When Does Obama Own The Economy?
By Justin Gardner | Related entries in 2010 Election, 2012 Election, Barack, Economy
That’s one of the questions a recent NBC/WSJ asked voters and the results show that they know Obama inherited a massive mess and they’re more than willing to be patient with the new guy.
What we find is that roughly 50% of voters think Obama will own the economy in about 18 months. So, if you believe these numbers will hold steady and Americans will remain patient, public sentiment will most likely shift against Obama by September 2010.
But that’s where the economists’ projections come in, because they have a much rosier view on when the recession will end…
Of course a number of different things could happen between now and then so the regular caveats apply, but if these projections hold up it’s good news for the White House and Dems because they’ll be well positioned to make the case that they helped pull us back from the brink before the 2010 midterms.
The question I have for those opposed to Obama’s current plans…if the US does pull out of this recession by then and have GDP growth, what will your response be? Because while I understand you have your principles and you may not agree with the mechanisms that brought about the recovery, will you give credit where credit’s due?
This entry was posted on Thursday, March 5th, 2009 and is filed under 2010 Election, 2012 Election, Barack, Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
March 5th, 2009 at 8:41 am
My response will be how are we going to repay a $ 12 trillion national debt ?
How are we going to deal with the inflation that will inevitably follow from the money and credit that is being pumped into the system ?
It’s a fallacy to focus solely on GDP growth and employment as measures of success here.
It’s entirely possible that we’ll see a temporary boom here, but then we’ll have to deal with the consequences of the drunken sailor like spending spree we’ve been on since September, and it won’t be pretty.
March 5th, 2009 at 9:04 am
How is it a fallacy to focus on those as real measures of economic growth when every economist in the world focuses on exactly those two things?
First, you don’t know that inflation will go up. Why? Because we’ve been printing money like crazy and our dollar is actually worth more internationally? Why? Because everybody is doing it because the whole world is in crisis. Also, you’re completely ignoring deflation and just predicting that it’ll go up without any proof that consumers will begin spending again.
Second, you and I both know that paying down a $12 trillion debt is going to take time, and that should definitely be a priority. But when did debt start going through the roof? Oh, that’s right, when we accepted Friedmanomics in earnest in 1980. When did it go down? Why, when a Democratic president came into office in 1992! When did it go back up? I’ll give you one guess. Forgive me I’m going to trust Obama to make fiscal responsibility a priority and carry through on that promise.
March 5th, 2009 at 10:02 am
No, the Republicans will never, ever give credit to Obama no matter what happens. They will make unprovable claims about how the economy would have not only have recovered without the Obama administration’s actions but would have done better. Doug’s post is a perfect example. Say anything. Predict anything. Provide no proof because there isn’t any. Just don’t admit that the free market BS is just that, BS.
March 5th, 2009 at 10:29 am
Justin,
All due respect, but this effort to blame Milton Friedman for the economic crisis is really quite hilarious. You probably don’t know it, but Friedman was a frequent critic of Republican economic policies when he was alive and never actually described himself as either a Republican or a conservative. Moreover, outside of Paul Volker and Alan Greenspan’s tight rein over the money supply, which is generally a good idea, there’s almost nothing about the economic policies of the last 30 years that bear any resemblance to what Friedman advocated.
Blame the Republicans if you want — although that’s absurd as well because the Democrats bear as much responsibility for things like the real estate bubble that put the current crisis into place — but don’t drag the name of a dead guy through the mud.
March 5th, 2009 at 11:05 am
Justin,
Because you’re ignoring the forest for the trees. A false recovery that’s built upon a mountain of debt is no recovery at all, merely a delaying of the day of reckoning.
As for the inflation argument, do you realize how much money and credit has been pumped into the system in the past six months ? More than at any other time in history. You don’t do those kinds of things and get to avoid the consequences.
March 5th, 2009 at 12:13 pm
That 2nd graph is really interesting. It illustrates how economists and regular folks don’t really think about the same things.
Econmists are talking about objective math, while people are expressing their subjective sense of optimism for their own future. I’m pretty sure that when regular people are asked about the recession ending, they are really thinking about when things will be good for them again, compared to now.
Economists are working from a different perspective. The recession will be “over” when the economy stops shrinking and begins to grow again. While this is an interesting point for all of us, it doesn’t speak to how MUCH the economy might have shrunken before it begins to grow again. If the economy continues to shrink drastically, then it MUST reach a bottom more quickly than if it shrinks slowly. Becuase thew quickest way to the bottom is straight down.
So let’s not lose sight of this simple fact: the economy could shrink drastically for a year or so and then after reaching a much smaller size, begin to grow again. When it begins to grow again, the “recession”will be over. At that point, we could still quite easily find ourselves in extremely wretched circumstances.
The question is whether we will end up seeing a healthy pruning of an overgrown shrub, or the lopping of a giant tree down to a stump that subsequently sprouts a few shoots.
March 5th, 2009 at 1:08 pm
Justin,
You know what they’re going to say …
As Jim pointed out above, if the economy improves, they will simply say that it’s the “business cycle”, but things would have been SO much better had John McCain won the election.
Heck, even in our current recession, there are a disturbingly large number of Conservatives who essentially blame it on the fact that we elected Democrats to the majority in congress in 2006.
Fortunately, it appears that more than 2/3s of the American people don’t currently consider themselves Conservatives … at least on this issue.
Which means that most of us actually want the President to “succeed” and see the economy turn around … no matter who gets the credit.
If I was a betting man, I’d almost certainly rather be in President Obama’s position, than the Republicans. If things turn around in the next 18 months, the President will “win”. But If by some chance, things continue to get much worse, we all “lose” … and the argument about who’s “fault” it is will become kind of academic anyway.
Todd
March 5th, 2009 at 3:18 pm
@Todd,
No, if John McCain were elected we’d be pretty much in the same boat. That was evidenced by his weak, uninformed reaction to the TARP funding back in October.
I love how some folks craft arguments like a bad married couple. Rather than focusing on the issue at hand, every disagreement results in dredging up both sides’ perceived injuries from the past 20 years. Bring up Bush’s spending for Iraq all you want–that folly doesn’t make Obama’s approach to solving the economic crisis right, correct, or justifiable. I mean, it’s a horrible cliche’, but two wrongs most definitely do not make a right. Is the thinking here that just because Bush ran up the deficit on a stupid war that Obama should run up the deficit even higher on a stupid plan to jumpstart the economy? We are trying to reinflate a balloon that already has a big hole in it.
To Kranky’s point, I’ll give a big round of applause to the Keynsians in the room when our economy gets back to the point it was in January, 2008. Thoughts on when that might be?
March 5th, 2009 at 3:44 pm
So if we pull back out of this thing, it’s “false” because we have too much debt?Wow, way to set up a reality where you’ll always be right and everybody else is wrong. Must be nice.
Of course you don’t acknowledge that we can slowly pay down that debt over the course of a couple decades and return it to more manageable levels. Especially when every other economic superpower is doing the same thing. You also fail to talk about the fact that we’ve been spending A LOT more money then we bring in over the past few decades and inflation has remained fairly steady.
And then there’s the cold hard reality that’s staring us in the face of what an economic collapse would actually mean and how much more costly that would be instead of what we’re doing now. It makes no sense to wait until we hit bottom and make people who had nothing to do with this suffer. We KNOW it’ll cost much more and we won’t be putting anybody back to work, fixing our infrastructure, reforming healthcare, etc.
Concerning Friedman, his ideology of markets as the greatest good and government intervention as meddlesome is extremely clear and the people who were his followers have passed legislation that has transformed this economy into one that mirrors that ideology. And of course any economic philosopher will have problems with implementation. No ideology can be pure. Why do we have to have this argument every single time? What’s truly laughable is you continue to try and act as if Friedmanomics hasn’t been the dominate economic philosophy for the past 30 years. I mean, that is completely divorced from reality.
As far as the real estate situation, that was a symptom of the disease. The banks were allowed to overleverage themselves 30 to 1 and that was a direct result of the deregulatory philosophy of the supply siders. AIG was also able to issue insurance that allowed the banks to hide the debt. I’m not saying blame shouldn’t be shared for the housing crisis, but, again, it all goes back to Friedman. If the banks weren’t allowed to overleverage themselves to that point, we wouldn’t be having nearly the problems we’re having right now.
March 6th, 2009 at 10:08 am
Justin,
With all due respect, this is nonsense.
You talk about deregulation, but you ignore things like the Community Reinvestment Act and pressure that was placed on Fannie Mae, Freddie Mac, and the banks to lower their mortgage requirements so that more people could buy homes. This led directly to people buying houses they couldn’t afford — The Washington Post profiled one such case about a year ago, a bricklayer and his wife the maid who purchased a $ 600,000 home. Those people never should have been given a loan and yet it was people like Barney Frank and others in the 90s who were accusing the banks of racial discrimination because their lending standards were “too tough.”
The fact of the matter is that most of what’s wrong with this economy can be laid squarely in the laps of government policies that interfered in the market and created things like the housing bubble. Greenspan’s and Ben Bernanke’s far too liberal monetary policy also didn’t help the situation.
Don’t blame this on Milton Friedman when it’s clear that responsibility for most of what’s gone wrong in this country for the past 40 years belongs in that two mile stretch between the White House and Capitol Hill.
And a final note — you do realize that Obama’s “pay down the debt” projections are based on incredibly optimistic GDP numbers. If and when those turn out to be wrong, the deficit numbers could potentially double and his “plan” to pay down the debt will be revealed to be as phony as all such previous plans
March 6th, 2009 at 11:53 am
Doug,
Do you think that Wall St would have knuckled under to the mean boogeymen of Barney Frank and the CRA if they hadn’t been making trillions packaging risky loans with fraudulent AAA ratings?
Who, to your knowledge, on either side of the aisle or in the private sector, was advocating for HIGHER interest rates over the past decade. In what sense was the cheap credit bonanza a “liberal” policy as opposed to an “everyone’s loving it” policy.
Let’s suppose you and I had a time machine, and we could travel back to lets say 2002 to warn everyone how badly an extended period of low interest rates would turn out for the economy. Do you think we would have been crucified onthe first day or the second? with 6 nails or 12? :-)
March 6th, 2009 at 12:38 pm
kk,
Oh I don’t disagree with you there.
It’s only a perverted version of free market economics that holds to the idea that businessmen and stock brokers can do no wrong. They saw an opportunity in all these new mortgage that programs like the CRA created, and they tried to profit from it. That’s how bubbles are created.
And the only economists I know who were warning about this back when it would’ve mattered are the ones who were being dismissed as kooks, as were the people who dared suggest that something wasn’t quite right with the way the real estate market was behaving.