Republicans want to reduce the size of the federal government, and they won’t take no for an answer. “I just want to shrink it down to the size where we can drown it in the bathtub,” Grover Norquist famously declared. And in negotiations over the fiscal cliff, they have insisted on cutting spending rather than raising taxes. “The President wants to pretend that spending isn’t the problem,” House Speaker John Boehner has complained. Democrats, for their part, have responded defensively.
Are President Obama and his advisers alarmed about the tepid recovery? Are they working feverishly to think up new interventions, the kind that involve increasing short-term deficits, to strengthen it?
I’ll admit it: I was worried when the president named Bill Daley as his second chief of staff. True, Daley was a loyal Democrat long before he was a bank executive. But I couldn’t shake the feeling that the White House was giving in to months of mau-mauing from the business community. That was distressing not just because the idea of Obama as anti-business is wrong, but also because Obama had a lot more leverage over the business community than he seemed to realize. Not quite three weeks later and I feel confident this is not the case.
GDP grew at a 2 percent annualized rate in the third quarter, which confirms two things: the economy is still in the dumps, and it won’t be getting much better any time soon. The numbers were in line with estimates, and they’re good news in that they’re higher than the second quarter’s 1.7 percent rate.
[Guest post by Noam Scheiber:] One of the least suspenseful decisions in Washington became official today when President Obama named Austan Goolsbee to be the chairman of his Council of Economic Advisers. Goolsbee, who’s on leave from the University of Chicago, is a longtime Obama adviser currently serving as a member of the three-person Council.