Screw Job

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POLITICS DECEMBER 23, 2009

Screw Job

President Obama is like a pilot who took the controls of the plane in mid-flight after the engines fell out. It’s obvious that he didn’t cause the problem. But the passengers are going to focus on the fact that the plane was still airborne before he took over, and now, he’s crash-landing in the ocean.

That’s Obama’s problem in the debate over the economy. His arguments are true. The trouble is, they don’t feel true, and they feel less and less true as time goes by.

Republicans focus relentlessly on the simple fact that the economy is in worse shape now than it was before Obama took office. The trajectory may have improved, but the level has worsened--more people are out of work now than on January 20.

The Obama administration predicted in January that, if its stimulus package passed, unemployment would stay below 8 percent, yet it has crossed 10 percent. You have probably heard this statistic if you have heard any Republican in elected or unelected office open his mouth at any point over the last half-dozen months. The implication of this statistic--sometimes made explicit--is that the stimulus failed to alleviate, or even caused, rising unemployment.

The more plausible interpretation is that the Obama administration’s January forecast, along with most private forecasts at the time, underestimated the depth of the recession. One bit of evidence for that view is that unemployment hit 8 percent by February, which was about the same time that the stimulus passed and long before it could take effect.

What level unemployment would have reached without a stimulus is, of course, a total guess. Republicans have ridiculed the administration’s efforts to tabulate the jobs that the stimulus saved. The implication here is that, because you can’t count something, it doesn’t exist. It’s true that there’s no way to actually count the number of jobs saved by the stimulus. Even if you could accurately tabulate the workers hired by federal grants, you’d be missing all the jobs saved by the money those workers are spending. Not to mention the impact of the tax cuts, which account for two-fifths of the cost of the stimulus. So, while the positive effect of the stimulus is necessarily a guess, it’s a guess shared by nonpartisan government agencies like the Congressional Budget Office as well as all the leading macroeconomic forecasters.

If you look at a graph of jobs lost by month, it resembles a pyramid, with the stack building through 2008, peaking in January 2009, then dropping down around zero over the course of this year. No serious person could dispute that the rise in unemployment reflects anything but the aftershocks of an economic collapse that predate the Obama presidency. (This likewise holds true of the rising budget deficit: CBO numbers show that approximately 100 percent of the long-term deficit increase results from Bush policies and the effects of the slowdown.)

The Republican strategy here consists of two nifty steps. Step one consists of affixing Obama with the blame for rising unemployment. Step two is, when Obama points out that the economic collapse occurred before he took office, pummel him as a classless blame-shirker. Columns by National Review editor Rich Lowry (“Obama the graceless”), Wall Street Journal columnist William McGurn (“The post-gracious president”), and numerous other conservative worthies have harped upon this theme. Obama must accede to the Republican campaign to blame him for the consequences of the 2008 economic collapse because to do otherwise would violate social etiquette. Obama’s pointing out that he inherited the recession is “graceless, whiny, and tin-eared,” complains Lowry.

At first, in a fit of naïveté, I assumed that the conservative belief in the impropriety of a president blaming his predecessor must be a deeply held principle unrelated to the partisan identity of the presidents in question. Sadly, after a quick search of the recent historical record, the scales fell from before my eyes. President Bush repeatedly asserted that he “inherited a recession”--the one that began in March of 2001--from Bill Clinton. He also charged that Clinton’s weakness in the face of terrorism emboldened Al Qaeda to strike on September 11, which I would argue is even ruder than anything Obama has said about Bush. That particular theme also features prominently in Lowry’s 2003 book, Legacy: Paying the Price for the Clinton Years.

Obama’s trickiest dilemma is that the public does not agree with--or, to put it less charitably, understand--the basis for his anti-recession strategy. Whatever your view of deficits, they clearly make more sense during a recession than during an expansion, when deficit spending can help fuel overheated growth. The trouble is, public opinion tends to get loose with the purse strings during boom times and tight during recessions, which is the opposite of what you want. During the 1990s boom, the public favored expanded social spending and tax cuts over paying down the national debt. Today, by overwhelming margins, they favor an immediate balanced budget, even in the face of economic catastrophe.

That is, of course, insane. But Republicans have taken full advantage of the public’s fiscal insanity. President Bush used to scoff at proposals to pay down the national debt, saying, “The surplus means the government has more money than it needs.” Nowadays, Republicans like John Boehner say things like, “American families are tightening their belts,” and, therefore, Washington should “lead by example and show the American people that the government can go on a diet as well.”

What sounds to the American people like simple common sense is economic malpractice, and vice versa. Thus the Democrats’ predicament: High unemployment is making them unpopular, but the only steps they can take to reduce unemployment are themselves unpopular. If the Democrats actually gave the people what they say they want--$1.4 trillion in spending cuts and/or tax hikes to eliminate the 2010 deficit--Republicans would capture approximately 100 percent of Congress in the next election.

“The American people are a lot smarter than people in Washington think,” White House communications director Dan Pfeiffer said. “They understand we have to deal with jobs and deficits in a coordinated strategy.” If the administration is dumb enough to actually believe that, it would help explain how they’ve let Republicans win the political argument over the economy.

Jonathan Chait is a senior editor of The New Republic.

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posted in: politics, national review, wall street journal, al-qaeda, bill clinton, bush, rich lowry, william mcgurn

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