Sowing The Seeds Of Trouble
I’ve got my share of concerns with the Obama administration on a variety of fronts, not just their mishandling of the health care reform debate. Yes, Obama has been Bush Lite on domestic surveillance and even the CIA. Yes, he’s about to make Afghanistan his war and isn’t getting out of Iraq soon enough. Moreover, he has been excessively slow in filling vacancies on the appeals courts.
However, there's one area where I have great concerns over the administration’s policy choices, and that's the economy. It's the one issue that can hang Democratic incumbents next year and reverse the party’s major gains from last year. Specifically, Larry Summers and Tim Geithner from Day One have spent too much time catering to Wall Street and not enough time helping Main Street. The initial bailouts, whether they be at AIG or the major banks were all targeted at Wall Street and Goldman Sachs, not towards regional banks and Main Street. And as for the stimulus, it was too little and badly targeted, leading to initial spurts of growth that won't translate into sustainable levels that generate new jobs.
We now have some confirmation that Summers did not even give Obama a full range of stimulus options last spring, and prevented the president from seeing the one stimulus option many economists believe would have worked – the largest one. As it is, Obama approved only a down payment stimulus package, on the mistaken assumption the administration would get a second bite of the apple if the first one didn’t do the trick. Well, that train has left the station, the moment the administration gave all the money to the banks and decided to push health care this year rather than next year. There will be no second bite of the apple, and incumbent Democrats up for reelection next year are saddled with Larry Summers’ pathetic decision-making. Krugman and others have said all along that going big and targeted with the stimulus was the only way to go, and yet Summers was more concerned with debt, except when it came to larding that money on Wall Street.
Secondly, we also find out that Geithner spends a good deal of his time each week not in dealing with Congress or Main Street, but rather in catering to his friends on Wall Street and making sure they get all the personal attention they need from the Treasury Secretary.
This comes at a time when a new survey of registered voters last month showed large majorities who felt that Obama needed to do more about jobs and unemployment, and that his policies so far had helped Wall Street and the banks much more than everyday people. Sixteen years ago, James Carville advised a new president to focus on the economy, and yet voters after nine months haven't been sold that Obama has done enough.
If the recovery sputters, as I think it will, Obama can look back at his choices of Summers and Geithner, and blame no one but himself for losing strong Democratic majorities in 2010. Then again, I have also thought for a while now that Obama may prefer running against Congress to leading it. He seemed more focused in dealing with Hillary during the campaign than he has at any time since becoming president. He failed to clearly lead Congress on both the stimulus and health care, and the party will pay a price for it. Perhaps going into 2012, with the GOP likely to mount a pathetic challenge for the White House, Obama is more comfortable running against a hostile Congress than he is in effectively working with it.