Dean Baker: President Obama's re-election economic policy

[marmar]

President Obama's re-election economic policy
President Obama has abandoned evidence-based economics to return the US to growth in favour of the politics of deficit-cutting

Dean Baker
guardian.co.uk, Monday 15 August 2011


A front page story in Sunday's New York Times gave the country the bad news. President Obama is no longer paying attention to economists and economics in designing economic policy. Instead, he will do what his campaign people tell him will get him re-elected, presumably by getting lots of money from Wall Street.

The article said that President Obama intends to focus on reducing government spending and cutting programmes like social security and Medicare. This is in spite of the fact that: "A wide range of economists say the administration should call for a new round of stimulus spending, as prescribed by mainstream economic theory, to create jobs and promote growth."

In other words, President Obama intends to ignore the path for getting the economy back to full employment that most economists advocate. Instead, he is going to cut government spending – because his chief of staff and former JP Morgan vice president Bill Daley and his top campaign adviser David Plouffe both say this is a good idea.

While people are justified in having little respect for economists – almost the entire profession missed the $8tn housing bubble that crashed the US economy – it is still scary to see that policy will be determined by people with no knowledge of economics whatsoever. After all, do Daley and Plouffe even have a theory as to how cutting government spending could help the economy? ............(more)

The complete piece is at: http://www.guardian.co.uk/commentisfree/cifamerica/2011/aug/15/president-obama-reelection-economic-policy

[ProSense]

1. It would

be a good idea if Baker and others ignored NYT gossip and comment on the President's specific proposals.

[daa]

3. A better idea would be for you to realize Obama has fallen

to 39% and it isn't Dean Baker or the NYT.

[edhopper]

5. How many times have you posted that?

All I see from Obama is NO second stimulus bill (actually it would be the first REAL stimulus bill) and we have to put social programs on the table.

[chill_wind]

2. Owww.

"But President Obama is apparently not listening to economists anymore, so he wouldn't care, in any case. Just as we have many politicians who ignore climatologists in the design of energy policy, and politicians who think that biology has no place in teaching the origins of species, we now have politicians who think that economics has no place in designing economic policy.

This could be viewed as comical, but tens of millions of lives stand to be ruined. Ever since Keynes, we have known how to bring an economy back to full employment after it has fallen into a slump. Keynes's basic insights have been supported by a vast amount of economic research over the last seven decades. And we have solid evidence showing (pdf) that the limited stimulus pushed through by Obama in 2009 worked pretty much as predicted in generating growth and jobs.

But evidence, apparently, doesn't matter at the White House any more."

[amborin]

4. and from Krugman, on an Obama 2nd term:

".......

Mark Thoma notes something else: the administration’s vision of what to do with a second term still doesn’t include job creation, it’s all about more Grand Bargain deficit reduction. As he says,

"The best thing the administration can do is abandon support for struggling households now so Obama can get reelected and
reduce social insurance programs that help struggling households?

It all makes me think of an 80s-era joke about centrist Democrats, which was that their big difference from Republicans was compassion: the Democrats cared about the victims of their policies.

OK, to be fair, an Obama second term would be a lot less hard on working Americans than, say, the Texasification of America that would take place under Rick Perry. But “not as vicious as the GOP” isn’t exactly a stirring slogan......"


snip

http://krugman.blogs.nytimes.com/