James Pethokoukis

Politics and policy from inside Washington

A limited speech by a constrained president

Jan 28, 2010 15:55 UTC

The White House political team loves comparing Barack Obama to Bill Clinton and Ronald Reagan, predecessors who easily won second terms despite early stumbles in their first ones. But the economic and fiscal pincers which constrain Obama are much tighter. None of the president’s proposals in Wednesday’s State of the Union speech can do much to free him.

Obama said high unemployment would be his number one focus this year. No wonder, as it is the issue of most concern to voters, and the biggest reason their support for the president and Congress is falling.

The president made some proposals — money for small business lending and a tax credit for hiring — which may help at the margins. But the new initiatives would probably cost around $100 billion, a fraction of the $300 billion or so in stimulus spending so far, which has not prevented the unemployment rate from climbing to 10.0 percent currently from 7.7 percent at the start of 2009. Good luck finding an economist — even inside the Obama administration — who has great expectations from the proposed new spending.

On unemployment Obama is falling behind his comeback predecessors. As it is, the Congressional Budget Office predicts unemployment will remain close to 10 percent heading into 2011, a forecast echoed by many private economists. By contrast, the first full year of the Reagan recovery in 1983 saw unemployment fall by 2.5 percentage points, while Clinton inherited a growing economy and a falling jobless rate.

And don’t forget the moribund housing market. A new piece of analysis from Goldman Sachs concludes that “recoveries from post-bust recessions tend to be more sluggish than normal and substantial excess capacity generally remains for some time.”

Looking at the political damage caused be high joblessness, Obama would no doubt have preferred to announce something bolder. The liberal Economic Policy Institute has a $400 billion plan that takes in everything from tax credits to government make-work positions. (And major cuts in investment and corporate taxes are out of the question with this administration.)

But that price tag doesn’t go with the double-digit deficit, which spooks financial markets and independent voters. Obama nodded in their direction with a proposed idea-seeking commission and a very limited three-year spending freeze. While not exactly a frugal Hooverite response, it’s not exactly New Deal II, either.

In the end, it was a limited agenda outlined by a constrained president — constrained by the loss of a Senate supermajority, constrained by the Scott Brown win in Massachusetts, constrained by his own falling popularity and constrained by investors whom he fears are reaching their debtload tolerance.

So not a reboot but a slow retreat. The reboot may come next January if the sour economy costs Democrats their dominance of Congress. I didn’t even think Obama’s heart was really in the no obligatory bit of Wall Street bashing. There was also an interesting moment in the televised Frank Luntz focus group after the speech. Those folks hated when Obama talked about the economy having turned the corner. They think the recession continues.

So forget Reagan and Clinton.  Given Obama’s economic challenges, one-term Jimmy Carter might be the better historical comparison.

COMMENT

The only constraint on this guy is his radical ideology.

Every time Amerca gets a glimpse, we recoil in horror.

Posted by proreason | Report as abusive

How Obama’s popularity will affect the midterm elections

Jan 7, 2010 14:33 UTC

The good folks at Public Opinion Strategies have an interesting analysis (in chart form!) of the impact of presidential approval ratings on congressional elections:

approval010710

COMMENT

I am happy with Obama. We voted for a President that would do the right thing and bring change to the country and he did. “Change” is bitter medicine that this country needs. Get used to it folks. I rather have a president that will stand up for what’s right then a bunch of inbred conservative that thinks the middle east is some where near Iowa.

Posted by Maddison | Report as abusive

Obama wins Nobel Peace Prize. But he shouldn’t have

Oct 9, 2009 13:34 UTC

My quick thoughts:

1) The complete abdication by the Obama administration on trade should disqualify him from the Nobel Peace Prize. Free trade has lifted hundred of millions out of poverty worldwide and promoted a closer global society. But the Obama White House has been as protectionist as any in memory. Free trade is that the core of  foundation of the post-World War II economic order.

2) Maybe Obama should accept PP on behalf of Reagan (defeating USSR), Bush I (freeing Kuwait), Clinton (free trade) and Bush II (liberating 50m).

3) Certainly with his recessionary economic policies (more taxes, more government, weak dollar), he is not going to win a Nobel for economics anytime soon.

Here is the press release:

The Norwegian Nobel Committee has decided that the Nobel Peace Prize for 2009 is to be awarded to President Barack Obama for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples. The Committee has attached special importance to Obama’s vision of and work for a world without nuclear weapons.

Obama has as President created a new climate in international politics. Multilateral diplomacy has regained a central position, with emphasis on the role that the United Nations and other international institutions can play. Dialogue and negotiations are preferred as instruments for resolving even the most difficult international conflicts. The vision of a world free from nuclear arms has powerfully stimulated disarmament and arms control negotiations. Thanks to Obama’s initiative, the USA is now playing a more constructive role in meeting the great climatic challenges the world is confronting. Democracy and human rights are to be strengthened.

Only very rarely has a person to the same extent as Obama captured the world’s attention and given its people hope for a better future. His diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world’s population.

For 108 years, the Norwegian Nobel Committee has sought to stimulate precisely that international policy and those attitudes for which Obama is now the world’s leading spokesman. The Committee endorses Obama’s appeal that “Now is the time for all of us to take our share of responsibility for a global response to global challenges.”

COMMENT

@ nonono:

Sure,, but those are regulated by the Norwegian govt. Our govt has ripped our pants off and held our head while their corporate pals take a turn at our ass.
Ever been there? I have. They receive good telecom service and never pay for incoming calls. I know this because I was laughed at for the American cellular service I was using. Telecoom technology isn’t the only thing we get shafted on in America.

Posted by Unemployed | Report as abusive
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