Done In By His Own Rhetoric
Paul Krugman puts into words something I've been feeling the past few days.
Back in March, when I was lamenting the inadequate size of the Obama stimulus, I made this prediction:
Republicans are now firmly committed to the view that we should do nothing to respond to the economic crisis, except cut taxes — which they always want to do regardless of circumstances. If Mr. Obama comes back for a second round of stimulus, they’ll respond not by being helpful, but by claiming that his policies have failed [...]
It’s only June, but Republicans are already claiming that the Obama economic plan has failed. (Yes, that’s insane — hardly any of the money has flowed to the economy yet — but this was predictable.) Meanwhile, unemployment is already above 9 percent. And the green shoots are looking browner by the week, especially on the jobs front: new claims for unemployment insurance are stubbornly running at more than 600,000 a week, far above the 350,000 or so that would be consistent with a stable unemployment rate.
We really do need a bigger stimulus. But it’s going to be hard slogging.
Pointedly, when asked at his last press conference if we need a second stimulus, Obama said "Not yet."
My worry comes from the fact that Obama and his White House take every opportunity to sell the great economic benefits of the Recovery Act, how it creates a new era by investing in the policies we need to return to economic growth, etc. And yet they knew that the stimulus was kneecapped in the Senate and turned into a worthwhile but inadequate effort to deal with an historic shortfall in economic activity. It was always going to be hard to reconcile that disconnect between continuing bad times and this laudatory language used to describe a stimulus that has barely begun to reach the ground. But that tightrope is starting to fray at the edges.
Barely half of Americans are now confident that President Obama's $787 billion stimulus measure will boost the economy, and the rapid rise in optimism about the state of the nation that followed the 2008 election has abated, according to a new Washington Post-ABC News poll.
Overall, 52 percent now say the stimulus package has succeeded or will succeed in restoring the economy, compared with 59 percent two months ago. The falloff in confidence has been sharpest in the hard-hit Midwest, where fewer than half now see the government spending as succeeding. In April, six in 10 Midwesterners said the federal program had worked or would do so.
This was inevitable. With the global economy tracking the Great Depression (more charts on that) but the financial elites eager to get back to the hard work of accountability-free pillaging of the middle class, a credibility gap between the "green shoots" public statements and reality was bound to emerge. And if oil shoots back up to triple digits, the resulting squeeze in consumer spending could devastate growth even more.
This presents a vexing problem. Obama needs a national economic rebound and would probably support a new stimulus if he thought events warranted one, but he's hemmed in by his own rhetoric about the first stimulus.