Why Obama Should Stop Congratulating Himself on America's Economic Progress
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The president's economic initiatives – food stamps, manufacturing, infrastructure, raising the debt ceiling, appointing a new chairman of the Federal Reserve – have mostly ended in either neglect or shambles. After five years, the Obama Administration's stated intentions to improve the fortunes of the middle class, boost manufacturing, reduce income inequality, and promote the recovery of the economy have come up severely short.
Despite this, the president believes he is negotiating his economic agenda with Congress from a position of strength, and almost every speech includes some self-congratulatory note about how far the economy has come.
Most recently, when answering the withdrawal letter of Larry Summers, the former Treasury Secretary and Harvard president who was an unofficially named candidate for chairman of the Federal Reserve, the president claimed that Summers was instrumental to turning the current economy into what the rest of us must have missed: a world of butterflies and unicorns:
Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today.
The kind of progress we are seeing today? The mind boggles: what progress is that?
Here's the litany of failure: the president has not pushed through any major stimulus bill since 2009, and most of that was pork-barrel junk. Manufacturing is weak and weakening; the employment gap between the rich and the poor is the widest on record; the economic recovery is actually more like an extended stagnation with 12 million people unemployed; the housing "recovery" will be stalled as long as incomes are low and house prices are high; and quantitative easing as a stimulus, while a heroic independent effort by the Federal Reserve, is past its due date and is no longer improving the country's fortunes beyond the stock market.
Shall we continue? We don't have a food stamp bill even though 49 million Americans lack regular access to food. Goldman Sachs analysts have said the sequester is taking a toll on stubbornly growing unemployment: "since sequestration took effect in March, federal job losses have been somewhat more pronounced," they wrote last week; and another debt ceiling controversy – the third of Obama's presidency – looms in only a few weeks with the potential to hurt what meager economic growth we can still cling to.
The president could not be more wrong or misleading in the way in which he presents our economic progress. One can perfectly understand economist Dean Baker's horror when he realized, back in August, that Obama's economic team believes it is doing a good job.
It's time to end the delusion that this White House has accomplished even a fraction of what it should be doing to help the economy. It should have been focusing all its efforts on employment, perhaps by boosting job-retraining programs, providing tax incentives for employers or supporting a comprehensive infrastructure effort. Instead, the administration is falling victim to political distractions and lack of follow-through and wasting its meager political capital on the wrong fights.
The latest example is the debacle around Larry Summers. The week leading up to his exit was a rough one, as no fewer than three important senators – Jeff Merkley, Sherrod Brown and Jon Tester – openly stated that they would not vote for Summers when his name came in front of the Senate Banking Committee. Another member of the committee, Elizabeth Warren, was opposed to Summers as well, and two other senators – Dianne Feinstein and Dick Durbin – signed a letter begging Obama to choose someone else.