and if Republicans block revenues, the Democrats on the panel won’t limit entitlements. The appointments deepened the capital’s conviction that the exercise is doomed to stalemate.
Betting on failure is usually the safest wager in Washington. But it’s too early to entirely write off the panel. The committee’s members may not be inclined toward compromise, but many are not inimical to it. Although they haven’t challenged party doctrine as directly as the Gang of Six, committee members like House Republicans Dave Camp and Fred Upton (both of Michigan), Senate Democrats Max Baucus of Montana and John Kerry of Massachusetts, and Senate Republicans Rob Portman of Ohio and even (to some extent) Jon Kyl of Arizona have proven willing to negotiate with the other party on difficult issues. Considering the list, one senior White House official says “the mix of people suggests a possibility for compromise—if the leadership in their party will let them do it.”
Judging by their appointments, Congressional leaders today view stalemate as a safer course than compromise. Only public pressure can change that calculation, especially in the GOP, whose resistance to tax increases looms as the panel’s biggest obstacle. More dismal polls might soften that perception—as would more pressure from financial markets.
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.