President Obama has a need to further stimulate the economy.
But does the economy really need more Obama-styled stimulation?
Speaking in Paris, France this past week, Christina Romer, head of the White House Council of Economic Advisers noted that "It would be wrong to tighten fiscal policy immediately, as that would nip the nascent economic recovery in the bud.” During a week when President Obama was busy raising campaign cash for Senator Barbara Boxer in San Francisco, taking photos with the Duke University basketball team at the White House, lunching with Bill Clinton, and – yes – holding his first press conference in ten months to talk about the gulf oil spill, Ms. Romer traveled to Europe as the President’s representative to the annual meeting of the Organization for Economic Cooperation and Development, a 31-nation watchdog that includes the world's richest economies.
While there, Ms. Romer astutely observed that “unemployment is still painfully high,” and that "nothing would be more damaging than a protracted recession that brought about permanent high unemployment.” She further noted that the President was planning “further targeted fiscal actions” to stimulate the U.S. economy, after the President’s current economic stimulus plan “winds down” next year.
Ms. Romer’s remarks, innocuous and non-substantive as they were, nonetheless were consistent with the Obama Administration’s overall public posture on the economy. Yet her comments also serve as an additional reminder of two extremely important truths – truths that at times seem all but forgotten, in the midst of the ongoing economic hardship.
For one, President Obama’s “need” to stimulate the economy, and the genuine needs of the economy itself, are not the same thing. Elected politicians like the U.S. President generally always have an immediate need to appear as though they’re doing something constructive, and to make people feel good about the economy (or at least as good as they possibly can) right here, and right now.
In the past sixteen months, Mr. Obama’s immediate, short-term political need has produced a lot of public policy that positions the President to appear as though he’s rescuing people – rescuing them from the economic downturn, from “greedy bankers” and “rich executives,” from the threat of home foreclosure, from credit card debt, and so forth. And part of the political calculus involved with this kind of policy is the assumption that as long as the President gives away enough “things” to the American electorate, and appears as though he’s doing enough to “protect” them, the electorate will continue to vote for him and his party, regardless of what the economy does. This is a big gamble, to be sure, but we don’t know yet if the President’s approach will produce either political or economic success (he could up with both, neither, or one without the other).
Thus, it is presumed, everything that President Obama seeks to do with our nation’s economic resources is for the good of everybody, done out of the benevolence of his heart. A government take-over of General Motors and Chrysler? That was done only for the sake of “saving American jobs,” right? Except that the President violated U.S. bankruptcy laws with the ways in which his Administration forced Chrysler’s secured creditors to accept pennies on the dollar as a bankruptcy “settlement” (among the secured creditors were a retirement fund for school teachers and police officers in the “red state” of Indiana), and our tax dollars are continuing to subsidize both companies even when they’re not selling adequate numbers of cars to make ends meet.
And nationalized healthcare was all about Obama blessing us with goodness, right? Well, Obamacare is so good that over half the states in our union are suing the federal government to prevent the implementation of the President’s “plan,” and nearly 70% of the American electorate now wants it repealed.
It probably doesn’t even cross Christina Romer’s mind (or Barack Obama’s, for that matter) that the constant extension of federal unemployment benefits (that have now been “extended” in some states for over two years), the likes of which she was advocating in Paris last week, might actually be giving people a dis-incentive to get back to work. But that leads us back to “truth number one,” which I’ll state here in a slightly different way: good politics does not always amount to good economic policy.
May America elect to “stop the stimulus” – before it kills us all.