I’m not suggesting that Obama policies alone are driving the stock market. Many factors, particularly earnings, drive the overall market.
But, many conservatives were quick to blame Obama when the market slipped in the spring, implying he was to blame as opposed to the economic crisis he inherited. Melissa Francis and some of the other conservative market worshipers at CNBC were just a few of the examples. Well, the market is now up, and we’re not hearing conservatives talk about it much any more.
One of the original supply-siders, Bruce Bartlett, explains in a brilliant op-ed why the ideas that worked so well in the early 1980’s are irrelevant today. Bartlett is promoting a new book, The New American Economy.
I continue to believe that what the supply-siders did was good for the economy, good for the country and good for the advancement of economic science. The best economists in the country were pretty clueless about our economic problems during the Carter years. It was widely asserted that the money supply had no meaningful effect on inflation, that marginal tax rates had no incentive effects, and that it would take decades or another Great Depression to break the back of inflation.
As all economists now know, these ideas were wrong. All economists today accept the importance of the money supply–perhaps too much; during the recent crisis many asserted that fiscal stimulus was unnecessary because an increase in the money supply was the only thing necessary to restore growth. (How this would have been accomplished when interest rates were close to zero was never explained.) All economists now accept the importance of marginal tax rates to economic decisionmaking, and organizations like the National Bureau of Economic Research publish vast numbers of papers on this topic.
During the George W. Bush years, however, I think SSE became distorted into something that is, frankly, nuts–the ideas that there is no economic problem that cannot be cured with more and bigger tax cuts, that all tax cuts are equally beneficial, and that all tax cuts raise revenue.
These incorrect ideas led to the enactment of many tax cuts that had no meaningful effect on economic performance. Many were just give-aways to favored Republican constituencies, little different, substantively, from government spending. What, after all, is the difference between a direct spending program and a refundable tax credit? Nothing, really, except that Republicans oppose the first because it represents Big Government while they support the latter because it is a “tax cut.”
Bartlett exposes the caricature that has taken over conservative economic thinking, the slavish devotion to dogma that makes it impossible to consider the circumstances of our new reality. Think about it. Talk to a conservative about economic policy, and the answer, regardless of the circumstances, is usually the same – spending bad, tax cuts good. I can teach a three-year-old to repeat that.
Bartlett goes on to explain why massive spending was necessary with the economic collapse we faced last year, and the obscenely stupid response of many conservatives who suggested addressing the problem with more tax cuts.
Bartlett was an adviser to Jack Kemp and helped write the Reagan tax cuts. This is a must-read for anyone who wants to understand the history of supply-side economics and why one of its chief architects is arguing that it doesn’t apply today.
The press is in a tizzy over the AIG mess, but the real story involves the new Geithner plan to deal with toxic assets. Of course, Paul Krugman hated it, but economist Brad DeLong explains why the plan makes sense.
News about the Obama administrations plans for cuts in weapons systems is starting to leak out.
Two defense officials who were not authorized to speak publicly said Gates will announce up to a half-dozen major weapons cancellations later this month. Candidates include a new Navy destroyer, the Air Force’s F-22 fighter jet, and Army ground-combat vehicles, the officials said.
More cuts are planned for later this year after a review that could lead to reductions in programs such as aircraft carriers and nuclear arms, the officials said.
As a former CIA director with strong Republican credentials, Gates is prepared to use his credibility to help Obama overcome the expected outcry from conservatives. And after a lifetime in the national security arena, working in eight administrations, the 65-year-old Gates is also ready to counter the defense companies and throngs of retired generals and other lobbyists who are gearing up to protect their pet projects.
“He has earned a great deal of credibility over the past two years, both inside and outside the Pentagon, and now he is prepared to use it to lead the department in a new direction and bring about the changes he believes are necessary to protect the nation’s security,” said Geoff Morrell, the Pentagon press secretary.
Gates is not the first secretary to try to change military priorities. His predecessor, Donald H. Rumsfeld, sought to retool the military but succeeded in cancelling only one major project, an Army artillery system.
Former vice president Dick Cheney’s efforts as defense chief under the first President Bush, meanwhile, are cited as a case study in the resistance of the military, defense industry, and Capitol Hill. Cheney canceled the Marine Corps’ troubled V-22 Osprey aircraft not once, but four times, only to see Congress reverse the decision.
The article highlights the difficulties Gates and Obama will face as they try to cancel these unnecessary and ridiculously expensive programs. This time we’re in the middle of a financial crisis, and Republicans have been howling about spending, so now Obama will be able to turn the tables on them.
Gates’ first showdown looms with a $350 million–a–pop fighter jet. He has to decide by March 1 whether to add more F-22 Raptor fighters to the 183 purchased by the Bush Administration. For years, the Air Force has wanted to double the fleet, while Gates has made clear that he thinks 183 is sufficient. A month ago, some Air Force officials were saying privately that maybe 60 more F-22s would suffice. The Pentagon’s acquisition boss, John Young, recently detailed why more F-22s might be a poor investment. The F-22s that exist are ready to fly only 62% of the time and haven’t met most of their performance goals. “The airplane is proving very expensive to operate, not seeing the mission-capable rates we expected, and it’s complex to maintain,” Young said. Besides, he added, the Air Force plans on spending $8 billion to upgrade most of the F-22s it already has.
Gerardo brought you Jon Stewart’s skewering of the know-nothing know-it-alls over at CNBC. While most of the CNBC personalities wisely kept their mouths shut, Jim Cramer called foul, saying that Stewart’s claim that Cramer said to buy Bear Stearns stock days before it collapsed was false.
Okay, so Cramer didn’t give a “buy” recommendation in the original video, but five days later he basically gave it a “hold” recommendation and seven weeks before it collapsed he literally asked people to go out and buy Bear Stearns stock.
So then Cramer goes around to the NBC shows — “The Today Show,” “Morning Joe,” etc. — and badmouths Stewart…for what? Calling him out?
Jim, here’s some free advice: Don’t get into a war with Jon Stewart. You’re just going to lose. He’s funnier than you, has better researchers than you do, but mostly…he’s right. You are supposed to be one of the nation’s leading financial experts and you didn’t see this financial collapse coming. Anytime that someone suggested a market downturn, he was shouted down on CNBC and every other financial network out there.
So my advice to you is to take your lumps and move on. Starting a feud with Stewart is only going to give him more ammunition to roll clips of you making a horrible recommendation (or several horrible recommendations). Stock market bubbles start because guys like you create a false sense of urgency and security. But every single time the market has a steep rise, there is some sort of correction, and this one is/was worse than most.
I know your first instinct is to defend yourself. But you were wrong about Bear Stearns and countless other stocks over the past few months. Quit grousing about someone calling you out for not doing your job. Get over it.
I’ve been stunned by what I’ve been seeing on CNBC. After most of the clowns on this networks completely missed the financial crisis, we have them lecturing the Obama administration about its efforts to dig us out of this mess and address long-term problems like health care and energy.
Rick Santelli has received the most press with his idiotic rant, but Jim Cramer has pushed the envelope on irresponsible rhetoric, calling Obama “Lenin” and saying he wants to destroy capitalism. This over-the-top rhetoric is absurd, particularly when you watch the video below. Cramer has been so spectacularly wrong about the banks that he looks like a complete fool now.
While conservatives are having heart attacks over the prospect of the government helping sick people, Barack Obama is cleaning up the mess left over by President Bush and the Republicans.
The contracting process in Washington is a disgrace, wasting billions of dollars every year. The war-profiteering in Iraq was particularly bad, and the process for building weapons systems is completely out of control.
With that backdrop, Obama announced that the old ways of doing business in Washington are over.
President Barack Obama on Wednesday ordered an overhaul of the way the U.S. government awards contracts for private sector work, reversing a Bush administration policy that in some cases led to federal investigations of procurement practices and no-bid contracts.
Obama joined Republican Sen. John McCain, his presidential campaign rival, and other congressional figures to announce an executive memorandum that commits his administration to a new set of marching orders for awarding contracts. Obama said “the days of giving government contractors a blank check are over” and said changes could save up to $40 billion a year.
One area in particular that is targeted is no-bid contracts, which the administration is seeking to change so that there will be more competition for government-paid work.
“Even if these were the best of times, budget reform would be overdue in Washington,” Obama said.
Obama’s presidential memo changes government contracting procedures. It directs Peter Orszag, director of the White House Office of Management and Budget, to work with Cabinet and agency officials to draft new contracting rules by the end of September. Those new rules, White House aides say, will make it more difficult for contractors to bilk taxpayers and make some half-trillion dollars in federal contracts each year more accessible to independent contractors.
“We will stop outsourcing services that should be performed by the government and open up the contracting process to small businesses,” he said. “We will end unnecessary no-bid and cost-plus contracts that run up a bill that is paid by the American people. And we will strengthen oversight to maximize transparency and accountability.”
The new administration argued that its Republican predecessor’s contract spending had doubled to more than $500 billion over the last eight years.
Having McCain join Obama on this is huge. He and Obama don’t get along on many issues, and McCain recently scolded Obama over his unwillingness to take on earmarks. But McCain has been a tireless advocate of cleaning up the mess in government contracting. Hopefully this signals true bi-partisan cooperation. It is much easier to afford necessary government programs when we don’t waste money.
Expectations were justifiably pretty low for Treasury Secretary Timothy Geithner based on his prior performances, but I’ve been impressed with his testimony today as he explains the Obama administration’s budget in front of the House Ways and Means Committee. He has complete command of the issues, and he has been able to explain the strategy behind the plan.
The Obama administration needs effective surrogates to sell the President’s economic plan, and Geithner’s testimony today suggests he will be more effective than he was in the past.
President Barack Obama has been vague about details of his healthcare reform efforts, but he provided a hint on Monday of one direction he could take — community health centers.
As he announced the nominations of his two top health executives, Obama highlighted the allocation of $155 million to 126 community health centers as part of the $787 billion economic stimulus package.
“These health centers will expand access to care by helping people in need — many with no health insurance — obtain access to comprehensive primary and preventive health care services,” Obama told a news conference.
“That helps relieve the burden on emergency rooms across the country, which have become primary care clinics for too many who lack coverage — often at taxpayer expense.”
The Health and Human Services Department said the money would create 5,500 new jobs and help provide health care to an estimated 750,000 low-income Americans.
Gary Pickens, chief research officer for the Healthcare business of Thomson Reuters, a division of Thomson Reuters Corp, agreed the centers relieve overburdened hospitals.
“Hospitals currently have overcrowded emergency departments and would probably prefer to see care given in more appropriate settings for conditions that don’t require hospitalization,” Pickens said in a telephone interview.
This addresses one of the most pressing problems facing our health care system. Emergency rooms are overcrowded, as too many Americans without health insurance rely on them for care. Community health centers can help handle many of these cases, and they provide better care as they are organized to handle primary health services as opposed to emergencies.
More money is on the way.
“Over the next two years, a total of $2 billion in Recovery Act funding will be invested in Community Health Centers to support renovations and repairs, investments in health information technology, and critically needed health care services,” HHS said in a statement.
These are the types of “investments” that contribute to the common good. It attacks the inefficiencies in the current system while improving the quality of care.
We will be hearing many stories like this one over the next several years.
When Rita Bryer sees 300-foot-tall wind turbines sprouting up from the prairie near her home in western Oklahoma, she can’t help but wonder about the view from the top, where blades the size of semi-trucks spin.
“Out here, you can see the wind turbines from 10 miles away,” she said. “Think about how far you’ll be able to see when you’re at the top.”
So, partly out of curiosity, partly because she wants to be part of something new, the 51-year-old is leaving behind a career of odd jobs and oil-field work.
She’s going back to school to become a wind turbine mechanic — one who’ll have to scale the turbines to make repairs.
Across the country, people like Bryer are looking to the renewable energy sector in hopes its “green-collar jobs” will offer them stability in this shaky economy. Some are signing up for community college or apprenticeship programs that train students to be wind turbine mechanics, solar panel installers, fuel-cell engineers or energy efficiency experts. Video Watch how the green economy is growing in Pennsylvania »
Government support has rallied excitement for the prospect of a green jobs corps, as President Obama’s stimulus package puts about $20 billion into greening the economy, according to the White House.
n his recent speech to Congress, Obama said the U.S. will double its supply of renewable energy in three years. To do so, he’s calling on a new class of workers to be trained in environmental fields. Green jobs training programs will get $500 million from the stimulus.
The transformation of our energy industry to greener technologies will be critical for our economic recovery along with our national security. The idea is simple – having mechanics and technicians maintaining windmills and installing solar panels here in the United States is better for our economy than having workers working on Saudi oil rigs. The energy is cleaner, more Americans are employed, and American wealth isn’t shipped overseas.
It’s stunning to me that Republicans are ceding these arguments to Democrats.
Paul Krugman has been pretty tough on Barack Obama, but he’s very pleased with the budget.
Elections have consequences. President Obama’s new budget represents a huge break, not just with the policies of the past eight years, but with policy trends over the past 30 years. If he can get anything like the plan he announced on Thursday through Congress, he will set America on a fundamentally new course.
The budget will, among other things, come as a huge relief to Democrats who were starting to feel a bit of postpartisan depression. The stimulus bill that Congress passed may have been too weak and too focused on tax cuts. The administration’s refusal to get tough on the banks may be deeply disappointing. But fears that Mr. Obama would sacrifice progressive priorities in his budget plans, and satisfy himself with fiddling around the edges of the tax system, have now been banished.
For this budget allocates $634 billion over the next decade for health reform. That’s not enough to pay for universal coverage, but it’s an impressive start. And Mr. Obama plans to pay for health reform, not just with higher taxes on the affluent, but by putting a halt to the creeping privatization of Medicare, eliminating overpayments to insurance companies.
On another front, it’s also heartening to see that the budget projects $645 billion in revenues from the sale of emission allowances. After years of denial and delay by its predecessor, the Obama administration is signaling that it’s ready to take on climate change.
And these new priorities are laid out in a document whose clarity and plausibility seem almost incredible to those of us who grew accustomed to reading Bush-era budgets, which insulted our intelligence on every page. This is budgeting we can believe in.
Krugman goes on to explain that cutting the deficit with this plan is definitely plausible. We’ll see how it plays out, but Obama seems to have support from the left.
When Barack Obama kept Robert Gates as Defense Secretary, most liberals were disappointed, and the news media focused on how this might impact Obama’s decisions regarding the wars in Iraq and Afghanistan.
While those issues are certainly important, Obama and Gates will be embarking on a mission to radically change the way the United States purchases military equipment.
But if you are a defense contractor who has enjoyed a decade of bottomless Pentagon funding, it was Gates’ comments about a struggle much closer to home that are keeping you up at night. “The spigot of defense spending that opened on 9/11 is closing,” he said. “With two major campaigns ongoing, the economic crisis and resulting budget pressures will force hard choices on this department.”
Gates, the U.S.’s 22nd Defense Secretary, has declared a low-key war against the military services and the way they develop and buy the weapons they use to defend the nation. Up until now, he has done that mostly by jawboning: The U.S. can’t “eliminate national-security risks through higher defense budgets, to do everything and buy everything,” Gates says in the latest issue of Foreign Affairs. That futile quest has led to weapons that “have grown ever more baroque, have become ever more costly, are taking longer to build and are being fielded in ever dwindling quantities.”
But his war of words is about to become very real. As he prepares a budget for next year, Gates must decide the fate of a number of fantastically expensive weapons programs the military services say they need. He can’t fund them all–and might be wise to take a knife to them all. In this, Gates has little choice: the military’s annual budget has finished growing, and the billions it once imagined it might spend on future weapons have evaporated. So cuts–and big ones–are coming, and Gates will be the man who makes them.
Though Gates was hired by George W. Bush to clean up the mismanaged wars in Iraq and Afghanistan, Gates’ greatest legacy may come in what he calls a “strategic reshaping” that better outfits the U.S. military to wage coming wars. Future weapons buys must “be driven more by the actual capabilities of potential adversaries,” Gates told Congress a few weeks ago, “and less by what is technologically feasible given unlimited time and resources.” Pentagon procurement, he said, is plagued by a “risk-averse culture, a litigious process, parochial interests, excessive and changing requirements, budget churn and instability and sometimes adversarial relationships within the Department of Defense.”
With the release today of Barack Obama’s budget outline, we’re seeing that Obama and Gates are serious about these changes. You’re also hearing Obama talk about how we can’t afford any more “Cold War” weapons systems.
The articles linked above is worth a read. It discusses specific weapons systems, and the stunning costs associated with systems that we no longer need and may be obsolete in a world where inexpensive drones can do the job of piloted planes.
This will not be an easy fight. The problem is that Congress often overrides the needs and requests of the military. Many conservative Senators will scream about wasteful spending, but then they will defend grossly expensive weapons systems if it affects jobs in their districts. Democrats do the same thing.
Based on the “Cold War” rhetoric, it looks like Obama is ready for a fight. He should bring along enough Democrats, especially if they have to choose between health care and these weapons systems.
I’m listening to Obama’s remarks as he closes his Fiscal Responsibility Summit, and it’s rather stunning to see an interactive session that includes the President, and other leaders of our government like John McCain and Steny Hoyer. It was particularly interesting to hear John McCain speak and be supportive of the Obama Administration’s goal to get control of the military procurement process.
When looking at the list of attendees, it seems clear that Obama is serious about his goal to address the serious fiscal issues facing this nation. We are wasting billions of dollars with an inefficient health care system and wasteful weapons programs.
There seems to be some consensus on the potential of cutting corporate tax rates in exchange for closing loopholes.
Coupled with Obama’s aggressive, and honest, budget proposal, this might help generate some serious momentum for fiscal discipline.
David Brooks laments the harsh reality that the bank, auto and mortgage bailouts are rewarding too many people for stupid behavior. Yet, if we want to stop the downward spiral, we have no choice.
It makes sense for the government to intervene to try to reduce the oscillation. It makes sense for government to try to restore some communal order. And the sad reality is that in these circumstances government has to spend money on precisely those sectors that have been swinging most wildly — housing, finance, etc. It has to help stabilize people who have been idiots.
Actually executing this is a near-impossible task. Looking at the auto, housing and banking bailouts, we’re getting a sense of how the propeller heads around Obama operate. They try to put together programs that are bold, but without the huge interventions in the market implied by, say, nationalization. They’re balancing so many cross-pressures, they often come up with technocratic Rube Goldberg schemes that alter incentives in lots of medium and small ways. Some economists argue that the plans are too ineffectual, others that they are too opaque (estimates for the mortgage plan range from $75 billion to $275 billion and up). Personally, I hate the idea of 10 guys sitting around in the White House trying to redesign huge swaths of the U.S. economy on legal pads.
But at least they seem to be driven by a spirit of moderation and restraint. They seem to be trying to keep as many market structures in place as possible so things can return to normal relatively smoothly.
And they seem to understand the big thing. The nation’s economy is not just the sum of its individuals. It is an interwoven context that we all share. To stabilize that communal landscape, sometimes you have to shower money upon those who have been foolish or self-indulgent. The greedy idiots may be greedy idiots, but they are our countrymen. And at some level, we’re all in this together. If their lives don’t stabilize, then our lives don’t stabilize.
There will be those who gripe about this and try to whip up anger and opposition to the administration’s efforts, but they won’t offer practical alternatives. They might call for the banks, automakers and homeowners to go bankrupt, but they probably don’t mean it. If they do, it probably means they have no clue of how bad it can get if they get their wish.
This makes sense. There’s no reason to force moderate Democrats to vote for the Employee Free Choice Act, otherwise known as Card Check, before the Senate tackles it. The real fight will be in the Senate.
Blue Dog Democrats in the House have asked House Dem leaders to postpone a vote on the Employee Free Choice Act until after the Senate votes on it, and the Democratic leadership has agreed, a senior House Dem aide tells me.
The discussions are likely to disappoint some in the labor movement, who see Employee Free Choice as their top priority and had hoped the House would act quickly and pass a strong bill before the Senate passes a weaker version. Proponents and foes of the measure alike say the Senate is expected to be the major battleground over the bill because of the tight Dem majority.
I think we might see a compromise here. Labor wants their bill, but it will be very difficult to get it through the Senate. That said, the current rules are stacked in favor of employers. There’s plenty of room to craft a compromise that makes it easier for unions to organize yet doesn’t go as far as this proposal.
The unsold cars and trucks piling up at dealerships and assembly lines as consumers cut back and auto companies scramble for federal aid are just one sign of a major problem hurting the economy and only likely to get worse.
The only way to stop the downward spiral is to boost demand. That’s the point of the stimulus package.
The world is suddenly awash in almost everything: flat-panel televisions, bulldozers, Barbie dolls, strip malls, Burberry stores. Japan yesterday said its economy shrank at an 12.7 percent annual pace in the last three months of 2008 as global demand evaporated for Japanese cars and electronics. Business everywhere are scrambling to bring supply in line with demand.
Downsizing can be tricky, though. No one knows how much worse the economy will get, and while everyone waits for the recession to peter out, businesses are grappling with how to cut costs and survive without sabotaging their ability to grow when the economy picks up.
And there is a lot to cut.
“There is over-capacity in everything,” from “retail to manufacturing to housing,” said Richard Yamarone, chief economist at Argus Research. “If capacity is too large, you don’t need that many people employed, which is another reason we’re seeing such high job losses.”
As long as capacity far outstrips demand, businesses have little reason to expand, buy new equipment or hire workers. Even if the government funds bridge repairs and banks step up lending, many industries still have to go through massive restructuring before growth can resume. But executives say they have to tread carefully. If they put off critical investments in technology or research for too long, they could hobble their recovery and even the economy’s.
Alan Greenspan deserves some credit for admitting to Congress last year that he made mistakes in not foreseeing the mortgage crisis, but his latest statements in a CNBC documentary, “House of Cards,” suggests he still has not come to terms with the full extent of his failure on the issue.
Alan Greenspan, the former chairman of the Federal Reserve, told CNBC in a documentary to be shown Thursday night that he did not fully understand the scope of the subprime mortgage market until well into 2005 and could not make sense of the complex derivative products created out of mortgages.
“So everybody in retrospect now knows that that boom was developing under the markets for quite a period of time, but nobody knew it,” Mr. Greenspan told CNBC’s David Faber. “In 2004, there was just no credible information on that. It wasn’t until we got well into 2005 that the first inklings that that was developing was emerging,” he said.
Mr. Greenspan’s critics have argued that the former Fed chairman expanded the money supply well beyond the growth in the nation’s gross domestic product by keeping interest rates too low for too long.
The Fed’s “easy money” policy created an excess of cash that inflated equity and asset prices, leading to both the technology bubble of the late 1990s and the housing bubble in this decade.
While Mr. Greenspan acknowledges that he could have done something to avert the housing crisis, he contends his hands were tied.
“If we tried to suppress the expansion of the subprime market, do you think that would have gone over very well with the Congress?” Mr. Greenspan said. “When it looked as though we were dealing with a major increase in home ownership, which is of unquestioned value to this society — would we have been able to do that? I doubt it.”
Mr. Greenspan said that if he had taken steps to prevent the crisis, the outcome would have been painful.
“We could have basically clamped down on the American economy, generated a 10 percent unemployment rate,” he said. “And I will guarantee we would not have had a housing boom, a stock market boom or indeed a particularly good economy either.”
This is a complete cop out on the part of Greenspan, and shows the danger of brilliant economists who get too immersed in the details. They become obsessed with the data and how it fits into their models, but can’t step back to see problems that can be seen by anyone with common sense.
First, the crisis was not limited to sub-prime. It was obvious at the time that many middle-class Americans were buying homes they could not afford, using exotic “interest-only” mortgages. Plenty of experts warned that these could be problematic if the economy turned south, but Greenspan and the administration did nothing. Once Americans started flipping homes like stocks, Greenspan should have known we had a major problem on our hands.
Second, most people understood that there was plenty of fraud in the system. Greenspan goes on to blame the rating agencies, and he’s correct on that front. The rating agencies should be investigated for fraud and gross negligence for their role in this crisis, and Wall Street banks need to be investigated to see just how much they really knew about the mortgages underlying the bonds they were buying and selling.
As for what Greenspan could have done, he’s presenting a false choice that betrays his real concern. He was obsessed with keeping economic growth going, and he suggests that he was concerned that any intervention here could have killed the party.
Well, the party has certainly ended, and the damage is staggering. By 2006 it was obvious that we had a real estate bubble. Greenspan helped to cause it with his loose money policy, and he did nothing to stop it once it became obvious we had a problem.
At this White House there’s no time to settle in. Even as their wall art sat in bubble wrap, Obama’s economic team was pushing through Congress the most expensive emergency spending package in the nation’s history. And they were helping Treasury Secretary Timothy Geithner craft his own sweeping plan to rescue the nation’s banking and housing sectors, phase two of a $700 billion effort launched by his predecessor, Hank Paulson.
That’s just the start. The team is fast at work on health-care reform, energy independence, vast changes in banking regulations, and the possibility of a “grand bargain” to curb entitlement costs that envisions historic sacrifices on both sides of the aisle: Republicans supporting tax increases and Democrats conceding to benefits cuts. “This is not a small-ball President,” says Summers, Obama’s top economic advisor and chair of the National Economic Council. “He wants to take on the large issues.”
There is a breadth and breathlessness to these under-takings, a frenzy of policymaking that will shape the contours of America’s economic future. Top Obama advisors who talked (often as they walked) with Fortune in early February put a premium on speed – speed to catch the right moment to turn around a deepening recession, speed to take advantage of this moment of crisis to put in place a Democratic vision of government’s role, speed to pass major legislation while the President is riding high in the polls. Obama’s White House has been endlessly compared to Lincoln’s team of rivals, or J.F.K.’s best and brightest. But we might also toss in the image of Sandra Bullock trying to control a runaway busload of passengers before the bomb goes off. (That scene was of course from the movie – “Speed.”)
It’s becoming clear that the upcoming budget will drive home Obama’s desire to pursue a very ambitios agenda.
The President’s first budget, expected to be unveiled by budget director Peter Orszag within weeks, will chart much of the administration’s ambitious course beyond stimulus and TARP – and it will be a document that Obama’s own shop, not Congress, produces. “In his budget the President is going to lay down markers around his seriousness on all the major issues,” notes Summers.
It’s likely that the decisions and debates on these issues – ranging from health-care reform to what government programs should be cut to ease the deficit – will keep on coming at Congress at mind-numbing speed. The President wouldn’t have it any other way.
I’m anxious to see which cuts they will be proposing. Our current budget is littered with programs that waste money, from farm subsidies, unnecessary weapons systems and much of the war on drugs. It’s also littered with tax loopholes bought by lobbyists, along with ridiculous restrictions preventing the government from negotiating bulk prices for drugs purchased by Medicare. If Obama can offer some serious cuts here, he’ll gain considerable credibility in his attempt to reorder the priorities of the nation.
On a day when all of Washington was grappling with the collapse of the American economy, President Barack Obama desperately needed some good news. And he got it from Intel CEO Paul Otellini, who was in town to announce that his company, which makes microprocessors for personal and business computing, would spend $7 billion over the next two years to build advanced manufacturing facilities in Oregon, Arizona and New Mexico.
So grateful was the president for this bit of private-sector economic stimulus that he called Otellini at his hotel room to congratulate him. And he took advantage of the call to do a little lobbying, asking for Otellini’s support in the debate over the economic stimulus package.
It was Otellini’s first conversation with the president, and he was impressed. “He’s very quick,” Otellini said. “He’s a natural.”
Otellini supports the stimulus plan, and that’s also a plus for Obama.
Given the horrible news coming from tech giants like Cisco, this news from Intel is even more important. Many of the tech giants are sitting on piles of cash, so hopefully we’ll see more investments.
Some have observed that President Obama’s Inaugural Address didn’t meet his high standards for powerful speeches. Yet other have noted that Obama wanted to stress the need to get serious about the problems facing our nation. It was time to get to work.
Joe Klein points out that Obama has continued with this tone during his first week in office.
Just as he could have opted for the adrenaline rush of grand rhetoric in his Inaugural Address but didn’t, he could have turned any of the profoundly serious actions of his first week into a whiz-bang photo opportunity. He could have planted solar panels and a wind turbine on the White House roof or blasted the Bush Administration as he signed an Executive Order banning torture or lacerated the bankers who got us into the economic mess. But that’s not his style, apparently. He has reversed the tactical, win-the-news-cycle sensibility of recent presidencies. During his first week in office, at least, he opted for strategy and substance over showbiz.
Which is not to say there weren’t symbolic gestures. But the groups Obama lavished his attention on were an unlikely bunch: diplomats, Muslims and Republicans. The gestures involved a geographic humility that was a clean break from the presidential past: he went to the State Department, to the Capitol, and appeared on the Al Arabiya television network before granting an interview to any of the American channels. In each case, the gesture was made more for its long-term effect than its short-term bang.
The President visited the State Department on his second full day in office to send a message: diplomacy will now take precedence over military force in U.S. foreign policy — and his Administration’s will be a diplomacy of constant, persistent attention to the world’s problem areas rather than slapdash summitry. The occasion for Obama’s visit was the announcement of two special envoys, Richard Holbrooke and George Mitchell, both of whom represent a silent reproach to the Bush Administration. Holbrooke will have the near impossible task of untangling the mess in Afghanistan and Pakistan, a problem exacerbated by recent American inattention to detail in the area. (The deterioration toward chaos in Pakistan, especially, surprised some of the President’s closest aides.)
There is much that needs to be done, and fixing these problems will take time. I suspect that the American people will be patient as Obama demonstrates a willingness to attack these problems in a serious, bi-partisan manner.
