But I’ve never been able to come up with a realistic scenario in which a lot more got done, the economy is in much better shape, and the president is dramatically more popular today. Anything that even comes close is really a counterfactual of what the chairman of the Federal Reserve could have done, and I’m not confident that I understand Bernanke’s constraints nor that a more massive intervention on the part of the Fed would have been the cure-all some suggest.
Indeed, if you had taken me aside in 2008 and sketched out the first three years of Obama’s presidency, I would have thought you were being overoptimistic: an $800 billion stimulus package — recall that people were only talking in the $200-$300 billion range back then — followed by near-universal health-care reform, followed by financial regulation, followed by another stimulus (in the 2010 tax deal), followed by the repeal of “don’t ask, don’t tell,” followed by the killing of Osama bin Laden and the apparent ousting of Moammar Gaddafi? There was no way. And yet all that did get done. But the administration hasn’t able to get unemployment under control — perhaps it couldn’t have gotten unemployment under control — and so all of that has not been nearly enough.
But perhaps I’m missing something obvious.
I think there are definitely reasonable scenarios under which more gets done. Remember, Obama won with a pretty huge mandate. The GOP was in ruins, people loathed them and the Bush legacy they rod out of town on, and the Dems had control of not just the House and Senate, but a solid majority in the House and a near filibuster proof majority in the Senate. The Dems were riding high. At the beginning of the President’s term when the stimulus and health care reform were first being discussed.
The question therefore, is whether the President did all he could have, should have, to get as much as he could in those negotiations. The answer is no.
Let’s start with the stimulus. While Ezra now says that everyone was only talking about a $200bn to $300bn stimulus, I’m not sure who he’s referring to, as in early November of 2008, Paul Krugman was saying we needed at least $600bn. Now keep in mind, this was only seven weeks or so after Lehman Brothers went belly up, so we were still scrambling to figure out how bad things really were. By January of 2009, Krugman had upped the calculation and was saying that we needed a $1.8 trillion stimulus, comprised of $600bn a year for three years.
By the middle of February of that same year, when the details of the final stimulus package were known, Krugman was none too happy with how much we got.
“It’s helpful, but it does not cover even one-third of the gap, so it’s disappointing,” Krugman said. Out of the $789 billion approved, only about $600 billion adds real stimulus, in Krugman’s opinion. “So you’ve only got $600 billion to fill a $2.9 trillion hole.” What’s more, he argued that $350 billion of the package slated for tax cuts will provide some, but not much, stimulus traction because households are likely to save rather than spend large portions of it. That’s the “paradox of thrift,” Krugman noted. Normally, encouraging savings is a great plus for an economy. But in a downturn, households (and businesses) worry about the future more, and decide to conserve resources and spend less — just when spending is needed most.
What’s more, much of the proposed aid to state and local governments was stripped from the stimulus package during political negotiations needed to secure passage, Krugman noted. That was the most effective component because it would be spent quickly. State budgets are in serious trouble, and if the states knew more federal funds were on the way, they’d be more likely to decide immediately to defer layoffs and continue with construction and other projects requiring instant funding. Also, much of the planned infrastructure spending, while positive for the economy, will take up to two years to have its greatest effect.
And Joe Stiglitz was saying similar things at the same time. (And keep in mind, that as bad as it was already, none of us were aware of how bad the economy was going to get. At the time, Krugman was talking about unemployment possibly hitting 10% if we didn’t pass a stimulus, when in fact it hit 10% even with the stimulus.)
So, I’m not entirely sure when it was that everyone was supposedly talking about a $200bn stimulus package. And even were that the case, say back in October of 2008, once we became aware that the crisis was far graver than we realized, the Obama White House didn’t come through for us. They didn’t up their ask enough. Rather, they low-balled it. No one that any of us trust was suggesting that an $800bn stimulus (or as Krugman points out, really a $600bn stimulus with some weak-tea tax cuts included) was the right amount. Even the President’s own chair of the Council of Economic Advisers said we needed $1.3 trillion (and even she was low-balling it, but still, it was at least higher than $800bn).
So, no, I don’t take solace in the fact that the Obama administration asked for, and got, more money than an abysmal $200bn that might have been being discussed in the fall of 08. What mattered is how much stimulus we knew we needed at the time the legislation was passed, and whether the White House did all they could to get it. They knew we needed more, and they didn’t ask for it. They instead asked for less, then chopped another $100bn off because Olympia Snowe didn’t like it, then gave away another 35% of what remained to not-very-stimulative tax cuts.
The White House should have negotiated from a position of strength, being fresh out of the elections, with a new wonderman in the White House, and with the GOP broken and in tatters. Instead, the President acted like the Democratic minority leader of the Senate (even the GOP minority leader of the Senate would have put up a bigger fight for what he wanted).
What do I mean? I mean that when Olympia Snowe tells you to cut $100bn from legislation intended to keep America from plummeting into another Great Depression, you send the President to Maine, where he won handily only two months before, and have him inform Olympia’s constituents that, on behalf of the very same people who got us into this crisis to start with, she’s trying to short-change the only thing that might, just might, save us all from economic death.
That’s what a leader with a mandate does in a time of national crisis. He leads. He fights.
But of course, President Obama didn’t do this because he doesn’t believe in fighting. Instead, he did what he since has become famous for – he lowballed his initial offer, and then proceeded to whittle away at it, again and again, every time a Republican (or conservative Dem) got in his face and said “boo!” To hell with the fact that we were talking about legislation to save the country from another Great Depression. It was more important to the President to be nice, than to get the size of the package that was needed to address the crisis at hand.
We could have had more, we should have had more, had he simply fought for what was needed. I just don’t know how anyone looks at that and says “job well done.” If anything, it was one of the first symptoms of the larger problem this President has with le
adership. The last thing President Obama, and our country, now need is an attempt to retroactively justify his actions on the stimulus or anything else. We almost lost “Don’t Ask, Don’t Tell” because the President wasn’t willing to fight. We most certainly lost the public option because of it, and we may lose whatever health care reform we did get because of it as well.
The President doesn’t fight to win, nor does he fight to defend his victories. Where is the ongoing effort to defend the stimulus, to defend health care reform? I have zero confidence that health care reform is going to survive next year’s election, mostly because the administration has done such a lousy job selling it to the American people, that if the GOP wins the White House, HCR is gone.
Outside of the administration bubble, I just can’t fathom how anyone still thinks the President did everything he could on the issues of the day.