After two long jobless years, Obama's naive belief that we could spend our way out of the recession remains widely discredited, with little or nothing to show for his efforts but $3 trillion of additional debt.
Now, with federal forecasters, including the Federal Reserve Board, predicting several years of painfully slow economic growth, Obama is abandoning his failed policies and buying into the GOP economic playbook that he has condemned throughout his presidency.
What changed his mind? Certainly the pounding Democrats took in last month's elections represented a massive rejection of his anti-growth economic policies. Worse than that, the realization that the feeble job numbers would not change anytime soon, threatening to make him a one term president.
But the Labor Department's report that the economy had added only 39,000 jobs in November was the killer that finally forced him to cave on his plan to raise taxes on the rich. A report from the Social Security Administration said the private economy would have to produce more than 200,000 jobs a month to lower unemployment to 8 percent or less by 2012. The Fed was even more bearish on the jobs front.
In an interview on CBS's "60 Minutes" Sunday, Fed Chairman Ben Bernanke urged Congress to enact tax cut incentives to boost job growth "by closing loopholes and lowering (tax) rates for businesses and individuals. It would take four or five years for the unemployment rate to fall to 5 or 6 percent -- still far from Bush's 4.7 percent.
But something closer to home also forced Obama to compromise with Republican leaders: Senate Democrats were deserting him left and right on the Bush rate cuts.
When the recent House bill to raise taxes on individuals, families and small businesses came up for a vote in the Senate on Saturday, five Democrats joined with Republicans to kill it: Sens. Joe Manchin III, W.Va., James Webb, Va., Ben Nelson, Neb., Russell Feingold, Wis., and Joseph Lieberman, Conn., an Independent who remains in the Democatic caucus.
Will Obama's p;olicy reversal save his presidency? A turnaround in the economy could win back some of the independents who fled from the Democrats in droves on Nov. 2, but at a cost of losing party liberals who are accusing him of betrayal.
But if the compromise package passes and Obama signs it, the Republicans will get the credit for forcing his hand. Then it's on to the president ial election in 2012 when 23 Democratic Senate seats will be at stake versus only 10 GOP seats. The Republicans may need a gain of just two or three to take control of the Senate, too.
In Honor of His 103rd Birthday, Here Are The 20 Best Quotes From The Late, Great Milton Friedman | John Hawkins