Paul Krugman’s Stomach Problem

Barack Obama’s attempts to get bipartisan support for a stimulus package failed.  The result of his efforts is a watered down bill that won’t do the job and not one Republican vote, as many predicted.  Paul Krugman offers his view on the Obama administrations efforts:

… while Mr. Obama got more or less what he asked for, he almost certainly didn’t ask for enough. We’re probably facing the worst slump since the Great Depression. The Congressional Budget Office, not usually given to hyperbole, predicts that over the next three years there will be a $2.9 trillion gap between what the economy could produce and what it will actually produce. And $800 billion, while it sounds like a lot of money, isn’t nearly enough to bridge that chasm.

Officially, the administration insists that the plan is adequate to the economy’s need. But few economists agree. And it’s widely believed that political considerations led to a plan that was weaker and contains more tax cuts than it should have — that Mr. Obama compromised in advance in the hope of gaining broad bipartisan support. We’ve just seen how well that worked.

Now, the chances that the fiscal stimulus will prove adequate would be higher if it were accompanied by an effective financial rescue, one that would unfreeze the credit markets and get money moving again. But the long-awaited announcement of the Obama administration’s plans on that front, which also came this week, landed with a dull thud.

The plan sketched out by Tim Geithner, the Treasury secretary, wasn’t bad, exactly. What it was, instead, was vague. It left everyone trying to figure out where the administration was really going. Will those public-private partnerships end up being a covert way to bail out bankers at taxpayers’ expense? Or will the required “stress test” act as a back-door route to temporary bank nationalization (the solution favored by a growing number of economists, myself included)? Nobody knows.

Over all, the effect was to kick the can down the road. And that’s not good enough. So far the Obama administration’s response to the economic crisis is all too reminiscent of Japan in the 1990s: a fiscal expansion large enough to avert the worst, but not enough to kick-start recovery; support for the banking system, but a reluctance to force banks to face up to their losses. It’s early days yet, but we’re falling behind the curve.

And I don’t know about you, but I’ve got a sick feeling in the pit of my stomach — a feeling that America just isn’t rising to the greatest economic challenge in 70 years. The best may not lack all conviction, but they seem alarmingly willing to settle for half-measures. And the worst are, as ever, full of passionate intensity, oblivious to the grotesque failure of their doctrine in practice.

There’s still time to turn this around. But Mr. Obama has to be stronger looking forward. Otherwise, the verdict on this crisis might be that no, we can’t.

Read the whole thing here

Is Obama A New Kind of Politician?

At Barack Obama’s press conference today, he said this, in part:

Fifty-five days before his inauguration, Obama defended his selection of former Clinton officials to help run his administration.

“The American people would be troubled if I selected a treasury secretary or a chairman of the National Economic Council at one of the most critical economic times in our history who had no experience in government whatsoever,” Obama said.

More on the press conference here

Well yes, Barack, but you said your lack of experience was not an impediment to your Presidential aspirations.  Or did you say you have lots of experience yourself, so you’re better than Sen Clinton who spent her time as First Lady attending tea parties?  Oh, speaking of which, I notice you’ve chosen her to be your Secretary of State – geez, I’m surprised.  Umm, she has no foreign policy experience, Barack.  Or so you said.  Gee, your approach is so, ummm, “refreshing”. 

And Barack, you said you’d make a better President than Hillary because she was tied-in to the old hack-job Washingtonian Clinton political establishment.  Some people believed you.  But now you’re hiring the old hack-job Washingtonian Clintonista political establishment shitheads who had no trouble extending Reaganomic/Friedman-freakynomic policies to such an extent that they are deeply implicated in the present economic debacle, i.e. Larry fuckin’ Summers and Tim Geithner.

Now if you were just a regular politician, none of this would merit comment.  Political expediency, political cynicism, all that.  But you said you were different, Barack.  And you’re not; you’re just not.  You’re a modestly intelligent man whose political stripe falls considerably to the right of Sen. Clinton’s and now you’re trying to cover your colours, hoping we won’t notice how blue you’re looking these days.

I wanted to believe you were “different”, Barack.  I’m glad I  never did.  I’m still angry with you though.  Yeah, alright, you’re better than John McCain.  Big fuckin’ changey-hopey whoop!

Endnote:  Maybe it’s not so much that Obama is a new kind of politician as that he’s simply more folksy/articulate and wiley than any politician we’ve seen since, well, Bill Clinton.

Maybe Ralph Nader was right in predicting that the same Wall Street hustlers would have a lock on our government no matter which major party won the election. I hate to admit it, since it wasn’t that long ago that I heatedly challenged Nader in a debate on this very point.

Robert Scheer


I’m off to stick a few fingers down my throat.

P.S. – Barack, in case you’ve forgotten about the Clinton tea parties, check this out:

It’s that experience, that understanding, not just of what world leaders I went and talked to in the ambassadors house I had tea with, but understanding the lives of the people like my grandmother who lives in a tiny hut in Africa.

And Barack, if you want to sort out why your cute tea-drinking fantasy came to mind, check over here

The Treasurer

On the appointment of Timothy Geithner to the post of Treasury Secretary:

Events have confronted Obama with a fearful symmetry between past and present, illustrated by his choice of economic advisers. On Friday, we learned that Timothy Geithner, president of the New York Federal Reserve, would become his new treasury secretary and Larry Summers, who held the same position in the Clinton administration, would be the White House overseer of economic policy. On Monday, Geithner was busy executing the government’s massive rescue of Citicorp–the very banking behemoth that Geithner and Summers helped to create back in the Clinton years, along with Federal Reserve chairman Alan Greenspan and Robert Rubin, Clinton’s economics guru. Now Rubin is himself a Citicorp executive and his bank is now being saved by his old protégé (Geithner) with the taxpayers’ money.

The connections go way beyond irony. They raise very serious questions about where the new president intends to lead and whether he has the nerve to break from the weak and haphazard strategy of the Bush administration. It has dumped piles of public money on the largest financial institutions and demanded little or nothing in return, hoping for the best. Geithner has been a central player in the deal-making, from Bear Stearns to AIG to Citi. The strategy has not only failed, it has arguably made things worse as savvy market players saw through the contradictions and rushed out to dump more bank stocks.

See “Past and Future” by William Greider at The Nation

In the Blogosphere

From the incomparable Historiann:

Well, we can all look forward to lots of prominent feminist women in key positions in the Obama administration who will change the way we look at women in power.  Just look at the women he’s appointed to manage his transition:  Rahm Emanuel and John Podesta, for example.  And all of the women who have been named as possible Treasury Secretary picks:  Lawrence Summers, Jon Corzine, Robert Rubin, Paul Volcker, and Timoth Geithner.  That’s a bunch of high-powered broads for you!  You show ‘em, girls.

See the post here

Obama & Politics As Usual

Barack Obama’s rhetoric in his battle with Hillary Clinton for the Democratic nomination stressed that she was part of the old Washington Beltway political cabal while he represents a new way of doing things, the politics of hope and a complete change from past administrations.  I would argue that Clinton’s connection to Bill Clinton and the “old politics” had a good deal to do with her losing the nomination.  And so it is without any surprise at all, but a good deal of chagrin, that I read things like this:

Acting quickly after securing his party’s presidential nomination, Barack Obama picked a well-known representative of Bill Clinton‘s economic policies as his economic policy director and signaled this week that the major players from the Clinton economics team were now in his camp – starting with Robert E. Rubin.

Senator Obama, Democrat of Illinois, hired Jason Furman, a Harvard-trained economist closely associated with Mr. Rubin, a Wall Street insider who served as President Clinton’s Treasury secretary.

Barack Obama didn’t enter the race for the Presidency because he is a hopeful idealist.  He didn’t enter the race to transform politics in America or in Washington.  He didn’t enter the race because he is significantly to the right or left of Hillary Clinton or because he has something new to offer to Americans.  Barack Obama entered the race because he is ambitious.  He wants to be President of the United States.  He wants it badly.  When Hillary Clinton wanted it badly, she was accused of displaying a sense of entitlement.  I think that’s a useless criticism.  I can’t imagine that anyone who has played the political game for as long as Sen Clinton has would ever fall prey to a sense of entitlement at this point in the game.  Sen Clinton was ambitious.  She wanted to be the President of the United States.  She wanted it badly.  Like Barack Obama.  In that way, and in terms of their policy platforms, they are so similar that one must work very hard to find ways to distinguish them from each other.

The bitterness of the campaign boiled down to the politics of a black American running against a female American.  Because it just couldn’t have been about anything else.  I believe that this was an instance in which the politics of identity overwhelmed the importance of the issues that ought to have been before the American people: America’s militarism and role in world diplomacy with respect to Israel and Palestine, Darfur, China, the Democratic Republic of Congo, Cuba, other Latin American countries such as Colombia and Venezuela, and climate change, to name just a few; the stupefying impact of global capitalism on economic inequality in developing countries and in America itself; the American economy and its impact on the economies of every other country in the world; the erosion of democracy in America and in the places where America has control or significant influence (where isn’t that?); and so forth, ad infinitum

At this perilous moment in the history of America and the world, there was a tragic distraction.

Now that the issue has been resolved in Obama’s favour, will Americans press him in a more progressive direction or will they be too frightened to critisize him, lest McCain make hay?  Is America a fearless democracy?

Last week, Ian Welsh had this to say about the historic battle of Clinton v. Obama:

Despite the fact that neither of them, on their actual records, is a progressive and the fact that their actual policy proposals are pretty similar to each other, the “progressive” blogosphere has been acting as if this is a battle which matters a great deal. It has acted as if the difference between Obama and Clinton is night and day, and that one of them (usually Obama, but sometimes Clinton) is so much better than the other one that it isn’t even close.

Not only is it close, but the differences are minor. Folks like Dodd and Kucinich, and to a lesser extent Edwards, who actually made a somewhat radical critique of what is wrong with America, aren’t in this fight anymore.

As the line runs about academia, the fight has been so vicious because so little is at stake.

I agreed with Welsh last week, last month and last year.  Not much at stake as between Clinton and Obama.  Somewhat more at stake as between McCain and Obama.  But not nearly enough.