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O's Political Choices Assured a Slow Recovery
President Obama's economic report card is at best mediocre. I'd give him a C+, while acknowledging that presidents usually don't much influence the economy. Policy levers are shared with Congress (taxes, spending), the Federal Reserve (financial markets) and regulatory agencies. Yeah! Waitaminute... How did those guys get there? Presidents often get blamed or credited for the economy when they don't deserve either. But during crises, presidents acquire power. That's why Obama will be -- and should be -- judged on the economy's performance. More interesting than my overall grade are its components. For the first six months, I'd award him an A-; for the rest, a C- or D. I'd weigh the two grades equally, because he deserves a lot of credit for stopping the economic free-fall when he took office. Stay with me here folks! This gives Samuelson street cred. Obama can't escape some responsibility for this dismal performance. His mistake was assuming he could pursue his political agenda without compromising the recovery. Passing the Affordable Care Act (a.k.a. Obamacare) weakened the economy. For starters, the complex law discourages job creation by forcing some firms to provide health insurance or pay a fine. If you make hiring harder and costlier, you will get less of it. I bet this guy is a PhD! B.S. - Harvard, actually. The struggle over the ACA also fostered a take-no-prisoners political climate that, by fanning policy uncertainty, further undermined recovery. What followed were stalemates on budget policy, last year's debt-ceiling brinkmanship and today's anxiety over the "fiscal cliff." Uncertainty spawns fear, and fear causes consumers and companies to step back -- to postpone purchases, investment projects or hiring. As the world changed around him, who remained steadfast, unchanging in the maelstrom? Who refused to compromise, because He Won? These unfavorable economics stemmed partly from Obama's politics. Pursuing "universal health care" was bound to alienate Republicans and polarize politics. This was predictable and knowable in advance. Anger over Obamacare fed tea party turnout in 2010's elections. Partisan gaps widened; compromise became harder. Perhaps all this would have happened anyway, but Obama's political choices guaranteed it. Even some economists highly supportive of Obama's policies concede that the health plan was poorly timed. "It distracted us from the economy," says Mark Zandi of Moody's Analytics. The same mistake occurred for trade, labor and environmental policy. The president subordinated job creation to other goals, says an economist adviser to John McCain in 2008. "When economic growth is so important," he argues, "you have to be ruthless in focusing on it. You have to err on the side of growth, and they haven't done that." A similar critique applies to Obama's recurring anti-business rhetoric. Though politically expedient, it cannot have helped job creation. Anti-business? That''s ridiculous! Lookit Wall Street! [/sarc.] To be fair, the weak recovery has other, larger causes: the hangover from the financial crisis and Great Recession. The burst real-estate bubble destroyed $6 trillion of housing values. But Obama's missteps have made the situation worse. Obama faces a tight reelection race. His performance will be judged against Mitt Romney's promises. He will soon know whether the American people give him a flunking grade. Posted by: Bobby 2012-09-03 |
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