Uh Oh

It may take all hands. While Obama and his team were hardly the only ones to underestimate the depth of the problem they inherited in early 2009, their failure to define it from those early days has undermined a bedrock idea of American liberalism, the faith in the capacity of government to play a constructive role in the markets and make up for the limits of individuals to cope with them. Since unemployment has remained so high for so long while deficits have soared, it must mean the stimulus did not work and the money was wasted. Smaller government, less regulation and lower taxes, therefore, would be the only answer. And so, Obama’s challenge may be more fundamental even than reducing unemployment and winning re-election; he wants to prove that liberal economic theory can be adapted to the 21st century.

“The White House Looks for Work,” NYT

(Emphasis mine.)

6 thoughts on “Uh Oh”

  1. I deleted a bunch of the original post because I thought it distracted from the excerpt. You all should read the article. Your jaw will be on the floor for most of it.

    1. The Republicans left the President a mess. This is somehow his fault. Unfair!
    2. The economic team squabbled. Can we pin this on Larry Summers?
    3. Krugman wanted a bigger stimulus. No data can ever nullify the hypothesis that more means better. This is known as science.
    4. Reality intrudes, so rudely, on theory. Poor Obama administration.
    5. The muddling will continue.
    6. The muddling will be branded a new start.

    Some people will buy this malarkey. 2012 will be hard for the Republicans, no doubt.

    – Madhu

  2. “he wants to prove that liberal economic theory can be adapted to the 21st century”

    He also wants to prove that an angle maybe trisected with compass and straight edge.

  3. The Republican House has an opportunity that comes once every 50 years. They can be bold and pass a budget that contains real cuts and brings us back to 2007 spending levels, with a promise that this is a down payment on reform. The Senate Democrats may complain but they would be unlikely to reverse this path. Obama then will be under huge pressure to sign the appropriations bills.

    If they fail and go back to the old rules of empty talk, they will be repudiated in the next election.

    Obama does not have a clue about modern economics. He will do what he thinks will work but he is poorly educated about many things, including economics and history. In a speech a few weeks ago, he said that a Depression era program for widows and orphans became Social Security. How could he be so ignorant ? He has done nothing in his life but school and politics. Social Security came from Old Age Assistance. The widows and orphans program became AFDC. This is a man who thinks Austrians speak Austrian.

    Remember all spending bills come from the House. If they do not appropriate money for public broadcasting, no one else can. Obama is trying to bypass Congress by using regulatory agencies. The EPA is trying to impose cap and trade. A big cut in the EPA budget should rein them in.

    But the House Republicans must muster the courage and will. We will see.

  4. Michael Kennedy:

    It might be a bit more complicated than that.

    Social Security has or had a survivor’s benefit — a windows-and-orphans component — as well as a disability component in addition to the old-age pension benefit. But AFDC is a continuation of a New Deal program as well.

  5. I think the disability component and the inclusion of children have had a lot to do with the insolvency. I am willing to be corrected but I don’t think they were in the original legislation.

  6. I don’t think the House will be bold unless pushed, sadly, but you never know. We’ll see.

    I don’t know. This is a period of confusion and the President completely confuses me :)

    – Madhu

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