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Monday, November 15, 2010

Paul Krugman: The World as He Finds It

Does Obama have the ability to take a stand, and then fight to hold his ground?:

The World as He Finds It, by Paul Krugman, Commentary, NY Times: On Wednesday David Axelrod, President Obama’s top political adviser, appeared to signal that the White House was ready to cave on tax cuts — to give in to Republican demands that tax cuts be extended for the wealthy as well as the middle class. “We have to deal with the world as we find it,” he declared.
The White House then tried to walk back what Mr. Axelrod had said. But it was a telling remark...
In retrospect, the roots of current Democratic despond go all the way back to the way Mr. Obama ran for president. Again and again, he ... promised to transcend ... partisan divisions. ... But the real question was whether Mr. Obama could change his tune when he ran into the partisan firestorm everyone who remembered the 1990s knew was coming. He could do uplift — but could he fight?
So far the answer has been no.
Right at the beginning of his administration, what Mr. Obama needed to do, above all, was fight for an economic plan commensurate with the scale of the crisis. Instead, he negotiated with himself before he ever got around to negotiating with Congress, proposing a plan that was clearly, grossly inadequate — then allowed that plan to be scaled back even further without protest. And the failure to act forcefully on the economy, more than anything else, accounts for the midterm “shellacking.”
Even given the economy’s troubles, however, the administration’s efforts to limit the political damage were amazingly weak. There were no catchy slogans, no clear statements of principle; the administration’s political messaging was not so much ineffective as invisible. ...
And things haven’t improved since the election. Consider Mr. Obama’s recent remarks on two fronts.
At the predictably unproductive G-20 summit meeting in South Korea, the president faced demands from China and Germany that the Federal Reserve stop its policy of “quantitative easing”.... What Mr. Obama should have said is that nations’ running huge trade surpluses — and in China’s case, doing so thanks to currency manipulation on a scale unprecedented in world history — have no business telling the United States that it can’t act to help its own economy.
But what he actually said was “From everything I can see, this decision was not one designed to have an impact on the currency, on the dollar.” Fighting words!
And then there’s the tax-cut issue. Mr. Obama could and should be hammering Republicans for trying to hold the middle class hostage to secure tax cuts for the wealthy. He could be pointing out that making the Bush tax cuts for the wealthy permanent is a huge budget issue — over the next 75 years it would cost as much as the entire Social Security shortfall. Instead, however, he is once again negotiating with himself, long before he actually gets to the table with the G.O.P.
Here’s the thing: Mr. Obama still has immense power, if he chooses to use it. At home, he has the veto pen, control of the Senate and the bully pulpit. He still has substantial executive authority to act on things like mortgage relief — there are billions of dollars not yet spent, not to mention the enormous leverage the government has via its ownership of Fannie and Freddie. Abroad, he still leads the world’s greatest economic power — and one area where he surely would get bipartisan support would be taking a tougher stand on China and other international bad actors.
But none of this will matter unless the president can find it within himself to use his power, to actually take a stand. And the signs aren’t good.

    Posted by on Monday, November 15, 2010 at 01:18 AM in Economics, Politics | Permalink  Comments (89)


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