Friday, March 11, 2011

Has Obama effectively thrown in the towel on fighting Republicans over the budget?

Not exactly. At least not yet.

But Robert Reich seems to think something like that is happening (Why Obama Isn't Fighting the Budget Battle 03/11/2011).

And Paul Krugman accurately observes, "As the national debate over fiscal policy descends ever deeper into penny-pinching, future-killing absurdity, one voice is curiously muted — that of President Obama." (Dumbing Deficits Down New York Times 03/10/2011)

I would say that it's no accident that economists seemed to be particularly harsh in their criticism of Obama's policies and his reinforcement of Republican economic narratives. But to today's Republicans, using the phrase "it's no accident that ..." is a sign you're a secret Commie. Which they think everyone to the right left of Rush Limbaugh is, anyway. So I guess it doesn't matter.

Krugman explains his alarm:

The president and his aides know that the G.O.P. approach to the budget is wrongheaded and destructive. But they’ve stopped making the case for an alternative approach; instead, they’ve positioned themselves as know-nothings lite, accepting the notion that spending must be slashed immediately — just not as much as Republicans want.

Mr. Obama's political advisers clearly believe that this strategy of protective camouflage offers the president his best chance at re-election — and they may be right. But that doesn’t change the fact that the White House is aiding and abetting the dumbing down of our deficit debate.

And this dumbing down bodes ill for the nation’s future. Health care is only one of the large and difficult problems America needs to deal with, ranging from infrastructure to climate change, all of which demand that we engage in a lot of hard thinking. Yet what we have instead is a political culture in which one side sneers at knowledge and exalts ignorance, while the other side hunkers down and pretends to halfway agree. [my emphasis]
Militant ignorance generally doesn't produce constructive results. Reich shares Krugman's concerns:

Most importantly, [concerned Congressional Democrats are] worried that the President’s absence from the debate will result in Republicans winning large budget cuts for the remainder of the fiscal year – large enough to imperil the fragile recovery.

But Obama won’t actively fight the budget battle if the current White House view of how he wins in 2012 continues to prevail.
Reich believes the White House political strategists are thinking by analogy and assuming the current situation is like Bill Clinton's in 1995, after the Republican Congressional victories in the 1994 election. But part of the risk of thinking by analogy is that if you aren't analogizing the right factors, it can do more harm than good. And one key element that isn't likely to be on the table for Obama's presumed 2012 re-election campaign is a budding economic boom like the one in 1996:

The superficial logic that so often passes for thought in Washington typically sees causation where there's only correlation. In fact, there's no reason to believe that Clinton's lurch rightward at the start of 1995 is what won him re-election the following November. He was re-elected because of the strength of the economic recovery.

By the spring of 1995, the American economy had bounced back, averaging 200,000 new jobs per month. By early 1996, it was roaring — creating 434,000 new jobs in February alone. I remember suggesting to Clinton's political adviser, Dick Morris, that the president should come up with some new policy ideas for the election. Morris scowled. This election will be about the economy — nothing more, nothing less, he said. Morris knew that voters didn’t care much about policy. They cared about jobs. "The president," said Morris, "is going to say, 'You’ve never had it this good, and you ain't seen nothing yet.'" [my emphasis]
The budget-cutting mania that the Obama White House has embraced against all economic good sense will be a serious blow the recovery, at the very best. The federal cutbacks combined with the massive state and local governments cutbacks coming this year are the opposite of what the economy needs right now. As Reich puts it:

So many jobs have been lost since Obama was elected and so many people have entered the workforce needing jobs that even if job growth were to match the extraordinary pace of the late 1990s, year after year, the unemployment rate wouldn’t fall below 6 percent until 2016. That pace of job growth is unlikely, to say the least.

If Republicans manage to cut federal spending significantly between now and Election Day while state outlays continue to shrink, the certain result is continued high unemployment and anemic growth.
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