Obama’s Economic Choices Frustrate Right-of-Center Supporters

Obama’s Economic Choices Frustrate Right-of-Center Supporters


Over at The Atlantic, Megan McArdle supported Barack Obama’s candidacy because of his economic team. Now, she worries that support may have been misplaced. Namely, she thinks Obama’s budget numbers are insane (her words) and the stimulus package was far too ideological.

The budget numbers are just one more blow to the credibility he worked hard to establish during the election. Back then, people like me handed him kudoes for using numbers that were really much less mendacious than the general run of candidate program promises. Now, he’s building a budget on the promise that this recession will be milder than average, with growth merely dipping to 1.2% this year and returning to trend in 2010. Isn’t there anyone at BLS who could have filled him in on the unemployment figures, or at Treasury who could have explained what a disproportionate impact finance salaries have on tax revenue? These numbers . . . well, I can’t really fully describe them on a family blog. But he has now raced passed Bush in the Delusional Budget Math olympics.

Remember, McArdle is a fiscal conservative, but she’s no Limbaugh-loving right winger. In fact, she makes the excellent point that one of the problems in Washington is that the non-leftist position is sadly represented by a group of Republicans obsessed with the wrong issues.

It’s therefore frankly more than a little disappointing that the free marketers are represented by Grover Norquist, who trots out conservative boilerplate to the effect that we’re all going to hell because of EFCA and marginal tax rate increases. Republicans will not fight delusional accounting by demonstrating that they’re still tangled up in the Laffer Curve. Growth can still hit 1.2%–or even 3.2%–if EFCA passes. But it manifestly cannot in the middle of an ugly recession.

I think many of us centrist types, like McArdle, ended up supporting Obama because we were willing to believe he’d approach the economy from a non-partisan standpoint. But between the leftist agenda items shoved into the stimulus bill, the earmark fest that was the recent spending bill and the budget numbers that are the same kind of wool-over-the-eyes “projections” we have come to expect from the White House, no matter the resident, Obama and his team are leaving the perception that, while they might be a great group of minds, they either lack the political will or the political clout to direct the kind of hard-reality, hard-choice economic policies we really need.

This is not to say Obama’s plans will fail. McCardle’s concerns, like my concerns, might be misplaced. Maybe a leftward agenda, rather than a non-partisan agenda really is the best course. Or maybe it’s the complete lack of a coherent fiscally conservative solution that’s making it too easy for the administration to stick to leftward ideas and/or politics as usual.

As I’ve said before, it’s far too soon to assume Obama’s first 50+ days will define his entire presidency. He has inherited a huge mess and is still learning how to manage congress and present his ideas to the public. Still, those of us concerned with the direction so far can’t keep quiet. Obama needs some nudging from those to his right who share his hopes if not, as of yet, his economic ideas.

  • http://gocerebrum.blogspot.com Jim Atkins

    I share the concern that President Obama’s budget team may be overestimating the speed of recovery of our recession. But if a breakthrough can be reached on the value of “toxic assets” and the hunker down mood of the public begins to loosen, then a more rapid recovery might be possible. If a rapid recovery – a solid uptic in economic activity by early 2010 – doesn’t materialize, then it’s back to the drawing board and a plumeting of the President’s political capital.

  • kranky kritter

    I hear you. For my part, I am giving him a fair amount of latitude because of the colossally trying circumstances. Absent the current trying economic circumstances, I would have looked more askance at deficit spending and democratic goody packing.

    It’s at least possible that the near-unanimity of the GOP in opposing some actions has fostered Obama’s willingness to try and keep democrats on board so that things can get done quickly, instead of having all sorts of initiatives jammed up in food fights. For example , witness his willingness to sign the recent govt appropriations bill with the earmarks in it.

    My sense (and my hope) is that Obama could see that now was a poor time for a timely and contentious fight over earmarks. So he’s gone ahead and said, OK, I’ll let this one go, but we’ll all have to get together and at least rationalize the process for future budgets. I’m OK with that for now. But I am 100% ready to keep score as far as whether he’s really prepared to make an issue of this, instead of just kicking the can down the road.

  • J. Harden

    Obama’s plan is doing absolute wonders for Swiss economy.


    Ah, what’s a few points to the tax rate really hurt?

  • Avinash_Tyagi

    So far his first 50 days give me great hope, remember the second world war was nothing more than a major government stimulus, granted it was for the military, but nothing says that a major stimulus can’t be domestic/social. The problem with the New Deal was it helped, but it wasn’t big enough, the only concern I have is maybe Obama’s initiatives aren’t big enough.

    The concern over leftist agenda stuff and earmarks is misplaced, first off the key is can they generate jobs and spending, and for nearly all the things, the answer is a resounding yes. Arguments of focus and trying to do too much is misplaced as well, in the past it hasn’t been scale of initiatives, but rather an inability to work with congress, even if only your party, that has sunk early presidential initiatives, Carter and Clinton failed by not including congress in their plans, and as a result nothing resulted, Obama has kept congress in the loop, even let them spearhead initiatives, which is good, as long as he and congress work together, things will pass.

    Also the right of center can’t complain, Obama tried to reach out in his early days and was slapped away, now he’s going in his own direction, they have only themselves to blame

  • http://sidewaysmencken.blogspot michael reynolds

    Citibank seems to believe they are healthy now. They have said they don’t need any more TARP money. The market’s moving back up (dammit, I may have missed the bottom.)

    Not dispositive, but interesting straws in the wind.

    Way too early to start losing hope and deciding that Obama’s failed. I mean, Jesus, we gave Bush a lot longer than this on Iraq.

  • Griffin Hoffmann

    I believe Mr.Atkins is spot-on in this assessment: “If a rapid recovery – a solid uptic in economic activity by early 2010 – doesn’t materialize, then it’s back to the drawing board and a plumeting of the President’s political capital.” Obama is rolling the dice big time, and if his gamble doesn’t pay off then he will be rightfully pounded. That being said, given the situation he inherited, ANY action, or non-action for that matter, is a gamble. No potential solution would not appear as a gamble now — the man has no choice but to gamble.

    What I am upset about in regard to Obama’s actions so far are things he does have control over. Namely, earmarks. I respectfully disagree with kk that “now was a poor time for a timely and contentious fight over earmarks”. There is never a poor time to make a stand against earmarks if your goal is honest and accountable governing. Earmarks are a disgrace — that they have been a part of federal fiscal budgeting this long is a slap in the face to taxpayers, and Obama should have stood by his campaign promise to eradicate them, and he should have done so immediately.

    I wish I could buy the defense that, and I’m paraphrasing,”this was the last administration’s budget” and “it will be different when it’s Obama’s budget from the inception”. You’ve got the veto, and I can’t think of a better way to use the veto than to strike down pet projects. To me it smacks of the worst sort of business-as-usual. And it is especially because of the financial crisis we are in now that the earmarks should have been ripped out of the federal budget.

  • SD3

    Maybe a leftward agenda, rather than a non-partisan agenda really is the best course.

    wow. what were the odds of that conclusion?

  • http://sidewaysmencken.blogspot michael reynolds

    J. Harden:

    It’s a puff piece put out by the Swiss to do damage control over the loss of secrecy issue. It’s vapor.

  • http://www.donklephant.com Justin Gardner

    But Michael, I don’t think you understand. You see, Obama is a Democrat and everybody knows that it’s Republicans who know how to run the economy. Why, just look at how well the market has done under Democrats vs. Republicans. I think it’s pretty clear. So giving him absolutely no time to do anything to turn this around makes sense because he’s going to fail anyway. Why delay the inevitable?

    Put a fork in this guy. He’s done.

  • J. Harden

    michael — that is an interesting theory, I handn’t thought of that. Still, the Swiss seem to be doing well in their chocolate-box villages in the Alps. Whether you think this is BS or not, surely you don’t disagree that in a global economy corporations, with multi-national offices to begin with, are going to gravitate toward countries with advantageous corporate tax rates.

  • Dustin

    Concerning the Swiss link; if already tax-sheltered Cayman Island businesses are pulling out of the Caymans and into Swiss territory because they think Obama is going to come after them, are we really losing anything?

  • http://sidewaysmencken.blogspot michael reynolds

    J. Harden:

    There have always been tax expats. Until recently many were touting Ireland for its pro-business tax policy. Sadly, Ireland has fallen and can’t get up.

    Companies stay in the US for the same reason that the Chinese and the Saudis keep their money in dollars: we may be f***ed up, but we’re less f***ed up than most countries, whatever their tax rates.

    Even here in the US you see huge disparities in tax rates. CA has very high income taxes, TX has no state income tax. I’m not seeing Apple, Sony Pictures, Wells Fargo and Google decamping to Texas.

  • kranky kritter

    There is never a poor time to make a stand against earmarks if your goal is honest and accountable governing.

    Sure, if that’s your only or primary goal. Unfortunately for the president, he has to juggle many, many goals, some of them even conflicting goals. And he always has to keep an eye on the amount of political capital he has in his tank. So it’s pretty clear that the simplistic contention that there’s never a bad time fails to speak to the rather obvious point that some times are still better than other times.

    You know what the primary purpose of this bill WAS, right? It was to provide money for the government to operate. It makes a TON of sense to me that Obama chose not to take on congress on this issue right now. Had he done so by something such as a veto, the gov’t funding bill would not have passed in a timely fashion, the government would have faced shut downs over the lack of funding. And across the spectrum, critics would have pointed out what a BAD time it was for such a showdown, given both the various ambitious initiatives the new admin is trying to get off the ground and the fact that the new President is still basically getting all his shiznit together, assembling teams, familiarizing himself with various gov’t mechanics, and so on.

  • Trescml

    I think that Obama will pursue a left of center economic strategy and I don’t think this should be a big surprise given what he promised during the campaign. What I think will moderate some of his intentions is the center-right Republicans and Blue Dog Democrats that will push economic policies more toward the middle. This will be more long term since in the short term the Democrats don’t want Obama to have major legislative failures in his first 100 days.

  • SD3

    …remember the second world war was nothing more than a major government stimulus…

    Avinach_Tyagi, unfortunately that’s a gross mischaracterization of what happened in WWII. When that war kicked off (in Europe) in ’39, the U.S. was selling vast quantities of U.S.-made war materials too all the anti-axis powers: Russia, France, Great Britain, etc. We also were selling millions of barrels of oil to Japan, by the way.

    It was fundamentally different from a stimulus, in that we weren’t borrowing money to pay for things there was no demand for. Half of everything manufactured in the world came from the United States, and it fulfilled a HUGE demand for those products. Great Britain alone, spent herself into poverty buying ships, vehicles & armaments.

    And we didn’t start to run deficits until we joined the war in ’41.

    Today, we are simply creating new dollars out of thin air, and selling them to foreign countries. Once they figure out that our economy is nothing more than a big ponzi scheme, they’re going to stop buying that dollar-denominated debt. Sounds like they’re starting to figure it out: http://online.wsj.com/article/SB123692233477317069.html

    And that’s when the party is going to end.

  • Griffin Hoffmann

    Point taken Kranky, I will admit I get bent way out of shape when it comes to earmarks. But if there is one earmark in next years budget…argh…

  • J. Harden

    Micheal — You might be interested in this article:


    I see Company’s shop states ALL THE TIME for the most business friendly environments.