While all of Washington fastened its gaze on Chris Christie, the most important issue of the week—maybe of the year—was playing out on the floor of the Senate.
Writing in the Wall Street Journal this week, Gerald Seib rightly reminds us that presidential campaigns are won and lost state by state in the Electoral College, not in the nationwide popular vote.
If you don’t think ideological perceptions matter in American politics, you need read no further. If you do and you’re a Democrat, there’s something to worry about. Even as the terms of the political debate in Washington, in the eyes of many Democrats, have moved steadily to the right, the electorate is increasingly likely to see itself as ideologically closer to the Republican Party than to Democrats.
The bankruptcy of Solyndra, the solar energy company that received a $535 million loan guarantee from the Department of Energy, has touched off the predictable partisan food fight, with the Obama administration on the defensive. The release of an August 2009 financial analysis commissioned by the Department of Energy suggesting that the company could run out of cash by September 2011 hasn’t made the administration’s task any easier. This episode fuels the growing sense that “green jobs” is a slogan in search of a policy.
The most significant policy disagreement in last week’s Republican debate went almost unnoticed. The moderator asked Jon Huntsman, “What does Governor Romney not get about China?” After noting America’s economic weakness and the need to focus on our tasks here at home, Huntsman remarked, “I’d have to say, Mitt, now is not the time … to enter a trade war.” Behind this exchange lies a remarkable development. A few days before the debate, Romney’s campaign released “Believe in America,” a book-length economic plan. In most respects it summarized standard conservative positions.
TO: MITT ROMNEY FROM: BILL GALSTON SUBJ: YOUR CAMPAIGN Every successful presidential campaign faces at least one defining moment when choices spell the difference between victory and defeat. Your first one has come earlier than just about anyone expected, and much depends on how you respond. Up to now, you’ve pursued a steady-as-you-go, above-the-fray strategy, ignoring your Republican rivals and training your fire on President Obama. And for six months it worked well enough to keep you in the lead.
The Congressional Budget Office’s semi-annual update on the budget and economic outlook, out on Wednesday, offers sobering news about the next few years. The report’s economic analysis begins by observing that “[t]he slow pace of the current recovery is broadly consistent with international experience of recoveries following financial crises.” The authors cite key impediments to renewed growth—the burden of household debt, the need for financial institutions to restore their capital bases, lack of business confidence, and the glut of vacant homes left over from the construction bubble.
As they have with the Great Depression, economic historians will argue for decades about the origins of our current crisis. But, surely, we can agree that the failure of international economic cooperation in the early 1930s—and worse, the sequential adoption of beggar-thy-neighbor domestic policies—made matters worse at a time when enlightened statesmanship could have made them better for everyone. Similarly, the current crisis is not just a U.S. problem or a European problem; it is a global problem that requires a coordinated global response.
Having spent some time inside the White House, I have some sense of how the world looks and feels from that unique vantage point. Its denizens always have a sense of operating under enormous pressure, subject to myriad constraints. When criticized, White House officials typically respond that they have done the best they could in the circumstances, and that if their critics had been in their shoes, they would have done the same thing. The more outside observers focus on the immediate situation, the more they will tend to agree with the assessment of the White House.
Raising the debt ceiling is a man-made crisis amenable to straightforward policy remedies. Political will is all that is lacking. Not so the economic crisis that our preoccupation with fiscal policy has temporarily obscured. Two major reports underscore both the depth of our economic woes and our increasing social divisions. The IMF recently conducted a comparative study of ten post-war economic recoveries seven quarters after the business cycle trough, or recession’s end. Its findings for the United States are stunning.