Let me say that Obama's press conference--his telling Congress that they had a duty to "those who sent us here" to pass the American Jobs Act and to pass it immediately--was very good.
But Duncan Black still is left with and asks a question:
Eschaton: It's The Economy, Stupid: No I don't know why we've spent 2 years talking about the deficit. I'm sure if we'd spent 2 years talking about jobs then the Republicans would still be behaving much as they have been, but at least the public conversation would be about an actual problem. Deficits are not a problem in and of themselves. They are a symptom of a bad economy, and potentially a cause of other problems, but they are not actually a problem. And at the moment they aren't the cause of any other problems, except stupidity.
Fix the economy, fix the deficit. Just give everybody some free money. It isn't always the case that free ice cream is the actual solution to serious problems, but it is! Politicians are handed any opportunity to do an incredibly popular thing - free money! - and yet we're talking about making people suffer so that David Brooks can get excited.
I think I understand the thinking of Obama, Emmanuel, Geithner, Orszag, and company as of, say, April 1, 2009:
- The Recovery Act will keep the recession from getting too deep.
- It is highly likely that when the recovery comes it will be a "V"--that bounce-back will be swift, and that by late 2010 the big threat on the horizon
- The major risk of a deeper, prolonged recession comes from a "capital strike" or from a Wall Street panic--that is what the reaction to the collapse of Lehman taught us--therefore we have to keep the banks and the bankers sweet or we face a real problem: not just a recession but a Lesser Depression.
- We really do not want to talk much about the fact that much of our macroeconomic policy consists of giving bankers free money and trying to keep them confident--the optics are terrible.
- There are lots of other things that need to be done: health-care reform, financial regulatory reform, carbon cap-and-trade, moving beyond don't-ask-don't-tell, solving the long-term financing dilemmas of the social insurance system, dealing with our long-run infrastructure deficit, and so forth.
- All of these will be much easier to do in 2009-2010 than they will be to do in 2011, because we will probably lose seats in 2010.
- Therefore we need to be satisfied with the Recovery Act, the TARP, and the stress tests as our macroeconomic policy; bet that the recovery will come as a "V"; and pivot to working on these other issues as soon as we can.
I think I understand the dissent of Romer, Summers, Bernstein, Krueger, and company from (1)-(7) starting around April 1, 2009…
What I do not understand is why Axelrod and Plouffe were satisfied with (1) through (7). Doing good policy on health-care reform, financial regulatory reform, carbon cap-and-trade, moving beyond don't-ask-don't-tell, solving the long-term financing dilemmas of the social insurance system, dealing with our long-run infrastructure deficit, and so forth is nice. But from their perspective winning elections is nicer, and is a precondition to making one's policy victories stick. And a strong macroeconomy with rapid GDP growth and falling unemployment makes it much much easier to win elections.
And what I do not understand is why Obama, Emmanuel, Geithner, Orszag, and company did not also think:
(8) We need to set up the game table so that if we need to pivot back to dealing with a jobless recovery, we have the power and authority to actually enact policies that matter in late 2010, 2011, and 2012.
(9) We need to make sure that the Federal Reserve understands its dual mandate and stands ready to intervene massively to turn a jobless recovery into a strong, healthy recovery, if necessary.
By late 2009, however, Obama and company should have been worrying that the "V" was very slow in coming. And the day after the Affordable Care Act was signed Obama and company should have concluded that waiting for the "V" was like waiting for Godot--and taken action.
So what were they thinking?
There is the possibility that they had turned into reputationally-bankrupt zombies gambling for resurrection, hoping against hope that each month would start the "V" recovery. But I am not sure that that is right. And I really do not have other possible interpretations.
Why were the mistakes that were made made, and what personnel changes would make Obama and company less likely to make similar mistakes over the next fifteen--and yes, the next sixty-three--months?