Supposedly Respectable Conservatives Going Over the Cliff

Pres Obama took office in 2009

Wow.  Someone sent me this piece from Peter Ferrara at Forbes magazine:

The record of President Obama’s first three years in office is in, and nothing that happens now can go back and change that. What that record shows is that President Obama, with his throwback, old-fashioned, 1970s Keynesian economics, has put America through the worst recovery from a recession since the Great Depression.

I told my correspondent who sent me this that I was planning to parse the piece on this blog, but reading it just exhausts me- it's so densely packed with poor reasoning, misleading arguments, and the like that I can barely face it.  But I'll give it a try, and see if I can slog through the whole thing.

Ferrara starts by noting that

What that history reveals is that before this last recession, since the Great Depression recessions in America have lasted an average of 10 months, with the longest previously lasting 16 months.

He then notes that Obama entered office when "the recession was in its 13th month", i.e. it was already over the average and only three months from the record before he was even in office.  In the end the recession lasted 18 months- i.e. it was over five months after Obama took office.  What could a president possibly do in his first five months in office that would improve that?  Ferrara goes on to take some gratuitous shots at Keynesian theory, which doesn't really merit a response from me- there aren't any facts to respond to.  But he also goes over lots of legitimate stats about how weak the recovery has been, and how unemployment continues to be at a very high level.

Ferrara notes that economists say that recessions resulting from financial crises are worse than other recessions, but then completely ignores that point when talking about how great Ronald Reagan's recovery was compared to Obama's.  But of course the recession of the late '70s was wholly a creation of the Federal Reserve Bank, intentionally inflicted to beat back inflation, and followed during the Reagan years by lowering interest rates.

What's needed when one criticizes the results of government policy, moreover, is to create a narrative explaining what should have been done.  Without explaining the mistakes, you don't have a credible argument and you're just left repeating the same thing- "look at the results!  Lalalalalalalala!"  I didn't see much of that until later in the piece.  But think about the issue with respect to the 1980s vs. the 2008 recession- tax rates are lower now than they were then.  Hell, Reagan increased taxes later in the decade!  Where's the explanation of what Reagan did right that BHO did wrong?  Instead we get this:

Indeed, exactly none of President Obama’s policies have been well designed to restore economic recovery and traditional American prosperity. They have consistently been the opposite of everything that Reagan did to end the American decline of the 1970s, and restore booming growth for 25 years.

Wow!  The opposite of Reagan!  That's serious!  I wonder what he means by that?  Sorry, the reader can keep wondering, because there's not a single example given.  The writer goes on to talk about the looming tax increases in 2013 and how they're going to really screw us up.  But of course that just points out again that taxes have been cut during the Obama years so far- the Magic Reagan Formula- and these are the results.

So next comes the Jeremiad against the tax rates scheduled to increase in 2013, tax rates that are essentially the same as existed during the Clinton years, which coincided with greater prosperity than was ever seen in the 2000s during the last conservative Golden Age.

Finally there's a screed about how "the Obama administration is in the process of imposing a blizzard of new regulatory costs and barriers that will be building to a crescendo by 2013 as well".  The examples given are Dodd-Frank (not yet implemented significantly) and the Health Care bill (also not yet implemented).  No examples of any expansion of regulation so far- so how is it that we've had this terrible recovery?  Taxes are lower, regulation hasn't changed.  The one thing that conservatives usually criticize, the exploding deficit, isn't mentioned here- I guess even a cynical hack like Ferrara can't bring himself to blame the lack of growth on a defict, which clearly has nothing to do with it.

And of course we know that the President is going to get the credit or blame for whatever happens in the economy, but supposed intellectuals writing for highbrow magazines ought to at least acknowledge that in fact presidents don't have absolute power and can't dictate policy- that's why it takes more than a view from 50,000 feet to explain why a recovery isn't taking hold.  Why not?  Would it be different if Congress had passed the jobs bill Obama proposed last year?  Did the Republicans propose something in particular that would have helped?  I guess Ferrara would say that we should have cut taxes more, but that argument is patently ridiculous given that the US currently has the lowest tax rates it's had since WW II, which didn't stop the recession from rocking us badly.

Anyway, what a piece of drivel.

UPDATE: This piece by Jon Chait makes some of these same points.

What Does Barack Obama Really Believe?

Impossible to know, of course.  But this NYT op-ed by Drew Westen has caused a bit of a stir in the liberal blogosphere.  Westen criticizes Obama for failing to lay out a narrative that the People would be able to follow, the way FDR did when faced with a similar crisis:

...when faced with the greatest economic crisis, the greatest levels of economic inequality, and the greatest levels of corporate influence on politics since the Depression, Barack Obama stared into the eyes of history and chose to avert his gaze. Instead of indicting the people whose recklessness wrecked the economy, he put them in charge of it. He never explained that decision to the public — a failure in storytelling as extraordinary as the failure in judgment behind it. Had the president chosen to bend the arc of history, he would have told the public the story of the destruction wrought by the dismantling of the New Deal regulations that had protected them for more than half a century. He would have offered them a counternarrative of how to fix the problem other than the politics of appeasement, one that emphasized creating economic demand and consumer confidence by putting consumers back to work. He would have had to stare down those who had wrecked the economy, and he would have had to tolerate their hatred if not welcome it. But the arc of his temperament just didn’t bend that far.

Westen says a lot of what I've said in my last few posts, and though it's a long piece I recommend it to those of you who are interested.

One of the points he makes is that BHO should have come out swinging right from the start, explaining why the recession was so bad, and putting the blame squarely where it belonged- on right-wing policies and politicians.  And such a style would certainly have appealed to me.
My criticism is a little different, though. I don't think BHO could have come out with guns blazing in 2009 after running for president as a conciliatory guy. So I don't fault him too much for the attempts early on to compromise, when he ran on that. But once it became clear that the Republicans were just not going to compromise on anything, and would be totally obstructionist, Obama was incredibly slow figuring this out. In fact I think he still hasn't figured it out. That he's trying to find a budget compromise that Republicans will accept, after they refused a deal where they got practically everything they wanted on the debt ceiling, is just pathetic. I hope to see him start proposing what he thinks is needed and then fighting for it. But I don't think he will, and like Westen I'm not sure what it is that he really does want- it's very possible that BHO is quite happy with all these budget cuts and practically no taxes. And that possibility is what has liberals really upset.

Obama and the "Failure of Liberalism"

It's very satisfying for a liberal to read the likes of David Frum, former Bush administration and down-the-line conservative who has been purged from the Right for pointing out that the Republican party was getting way too extreme.  I'm sure conservatives feel similar glee in reading liberals who have turned against the Democrats, like Joe Lieberman or Dennis Miller (I'm sure there are better examples- as you can probably guess, "liberals who have been mugged" isn't my favorite genre to read).

Anyway, Frum (who still identifies himself as a conservative) this week writes:

Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? The answer, I think, should give us pause. Can it be that our enemies were right?

And in the second piece he responds to those who point out that the liberals haven't done much to help the economy recover:

My conservative friends argue that the policies of Barack Obama are responsible for the horrifying length and depth of the economic crisis.
Question: Which policies?
Obama’s only tax increases – those contained in the Affordable Care Act – do not go into effect until 2014. Personal income tax rates and corporate tax rates are no higher today than they have been for the past decade. The payroll tax has actually been cut by 2 points. Total federal tax collections have dropped by 4 points of GDP since 2007, from 18+% to 14+%, the lowest rate since the Truman administration.
If so minded, you could describe Barack Obama as the biggest tax cutter in American history.

We have not seen a major surge in federal regulation, at least by the usual rough metrics: the page count of the Federal Register has risen by less than 5% since George W. Bush’s last year in office. Trade remains as free as it was a decade ago.
While the Affordable Care Act itself will eventually have major economic consequences, most of its provisions remain only impending.
Energy prices have surged, but that’s hardly a response to administration policies. Conservatives complain about restrictions on drilling in the Gulf of Mexico, but on a planet that produces 63 million barrels of oil per day, a few thousand more or less from the Gulf will not much budge the price of oil. Rising oil prices are a story about Chinese and Indian consumption and Middle Eastern political instability, not about US drilling or lack thereof.
The Dodd-Frank bill does somewhat curtail the activities of some banks and investment firms. But is it seriously argued that this could be the cause?

Conservatives complain about excess government spending. Fine. But isn’t the evil of excess government spending supposed to be inflation rather than recession? And where’s the inflation?

There’s a strong case for condemning Barack Obama for the things he might have done, but did not do. He might have cut payroll taxes more and faster. He might have pushed for more expansionary Federal Reserve governors. He might have designed a better stimulus. All true. But the things he did do? Texas Gov. Rick Perry today urges us to believe that the economy is gripped by the worst slump since the Great Depression because Obama spoke disrespectfully of the owners of private jets. To which I can only say: Really? That’s the indictment? Really?

Well said.  Paul Krugman is constantly taunting the "Very Serious People" who keep predicting hyperinflation or rocketing interest rates if the US keeps borrowing, while all evidence continues to show neither happening, just as Keynesian economics predicts in a Liquidity Trap.

The biggest problem for liberals now, though, is that nobody in power is listening to us.  So a mainly Democratic government here is thoroughly on board with austerity, which economists predict will lead to a new recession.  Wall Street seems to agree this week.  And the failure of macroeconomic policy is laid on.... the liberals! Because they're the ones in power.  But since the administration is pursuing mainstream conservative policies, the Republicans have contrasted it by calling for a caricature of conservative policies that were way out on the fringes of political thought only a few short years ago.  And true liberals are left shouldering the blame for our liberal policies, which have never been implemented.

So that's Obama's real sin- no matter what policies he pursues, he must realize by now that he'll be painted as a far-out Leftist.  Yet he keeps clinging to the false notion that he can be acclaimed as a centrist.  And in the process of this futile effort he pulls the whole country way over to the Right.  Tip O'Neil wouldn't recognize the Democratic party.  There is no place for liberals to go.

Where is the liberal equivalent of George W. Bush, a politician who unapologetically sticks to principles, doesn't care if the other side hates him, and gets his base energized and voting?  Republicans are loaded with pols like that, and we don't seem to have any.  So Republicans can rule effectively and make things happen- if only their policies were better it would be great!

Austerity it is!

Another aspect of the Debt Ceiling Surrender by the Democrats that I haven't really written about is this: in the short term, while the economy is still in the crapper, we're moving to an austerity budget.  Deficits are going down, though it's not clear by how much yet- it's the opposite of stimulus.

So what I expect to see in the next two years is continued sluggish growth and high unemployment if we're lucky, and a new recession if we're not.

And here's the best part: conservatives can legitimately keep blaming Obama for it!  He's going to sign an austerity budget, but of course not one that's austere enough for their tastes.  Then while I'm arguing that we should have done more stimulus, they'll argue that Democrats controlled the Presidency and the Senate and passed a bill that they said would be good for the country, and it's not.  They'll campaign in 2012 on the talking point that not enough austerity is continuing to cause slow job growth, and Americans are going to listen- after all, this stuff is complicated and people don't have the patience to follow macroeconomic policy, but they'll react to this message: Obama bargained for this, he said we needed to "tighten our belts", and it didn't work.  Time for someone else to try.  President Romney or Bachman is going to urge us to tighten our belts more- none of that sissy tightening BHO proposed!

There could be one other hope in 2012: get progressives jazzed up and excited and turning out in high numbers, as GWB did with evangelicals during his campaigns.  But with this deal and with the President's rhetoric leading up to it, Obama loses the Left.

I can't vote for this guy again.  He's the worst negotiator in the history of politics. 

Debt Ceiling and Some Rambling Thoughts on Hilary & BHO

Great piece here by Ross Douthat in the NYT.  He's a conservative columnist who makes the interesting point that Republicans didn't plan their endgame in the Debt Ceiling talks.  They've been so completely uncompromising that Obama can't possibly acede to their demands (can he?), but in pleasing the Tea Partiers they may lose everyone else in the end.

When I think about the deal that Obama was offering, as a liberal I'm glad they didn't take it.  I think BHO gave away the store.  Maybe he knew the GOP wouldn't take it, but I don't think so- as I've said before, I think Obama believes his own rhetoric about bringing people together, even in the face of all evidence to the contrary. 

I hereby officially declare that I think Hilary would have been a better president.  I was not a fan of hers in 2008 and preferred BHO (I think I voted for Edwards in the primary, but I honestly can't remember).  One of my main issues with the Clintons is their obsession with triangulation and finding the center of the debate, but I'm shocked to find Obama seems more obsessed with finding the right-of-center part of the debate and staking that out in his quest for a deal.  He just doesn't seem willing to stand up for anything- he offered to cut Social Security and Medicare in the current negotiations, in exchange for closing tax loopholes that should be agreed to by anyone.  Luckily the Republicans can't take yes for an answer.

Obama's Political Errors

My readers know I'm generally a fan of President Obama, as is Paul Krugman.  But this blog post by Krugman strikes me as just right.  I agree with all four specific mistakes noted in the post, but especially like this one:

Second, the administration made what I continue to believe was the awful decision to pretend that the half-measures it was actually able to get were exactly right, not a penny too small. Would it have made a difference in 2010 if Obama had been able to say to the country, “I asked for more aid to the economy, but those guys blocked it, and that’s why we’re not recovering faster”? I don’t know — but it could hardly have been worse than the position he actually found himself in, which was trying to explain why a policy he insisted had been perfect wasn’t doing the job.

There are two possibilities about what's going on here.  One, the administration really believed that the half-measures it enacted in 2009 were just right, or Two they knew it wasn't enough but decided to pretend otherwise in order to demonstrate confidence so the public would stick with the perception that he's a bridge builder or something. 

Either way it doesn't speak well of Obama.  Academic ecnomists crunching numbers all agreed that the stimulus needed to be much bigger than it was.  It was quite predictable that we'd be here now economically, and leads to egg on Obama's face, whereas he could be saying "I told you so" now. 

I think Obama actually might believe the stuff he campaigned on about bringing people together and changing the culture in Washington.  If he still believes that then the man borders on delusional at this point.  I was talking to a work colleague yesterday about this- he was a Clinton supporter, which I wasn't, but we agreed that if nothing else the Clintons know how to fight.  Obama had better figure that out, or his presidency will end up a failure, and short to boot.