Presidents generally enjoy a honeymoon both because the public wants their presidents to succeed and because in the early stages of a presidency the mistakes, lies, and screw-ups have not yet materialized. But soon they do. And in the case of this presidency, the non-stimulus plan is proving to be the equivalent of the first serious fight between the newlyweds.
The stimulus plan was bad policy, poorly conceived and oversold. It isn’t working, yet the president insists his policy was perfect. The result now is a surprising agreement between the Left and Right.
On the Left, Bob Herbert chimes in:
Vice President Joe Biden told us this week that the Obama administration “misread how bad the economy was” in the immediate aftermath of the inauguration. Puh-leeze. Mr. Biden and President Obama won the election because the economy was cratering so badly there were fears we might be entering another depression. No one understood that better than the two of them. Mr. Obama tried to clean up the vice president’s remarks by saying his team hadn’t misread what was happening, but rather “we had incomplete information.”
On the Right, House Minority Leader John Boehner calls foul:
I found it … interesting over the last couple of days to hear Vice President Biden and the president mention the fact that they didn’t realize how difficult an economic circumstance we were in. … Now this is the greatest fabrication I have seen since I’ve been in Congress. I’ve sat in meetings in the White House with the vice president and the president. There’s not one person that sat in those rooms that didn’t understand how serious our economic crisis was.
Hmm. We have consensus. And the president has a problem, both on policy and on credibility.
On the policy side of the equation, we have an economy still reeling. Unemployment, consumer and investor confidence, the Dow, and credit delinquency rates reflect that we are far from the end of the recession. As Herbert points out, “The roof is caving in on struggling American families that have already seen the value of their homes and retirement accounts put to the torch.” There will be less consumption and the doldrums will continue so long as unemployment increases. As David Wessel of the Wall Street Journal explains:
In December 2008, forecasters surveyed by the Wall Street Journal predicted the jobless rate would hit what then seemed a very high 8.1% at the end of 2009. Surveyed again this past week, forecasters now anticipate year-end unemployment of 10%. That suggests 775,000 more Americans will join the ranks of the jobless in the next six months. Because most Americans depend on their paychecks for their shopping, a weak job market and lousy wage growth have cast an ominous shadow over consumer spending and the overall economy.
Liberals are clearly getting nervous. Their Keynesian religious-like faith rests on the notion that government spending “creates” economic activity and wealth. So the answer must be: more stimulus!
But the demands for a second stimulus from Herbert, Paul Krugman, and other liberals are falling on deaf ears both in Congress and in the country at large. Even Obama says he’s not interested. Truth be told, we have already spent the money, albeit on something that didn’t work. And now there is no money or political support to do more. We could of course rip up the old plan and start again. But that would be an admission of failure too great for the administration and Democratic Congress to contemplate. It is therefore not surprising that this is precisely what Republicans are suggesting. Minority Whip Eric Cantor was happy to tell voters in an appearance on Fox News:
Let’s remember the context that we took this so-called stimulus bill up in. It was passed almost in the dark of night, 1,100 pages. No one in the House read that bill because the urgency was such that the president said we had to act now and if we acted now, we would stave off job loss and we’d get America back to work. That hasn’t happened. So why is it that we were going about spending nearly $800 billion if we didn’t expect the monies to go out until one, two, three, four years later? That’s not how we should be operating here. We’ve got to stop this bill from going into full effect, and we’ve got to start being smart again and that’s what the House Republican plan would have done.
So we head toward double-digit unemployment and the stimulus becomes a fiscal eye sore, the overstuffed, ineffective symbol of liberal governance. (As Cantor put it on his Saturday weekly radio and internet address, “President Obama has already asked you to borrow trillions, and so far nearly 3 million jobs have been lost this year alone. Simply put this is now President Obama’s economy and the American people are beginning to question whether his policies are working.”)
But worse than the policy problem is the credibility problem. As both Herbert and Boehner point out, the administration has resorted to lying. It is not that the president and his advisors failed to comprehend the magnitude of the economic crisis. It is that they got the solution wrong, and now they refuse to admit the mistake. It may not be long before the Washington press corps start hounding Obama, as they did George W. Bush, to admit “error.”
Yet Obama this weekend declared that the stimulus “has worked as intended” because it has extended unemployment insurance and delivered a one-shot tax rebate. Jaw-dropping statements like that suggest the president thinks the public, media, and his Republican critics won’t recall the promise of “immediate jobs” which accompanied the president’s stimulus sales effort. The whole point of spending a trillion dollars (with interest included) was to keep unemployment below 8%. We could have spent a great deal less simply to extend unemployment benefits.
There is an eerie familiarity about this. A policy well-intended was poorly executed. The results are obvious. The White House insists everything is fine. The public sees a different picture. The result: the president becomes the subject of ridicule and the target of barbs that he simply “doesn’t get it.” Iraq pre-surge? Katrina?
Well yes, one does sense that the White House is on the verge of going to war with reality. And unlike Iraq or a single hurricane, which did not personally impact the lives of every American, the economy does. They can see for themselves what is working and what is not. Average voters, even if still employed, certainly know a family member or friend who is unemployed. They are not fooled and they begin to wonder if the president thinks they are the fools.
Now, the economy may improve on its own. The Democrats in Congress may get lucky and see a recovery in the nick of time before the 2010 election. But they may not be so fortunate. (Wessel notes that “unemployment, up five percentage points so far, could remain in double digits into 2011.”) And then those who devised the stimulus plan and now defend it may take a beating at the polls.
Along the way, the public may come to see the president in a different light. Rather than the antidote to business-as-usual politics and ideologically-driven policies, he may come to embody both. And more importantly, if his policies don’t turn around the economy, the president, who was supposed to bring competency and efficiency to the White House, may come to resemble another one-term bumbler, Jimmy Carter, who resorted to blaming the American people for the stagflation brought on by his economic policies.
The president, like his predecessor, might therefore want to think seriously about a “surge” — an acknowledgment of policy error and a whole new approach to dealing with the nation’s major challenge. It may be the only option to rescue both the economy and his presidency. After all, it was Obama who said in February: “I expect to be judged by results and … I’m not going to make any excuses. If stuff hasn’t worked and people don’t feel like I’ve led the country in the right direction, then — you’ll have a new president.” Precisely so.
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