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Friday, December 17, 2010

"The Obama Renaissance"

James Kwak argues that Obama hasn't compromised his principles in recent deals with the GOP -- he was always far more conservative than his supporters were willing to acknowledge:

The Obama Renaissance, by James Kwak: President Obama is enjoying something of a political resurgence, at least among the commentariat. Ezra Klein points out that his approval ratings remain higher than those of his Congressional opposition, as opposed to Clinton in 1994 and Bush in 2006. In The New York Times, Michael Shear says the lame-duck session of Congress could be a “big win” for Obama, and Matt Bai hails the tax cut compromise as “responsible governance” and says it could lead to a successful presidency.
Obama is certainly in a decent position politically, and I would bet on him to be reelected comfortably in 2012. First off, his opponents in Congress are deeply irresponsible (admittedly: “The single most important thing we want to achieve is for President Obama to be a one-term president.”) and face a huge political problem within their own party: a significant portion of the conservative base really does want lower deficits, yet the only thing the Republican caucus knows how to do is cut taxes. ... Second, the Tea Party and Sarah Palin mean that Obama is likely to face an opponent who has been pulled dangerously close to the lunatic fringe during the primary (or, even better yet, Palin  herself). And third, there’s triangulation.
Bai basically parrots the Obama administration’s line: they did the tax cut deal because it was good policy, it would stimulate the economy, and they got a good deal. In other words, it’s not a cynical political tactic, it’s good governance. And as I’ve said before, I think the Obama team may actually believe that, because their idea of good policy was centrist to begin with. ...
So no, I don’t think Obama is abandoning his principles for political advantage; I think these are his principles. And while I’m upset at him, I’m upset at him for being wrong on the policy level, not for abandoning anything or selling out. I think a lot of the bitterness on the left comes from people who thought he was more progressive than he is, and now feel betrayed. As I said in January, I always thought Obama was a moderate who looked like a progressive..., and, as Nate Silver said, “what Obama has wound up with is an unpopular, liberal sheen on a relatively centrist agenda.” What’s happening now, if his good run continues, is he is shedding the liberal sheen and getting a centrist sheen on a centrist agenda. And politically, that’s all good for him. Combine that with his obvious political skills, and the future looks bright for him.

The GOP will do its very best to take ownership of anything positive that comes out of deals with Obama -- they will claim they forced him to do the good things against his and the Democrat's will -- and they will try to pin him with anything negative, real or imagined. In any case, I think the most important question is whether just under two years (until the election) is enough time for labor markets to recover. People won't care much about what happens now, "what have you done for me lately" is the more important consideration, so the condition of the economy around the election is the key factor.

I think two years would be enough time for labor markets to recover if we could expect policy supporting employment along the way. But we are likely to get just the opposite, deficit cutting measures and other policies that work against employment and hence work against electoral success for the Democrats. Toss in a compromise on Social Security that angers the Democratic base, a possibility that cannot be dismissed as Obama follows up on what appears to be a successful move to the center, and the future does not look as bright. Obama may think he is playing the game well now, but the game is far from over.

Update on what's ahead: The failure of the 1.1 trillion dollar omnibus spending bill gives the GOP an opportunity to insist on budget cuts early next year, and they plan to do just that:

Speaker-designate John Boehner (R, Ohio) Friday gave a nod to tea party activists, pointing out that the “untimely death” of Senate Democrats’ $1.1 trillion bill to fund the government through September came on the anniversary of the Boston Tea Party.

Tea party groups led the outcry this week when some Senate Republicans appeared ready to vote for the Senate omnibus... Those activists now may turn their attention to Mr. Boehner and his House colleagues, who have promised to cut about 20% of the federal spending not allocated to the military or entitlement programs, such as Social Security or Medicare.

Those cuts will likely face opposition from Senate Democrats, the Obama administration and interest groups. Mr. Boehner, meeting with reporters Friday, didn’t name any specific programs he’d cut. But he did hint House that Republicans would try to approve the promised cuts as early as January or February, if the Senate passes a stop-gap spending measure that runs out early next year. ...

Asked if they wanted to implement those cuts early next year – or wait until the next fiscal year – Mr. Boehner said: “We’d like to do it as soon as possible.”

That would put an end to any stimulus due to the tax compromise. Stimulating the economy was never the intent of th e GOP when they agreed to the tax compromise, it was all about the estate tax and tax cuts for the wealthy. They will do what they can to decrease government spending over the next two years, starting in January, and if they are successful it will reverse any benefit the economy might have received from the compromise.

    Posted by on Friday, December 17, 2010 at 10:53 AM in Economics, Politics | Permalink  Comments (84)


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