JONATHAN CHAIT JUNE 7, 2011
The new line on the right is that the economy is now swooning because President Obama criticized Paul Ryan. Here's Michael Barone:
On April 13 Obama delivered a ballyhooed speech at George Washington University. ...
The man depicted as pragmatic and free of ideological cant indulged in cheap political rhetoric, accusing Republicans, including House Budget Committee Chairman Paul Ryan who was in the audience, of pushing old ladies in wheelchairs down the hill and starving autistic children.
The signal was clear. Obama had already ignored his own deficit reduction commission in preparing his annual budget, which was later rejected 97-0 in the Senate. Now he was signaling that the time for governing was over and that he was entering campaign mode 19 months before the November 2012 election. People took notice, especially those people who decide whether to hire or not. Goldman Sachs's Current Activity Indicator stood at 4.2 percent in March. In April -- in the middle of which came Obama's GW speech -- it was 1.6 percent. For May it is 1 percent.
And here, via Nexis, is Bill Kristol on Fox News Sunday:
Two months ago, the economy's prospects looked better and President Obama's political prospects looked better. Then he gave that speech on April 13th. It was at Georgetown, where he demagogically attacked the Paul Ryan budget and basically started employing the "Mediscare" tactics.
I don't think it's an accident that the people have lost confidence in the last two months. I actually think it's hurt him politically.
Remember earlier this year he was going to compromise with Republicans, he was getting serious about the debt, he was pivoting to the center? I think that April 13 speech could be a moment where people look back and say, he went for a short-term political benefit, but hurt his prospects next year and hurt the economy.
David Frum rebuts:
I would myself lay much more emphasis on economic factors like: (i) the continuing destruction of American consumer wealth as housing prices deflate; (ii) the burden of rising oil prices; (iii) the collective decision of American consumers to increase their saving by 6 points of personal income – a laudable decision, but one that subtracts a lot of demand from the economy.
But if I were a believer in the business confidence theory, here’s the counter-question I’d put to Michael Barone:
Which is more likely to subtract from business confidence: a lame speech by the president – or a highly credible and sustained threat by the majority party in the House of Representatives to force a default on the debts, contracts, and other obligations of the United States?
Stan Collender thinks the economic consequences of the debt ceiling hostage fight are already occurring.