November 10, 2008
FOOT ON THE GAS.... Not surprisingly, Barack Obama is getting all kinds of advice about how aggressive to be after taking office. A growing number of prominent voices seem to be saying the same thing: err on the side of being bold.
Paul Krugman notes that FDR, early on, wasn't bold enough in responding to the Great Depression, and thinks Obama shouldn't be timid in tackling the ongoing financial crisis.
The economic lesson is the importance of doing enough. F.D.R. thought he was being prudent by reining in his spending plans; in reality, he was taking big risks with the economy and with his legacy. My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent. It's much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little.
In short, Mr. Obama's chances of leading a new New Deal depend largely on whether his short-run economic plans are sufficiently bold. Progressives can only hope that he has the necessary audacity.
Likewise, Fareed Zakaria believes Obama would benefit from being as ambitious as possible.
For the last few weeks, most of the A-list pundits have been arguing that Obama needs to jettison some of his grandiose plans, given the high budget deficits he will inherit and dangers of overreaching politically. Fareed Zakaria argued against this, strongly, and made two crucial points.
One was about the analogy to 1993, when high deficits compelled Bill Clinton to ditch his spending plans. But, as Zakaria noted, Clinton did that in part to bring down interest rates, which were bound to get in the way of a recovery. (This was Robert Rubin's essential argument: Bring down the deficit and the Fed will cooperate with lower interest rates, thereby boosting the economy.) Today interest rates are already low. The same rationale simply doesn't exist. Besides, when interest rates are low, borrowing is cheap. In that sense, this is an ideal time to run deficits, assuming they are temporary.
Zakaria's other argument was about the international economy. One reason you worry about deficits is the loss of confidence it might generate abroad. If foreigners lose faith in the federal government's ability to pay its bills, they could dump their dollars and switch to other currencies. But, as Zakaria pointed out, the rest of the world facing the same economic plight we are; they're all going to be running high deficits in the short- to medium-term. A run on the dollar seems extremely unlikely.
And E. J. Dionne Jr. is on board.
...Reagan offers another lesson: His first moves were bold, and Obama should not fear following his example. The president-elect is hearing that his greatest mistake would be something called "overreach." Democrats in Congress, it's implied, are hungry to impose wacky left-wing schemes that Obama must resist.
In fact, timidity is a far greater danger than overreaching, simply because it's quite easy to be cautious.... President-elect Obama can spend most of his time fretting warily about the shortcomings of past presidents and how to avoid their errors. Or he can think hopefully about truly successful presidents and how their daring changed the country. Is there any doubt as to which of these would more usefully engage his imagination?
Sounds like an audacious consensus is starting to built around the need for a bold presidency.
—Steve Benen 11:15 AM
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On the same note, take a look at my new post at TPM Cafe. Theda Skocpol
Posted by: Theda Skocpol on November 10, 2008 at 11:15 AM | PERMALINK
Not to mention, the whole 'overreaching' thing is basically a pile of BS anyway.
Unlike the Bush agenda, very little of the progressive agenda at the moment resembles any sort of 'goodie bag' for the left. Rather, it's about fixing problems, from our economic crisis to rising health care costs to Iraq to global warming.
There is no 'overreach' with respect to things like this. You either fix them or make headway towards doing so, or you don't.
So in addition to your solutions actually addressing the problems in question, your solutions have to be big enough to be effective.
Posted by: low-tech cyclist on November 10, 2008 at 11:24 AM | PERMALINK
Fareed Zakaria? Isn't he the Tom Friedman Professor of However the Wind Blows Political Expediency?
I seem to remember that he was initially in favor of the Iraq war as well. Feed him to the wolverine's too.
Posted by: Jeff II on November 10, 2008 at 11:32 AM | PERMALINK
And the other thing we need to do is push back, push back, push back against this STUPID MORONIC idea that we are center-right.
We are center-left.
The center-left won the election. Hence we are now center-left.
In the next election, the electorate will give us a grade. Until then, we are center-left.
Posted by: POed Lib on November 10, 2008 at 11:46 AM | PERMALINK
With all due respect to Krugman, Zakaria and Dionne, the most important advice on how and why Obama should "boldly go" comes from Al Gore:
The Climate for Change
By Al Gore
The New York Times
Sunday 09 November 2008
Excerpt:
The inspiring and transformative choice by the American people to elect Barack Obama as our 44th president lays the foundation for another fateful choice that he - and we - must make this January to begin an emergency rescue of human civilization from the imminent and rapidly growing threat posed by the climate crisis.
[...]
Here is the good news: the bold steps that are needed to solve the climate crisis are exactly the same steps that ought to be taken in order to solve the economic crisis and the energy security crisis.
Economists across the spectrum - including Martin Feldstein and Lawrence Summers - agree that large and rapid investments in a jobs-intensive infrastructure initiative is the best way to revive our economy in a quick and sustainable way. Many also agree that our economy will fall behind if we continue spending hundreds of billions of dollars on foreign oil every year. Moreover, national security experts in both parties agree that we face a dangerous strategic vulnerability if the world suddenly loses access to Middle Eastern oil.
[...]
Here's what we can do - now: we can make an immediate and large strategic investment to put people to work replacing 19th-century energy technologies that depend on dangerous and expensive carbon-based fuels with 21st-century technologies that use fuel that is free forever: the sun, the wind and the natural heat of the earth.
What follows is a five-part plan to repower America with a commitment to producing 100 percent of our electricity from carbon-free sources within 10 years. It is a plan that would simultaneously move us toward solutions to the climate crisis and the economic crisis - and create millions of new jobs that cannot be outsourced.
First, the new president and the new Congress should offer large-scale investment in incentives for the construction of concentrated solar thermal plants in the Southwestern deserts, wind farms in the corridor stretching from Texas to the Dakotas and advanced plants in geothermal hot spots that could produce large amounts of electricity.
Second, we should begin the planning and construction of a unified national smart grid for the transport of renewable electricity from the rural places where it is mostly generated to the cities where it is mostly used. New high-voltage, low-loss underground lines can be designed with "smart" features that provide consumers with sophisticated information and easy-to-use tools for conserving electricity, eliminating inefficiency and reducing their energy bills. The cost of this modern grid - $400 billion over 10 years - pales in comparison with the annual loss to American business of $120 billion due to the cascading failures that are endemic to our current balkanized and antiquated electricity lines.
Third, we should help America's automobile industry (not only the Big Three but the innovative new startup companies as well) to convert quickly to plug-in hybrids that can run on the renewable electricity that will be available as the rest of this plan matures. In combination with the unified grid, a nationwide fleet of plug-in hybrids would also help to solve the problem of electricity storage. Think about it: with this sort of grid, cars could be charged during off-peak energy-use hours; during peak hours, when fewer cars are on the road, they could contribute their electricity back into the national grid.
Fourth, we should embark on a nationwide effort to retrofit buildings with better insulation and energy-efficient windows and lighting. Approximately 40 percent of carbon dioxide emissions in the United States come from buildings - and stopping that pollution saves money for homeowners and businesses. This initiative should be coupled with the proposal in Congress to help Americans who are burdened by mortgages that exceed the value of their homes.
Fifth, the United States should lead the way by putting a price on carbon here at home, and by leading the world's efforts to replace the Kyoto treaty next year in Copenhagen with a more effective treaty that caps global carbon dioxide emissions and encourages nations to invest together in efficient ways to reduce global warming pollution quickly, including by sharply reducing deforestation.
I hope that Obama will embrace Gore's proposal -- Obama's campaign rhetoric gives me reason to believe that Obama "gets it", that he recognizes that urgent action and investment to spur the rapid development and deployment of energy efficientcy and clean renewable energy technologies is crucial to both averting climate catastrophe and regenerating the economy, and beyond that, to laying the foundation for the New Industrial Revolution of the 21st Century, and a sustainable, peaceful, prosperous global human civilization that can live in harmony with the rest of the Earth's biosphere, harvesting abundant, free solar, wind and geothermal energy for as long as the sun shines and the wind blows.
Posted by: SecularAnimist on November 10, 2008 at 11:59 AM | PERMALINK
Runners at first and third, no outs and the middle of the order is coming up. Go for the big inning or play small ball? I say swing for the fences!
The wind up, the stretch, the pitch...
Posted by: Stevio on November 10, 2008 at 11:59 AM | PERMALINK
POed Lib - that's the problem. We are "center-left" now, as in that's as far left as the pendulum is going to swing this time. Which means, on average, we're a center-right, or even a "center-right-right" nation now. Because when the people get sick of the Democrats, and they will, the pendulum will swing to the deep, deep right in response.
Obama must act boldly, and must pick his priorities carefully in order to ensure success and end this drifting toward the right over the long term. And of course, to solve the critical problems of the 21st century. Let us not forget how critical energy and global warming are, far overwhelming this admittedly unusually severe downturn in the business cycle. Which needs to be linked to supply side economics. So far, all our efforts - aka bailouts - are just more supply side, fill the pockets of the rich with our money and everything will be fine economics.
We must have bold action by the Obama administration.
Posted by: hark on November 10, 2008 at 12:00 PM | PERMALINK
A high cost strategy to fix the economy is precisely what Reps will attack the most. Obama will have to make a very strong case for doing this. Thankfully we elected him and not someone like Kerry.
Posted by: Danp on November 10, 2008 at 12:02 PM | PERMALINK
I just hope the Democrat party is careful not to overreach.
Posted by: ConcernTroll on November 10, 2008 at 12:02 PM | PERMALINK
Based on some of the statements Obama's making in his speeches and conferences since election day, I don't think that anyone should worry about insufficient boldness.
Obama appears to have two things on his agenda: Kick ass, and chew bubblegum. And bush done chewed up all the bubblegum.
Posted by: osama_been_forgotten on November 10, 2008 at 12:06 PM | PERMALINK
We have spent untold billions trying to get our economy back on track this past year. Yet none of it included job creation, none of it addressed energy source evolution, and none of it actually did much to slow down the downturn!
We have gone from one bail out to the next, with only a few entities actually benefitting.
I still don't think folks realize how f**ked up things are right now. When the State of New York cuts billions from schools next February, a lot of folks will be joining the unemployment lines. To think that we are faced with the unthinkable (midyear budget slashing) is unthinkable.
When the auto industry is screaming for their own bail out, who's next? Shopping malls?
The best we can hope for is for more folks to realize how dismal the outlook is, and then support the new administration.
Obama is faced with having to clean up Bush's mess. Right now, it's a stinking pile of......
We do need to boldly go where no POTUS has gone before!
Posted by: Tom Nicholson on November 10, 2008 at 12:15 PM | PERMALINK
OK, boldness it is.
But it's important for Obama to grab control of the agenda and hang on. Recall, for example, that the Senate GOP cornered Bill Clinton into early action on gays in the military. That didn't end well for anyone except the GOP.
Posted by: Quaker in a Basement on November 10, 2008 at 12:18 PM | PERMALINK
A high cost strategy to fix the economy is precisely what Reps will attack the most. Obama will have to make a very strong case for doing this. Posted by: Danp
I will harp on this from now until inauguration - Obama will have to go to the public frequently to explain and cajole them (their representatives in Congress actually) about what he is trying to do, how he needs their help and, without naming names, hint at partisan or Democratic obstructionists causing problems.
I expect he will have to march as many Ds as Rs to the woodshed in the first year. Unfortunately, for every flat Earth Jesus freak like Brownback, you've got an all-pork all-the-time Dem like Murtha. Neither do anything, ultimately, to help the nation.
Then there are the two mostly useless Congressional leaders . . .
Posted by: Jeff II on November 10, 2008 at 12:20 PM | PERMALINK
Hasn't Obama stated that part of his economic plan is to rebuild the electrical grid/infrastructure? Gore mentions this in his oped and I'm quite certain Obama has stated this as part of his plan to get people back to work.
Here's an anectdote I heard this weekend from a relative. A small bridge over a medium sized river in a nameless town needed replacing. construction began, the bridge was torn down, water diverted to pour concrete and this is where things hit a snag.
The steel needed was not available. Why? I assumed because the chinese are cornering the market.
Nope. Because the special steel needed is all going to uparmor humvees in Iraq.
These are the not so little things going on behind the scenes with our decaying infrastructure because of an illegal war.
I also keep hearing things about government waste and how there is no money to spend and the government should cut back. Last night I saw two teases for upcoming gotcha news stories about local government. I have two questions about this. Why no stories on corporate and financial waste? Also, why are people under the false assumption that government needs to spend less in a recession?
Posted by: grinning cat on November 10, 2008 at 12:20 PM | PERMALINK
...so where the bridge once sat connecting two towns there is nothing and now people must drive an hour out of there way to travel what was once a 10 or 20 minute ride.
I suppose the Republican response would be that "the commuters are whining and freedom is not free. By the way can we give a tax cut to the rich and bail out a wall st. ponzi scheme with public money?"
Posted by: grinning cat on November 10, 2008 at 12:24 PM | PERMALINK
Thankfully President-elect Obama is as thoughtful as he is decisive. I doubt he's going to fall for some line of crap our hack media is pitching. They've clearly shown they work best among idiots.
They should sit back, do there jobs and watch how a balanced President approaches governing.
Posted by: TBone on November 10, 2008 at 12:34 PM | PERMALINK
But he should realize that acting boldly inevitably means screwing up. There are some actions that will bite him, even though they're popular. FDR cut federal salaries 10 percent and wanted to balance the budget--Wrong. JFK wanted to oust Castro and approved the Bay of Pigs--Wrong. Reagan cut taxes deeply (and had to raise them in succeeding years)--Wrong. Problem is, we don't which of the current proposals for action will turn out to be wrong. So Obama needs to be modest in his rhetoric, if not in his actions.
Posted by: Bill Harshaw on November 10, 2008 at 12:38 PM | PERMALINK
Clinton's so called failures occurred because the congressional Democrats didn't back him up. Sam Nunn under cut him on GITM. Moynihan went out of his way to provide a sound bite on the '93 budget that the GOP could use in campaign ads against vulnerable Democrats. Bob Kerry postured endlessly on the '93 budget. On health care the congressional democrats were even weaker. The '94 GOP sweep occurred not because Clinton overreached but because the Democrats acted as though they were weak. On the other hand Bush had no mandate after the 2000 election. He governed as though he had one and the GOP did well in the '02 elections.
Obama has two hazards to deal with. 1)That he will not be sufficiently aggressive. 2)That the congressional Dems will not back him up.
Posted by: rk on November 10, 2008 at 12:49 PM | PERMALINK
Why do I think Obama is going to push like hell where he can and walk tenderly where he needs to.
The guy beat the Clintons and the republicans in the middle of two wars. Seems like the cartoon posted here last week, "Back off, I got this one".
And will someone please tell the GOP hacks, "tails I win, heads you lose" might work on their idiotic base, but in the real world, heads and tails are different. If they want to get nitpicky on this right/center non-sense, I say 52% of America voted for what they called a socialist president, that would make us fricken socialists, or so the 'majority rule' Prop 8 thinking would conclude, wouldn't it ?
Posted by: ScottW on November 10, 2008 at 1:20 PM | PERMALINK
Partisanship is dead. Post racial and post political candidates like Obama, who I almost voted for, understand this.
If you jamokes weren't too scared to leave this echo chamber you'd realize that Obama moving to the right is the best thing for his career, for this country and incidentally for yourselves. Heh.
Posted by: SJRSN on November 10, 2008 at 1:25 PM | PERMALINK
My upcoming newspaper column, due out Thursday, has the same theme, of “erring bolding,” rather than in timidity.
Posted by: SocraticGadfly on November 10, 2008 at 1:33 PM | PERMALINK
Obviously Obama is well aware of all this. He was asked by Jon Stewart if it wasn't a terrible time to become president, and he replied that on the contrary, it was in times of upheaval like this that one actually had the opportunity to do things, instead of just accepting the status quo (I am paraphrasing).
Posted by: Andrea on November 10, 2008 at 2:01 PM | PERMALINK
Robert Reich is on the same page. Can't be bothered to link, but it's on TPMCafe.
Posted by: SqueakyRat on November 10, 2008 at 3:38 PM | PERMALINK
Linking Single Payer National Health to its effects on the economy might be a good way to sidestep the expected Republican "outrage" at "socialized" medicine.
Posted by: Doug on November 10, 2008 at 5:51 PM | PERMALINK
It seems to me that Obama has demonstrated phenomenally good judgment about who to surround himself with, how to frame his message and what to say when.
I have no reason to believe that this instinct will disappear when he is inaugurated. I expect that he will fill his cabinet with smart, motivated people (regardless of their party affiliation) and that he will hit the ground running and not slow until we are moving in the right direction.
One last thing: Center-right my ass. If this election was nothing else it was a mandate away from the right. Center-left it is!
Posted by: DrDave on November 10, 2008 at 6:33 PM | PERMALINK
Me thinks the new President should install feinting couches in both chambers of congress.Two stations, no waiting.On further thought,a couch should be reserved for Boner alone.
Posted by: ray on November 10, 2008 at 7:59 PM | PERMALINK
One last thing: Center-right my ass. If this election was nothing else it was a mandate away from the right.
The US's two major parties are center-right (Democrats) and far right (Republicans).
The whole "center-right country" line is an example of using an explicit truth (that the US is predominantly center-right) to sell an unstated untruth (that the Democrats are farther from the political center of the US electorate than the Republicans).
Posted by: cmdicely on November 10, 2008 at 8:49 PM | PERMALINK
Add to that the fact that he has more backing and goodwill--from the American people and around the world--than any president-elect in recent memory has had, and the phrase "strike while the iron is hot" comes to mind.
Posted by: 14All on November 11, 2008 at 9:48 AM | PERMALINK
There is no credit Obama can take for 'being bold'. He will either spend enough money for economic stimulus or he will spend too much with unforseen consquences. The consensus of economists is that stimulus is needed. What's so bold about that?
Posted by: Cobb on November 11, 2008 at 2:51 PM | PERMALINK