Opinion

Felix Salmon

Are Obama’s policies working?

By Felix Salmon
November 17, 2009

The iq2us website is rather horrible, all flash-based and white-on-black and lacking permalinks, but tonight’s debate was well worth attending all the same. The motion was “Obama’s economic policies are working effectively”, and the interesting thing about it was that it wasn’t a left vs right thing at all.

Proposing the motion we had old-fashioned lefty Larry Mishel, who was joined by Steve Rattner and Mark Zandi. Opposing it were the even more interesting bedfellows of Jamie Galbraith, Eliot Spitzer, and, of all people, Allan Meltzer. An interesting debate was pretty much guaranteed.

The voting was interesting too. At the beginning of the debate, 32% of the audience supported the motion, 29% opposed it, and a very large 39% were undecided. By the end, the undecideds had shrunk to just 12%, the proponents were up to 46%, and the opposition was up to 42%. With an increase of 14 percentage points compared to the opposition’s 13 percentage points, the proposers were named the winners. But it was a very close-run thing, and in my view it was actually the opposition which clearly won the debate, not least because they had by far the best two debaters, in Galbraith and Spitzer.

The arguments for the motion were predictable: things aren’t as bad as they were a year ago, the Obama administration did everything that was politically within its power, and although things are certainly pretty gruesome now, they would be much worse were it not for the administration’s legislation.

The opposition was surprisingly cohesive, given that I can’t imagine Jamie Galbraith and Allan Meltzer ever agreeing on anything. The bailout was an attempt to recreate, at vast expense, the broken status quo ante which got us all into this mess to begin with. Yes, the stimulus and other Obama administration policies were necessary, but they were far from sufficient. And they have overwhelmingly helped the financial-services industry, rather than real Americans, who are still losing jobs at a rate of 200,000 a month.

The revelation was Eliot Spitzer, who was impassioned, fluent, compelling, and clearly enjoying himself. He made some very good points: how come Tim Geithner has managed to get away without ever being forced to justify the decision to pay all of AIG’s counterparties at 100 cents on the dollar? How come no one in the White House seriously pushed for judges to be able to modify mortgages in bankruptcy? How come more effort hasn’t been spent on preventing manufacturing jobs from disappearing, given that once such jobs go, they never come back?

In general, the proponents came across as weak and dry statistics-spewers suffering from a failure of imagination: they couldn’t even conceive of persuading the Democratic Congress to pass anything truly ambitious, even as the opponents were citing precedents from FDR to Reagan. That then prompted Steve Rattner to channel Rahm Emanuel, and accuse Eliot Spitzer, of all people, of being the kind of person who thinks up bright ideas while sitting in the shade at the Aspen Institute.

What’s more, the motion wasn’t whether the current economic policy was the best we could hope for given political realities, it was whether it’s working effectively. And if you’d asked Larry Summers when the stimulus bill was being passed what kind of year-end 2009 unemployment rate would indicate that his policies weren’t working effectively, he would have given a figure much lower than 10.2%. I think we should take him at his hypothesized and counterfactual word. The administration has tried its best, and done some necessary-but-not-sufficient things, but it hasn’t succeeded in its stated aims.

Comments
7 comments so far | RSS Comments RSS

I went from undecided to against, though I can see why more people went to Pro. Galbraith and Meltzer came at their side from opposite sides as far as I could see, and if you found yourself agreeing with one you disagreed with the other. I hadn’t seen Spitzer speak much before, and while he went off topic from the debate’s question, he was still pretty amazing.

The Pro side was a lot less theoretical than Con, though they blamed things on congress a little too easily. As you pointed out, the Dodd bill goes farther than what Geithner’s proposed in terms of regulation.

Not a fan of the audience questions.

Posted by Andrew | Report as abusive
 

It is always easier to criticize the person making the choices than to make the choices. Obama’s policies have definitely worked. When half the people are whining that it is not enough and the other half are whining that it is too much, Obama has definitely found the middle ground. Every month the economy has improved since he has been in office. And yes not declining as fast is an improvement. I’ll bet if you had these guys on a year ago they would all be talking about 20 years before we recover, like almost everybody was. These guys are just criticizing the Quarterback from the sidelines.

Posted by Okieoneshinobi | Report as abusive
 

Maybe Eliot Spitzer, was impassioned, fluent, compelling, and wrong

Posted by Luis Enrique | Report as abusive
 

I found the debate to be rather exciting and the audience questions to be very insightful and on point. I also just went to the site and think it is quite easy to navigate and looks rather striking. I suppose for Reuters an antiquated html site is more befitting of their viewership.

Posted by John Chamberlin | Report as abusive
 

If Obamas policies were to temporarily stabilize the financial sector, to prevent a further meltdown. Yes he has succeeded. To say that Obamas policies by any measure will now turn the economy around is absurd, and short sighted. It was a temporary fix, there is no consistent long term plan, to keep TARP recipient banks afloat. Massive umemployment, rising tarde deficits, low manufacturing, massive foreclosures, continuing decline in real estate values. Commercial lending for small business is at all time lows, as small businesses employ 60 to 80% of our workforce, this is a huge problem.

Temporary fix yes, but to name claim that a temporary stay of execution will be long lasting is an abberation.

Posted by Pvillou | Report as abusive
 

I’d say they aren’t working.

His economic policies helped the financial sector(The autos were saved by Bush), but not Americans working in any other industry. He may claim his stimulus saved x number of jobs, but the cost to save them was much higher than just paying those people their former salary.

His agenda on green energy and healthcare in addition to his non-commitment to Afganistan has been a burden to the economy since employers are unsure how high taxes will be raised.

His social agendas have increased incentives to be unemployed, poor, or working for too little. The increase in government aid for colleges supports the raise in tuition fees, which will keep the economy slow as younger workers have to pay off a loan for a degree that won’t help them get a job.

I will concede that things would probably be worse if he had done nothing (Hoover demonstrated that), but it’d be a different kind of worse that would be easier to fix.

 

I enjoyed most of the debate, but I disagree strongly with your view that the opposition “clearly won the debate.” Nothing could be further from the truth. Excellent points were made from both sides, and I would say that Steve Rattner continually made the best and most concrete points during his time in the debate, and it was perhaps he more than anyone who swayed the results in favor of the pro side. All in all, a very close contest.

I was (as another commenter mentioned) really dissatisfied with the questions from the audience. I had one myself which I didn’t get to ask, and weighing it against those that did find air was very frustrating. I wish that questions could be keyed in somehow and someone in the back would select the best of the questions for the panel to respond to. For the record, my question had to do with the fact that all the discussion had centered on the whether or not Obama’s economic policies were working… from a domestic viewpoint. But that is extremely myopic and perhaps xenophobic. It’s like a fraternity council debating its initiation rituals while the host university is debating whether it can keep its doors open. On the very day that the WSJ reported that China had accused Obama and the U.S. of protectionism and is considering further action in retaliation, to disregard the incredible presence of such “foreign” interests in the equation was just foolish. It makes any conclusion reached as a result of the debate seem pretty academic.

All in all, a close contest, as far as it went. But yes, I felt that the “pro” side did have an edge, which reality was borne out by the vote.

 

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