Robert Reich claims the President’s failure to advocate additional fiscal stimulus is a cynical political calculation

Robert Reich answers the “why” question  this way:

. . . Which gets me to the President. Even though the President’s two former top economic advisors (Larry Summers and Christy Roemer) have called for a major fiscal boost to the economy, the President has remained mum. Why?

I’m told White House political operatives are against a bold jobs plan. They believe the only jobs plan that could get through Congress would be so watered down as to have almost no impact by Election Day. They also worry the public wouldn’t understand how more government spending in the near term can be consistent with long-term deficit reduction. And they fear Republicans would use any such initiative to further bash Obama as a big spender.

So rather than fight for a bold jobs plan, the White House has apparently decided it’s politically wiser to continue fighting about the deficit. The idea is to keep the public focused on the deficit drama – to convince them their current economic woes have something to do with it, decry Washington’s paralysis over fixing it, and then claim victory over whatever outcome emerges from the process recently negotiated to fix it. They hope all this will distract the public’s attention from the President’s failure to do anything about continuing high unemployment and economic anemia.

When I first heard this I didn’t want to believe it. But then I listened to the President’s statement yesterday in the midst of yesterday’s 634-point drop in the Dow.

At a time when the nation’s eyes were on him, seeking an answer to what was happening, he chose not to talk about the need for a bold jobs plan but to talk instead about the budget deficit – as if it were responsible for the terrible economy, including Wall Street’s plunge. He spoke of Standard & Poor’s decision to downgrade the nation’s debt as proof that Washington’s political paralysis over deficit reduction “could do enormous damage to our economy and the world’s,” and said the nation could reduce its deficit and jump-start the economy if there was “political will in Washington.”

The President then called upon the nation’s political leadership to stop “drawing lines in the sand.” The lines were obviously Republicans’ insistence on cutting entitlements and enacting a balanced-budget amendment while refusing to raise taxes on the rich, and the Democrats’ insistence on tax increases on the rich while refusing to cut entitlements.

These partisan “lines in the sand” are irrelevant to the current crisis. They’re not even relevant to the budget standoff now that Congress and the President have agreed to a process that postpones the next round of debt-ceiling chicken until after the election. . . .


About Guy N. Texas

Guy N. Texas is the pen name of a lawyer living in Dallas, who is now a liberal. He was once conservative, but this word has so morphed in meaning that he can no longer call himself that in good conscience. Guy has no political aspirations. He speaks only for himself.
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3 Responses to Robert Reich claims the President’s failure to advocate additional fiscal stimulus is a cynical political calculation

  1. LR says:

    Dear Guy,

    The fact that Robert Reich agrees with the other various liberal economists you have quoted – and you – that aggressive fiscal policy is necessary in the short term during this economy in order to achieve long-term stability and ultimately deficit-reduction is neither surprising nor conclusive. There are many equally qualified economists who disagree, who believe that fiscal expansion at this time – given debt, deficit, and current tax rates – would be disastrous. I am enjoying reading your blog and have no quarrel with your taking the position you take. Where I do find fault is your assumption and repeated assertion that it is a no-brainer that fiscal expansion is required. This is a highly debateable point, and your implication is that those of us who disagree with you just aren’t on the same intellectual playing field. You learned better than that in your many years of debate – explain to us why more spending now is the key, don’t just call us stupid because we don’t yet agree with you.

    Another Guy N Texas

  2. Guy N. Texas says:

    Thanks for commenting, LR. I’m glad a conservative has joined us. I hope you’ll hang around.

    I’m not sure what I can add to the 40+ posts on the blog endeavoring to explain, step by step, Krugman’s position, his rationale, why it makes sense, what one would expect to see if the pro-austerity arguments were correct (e.g., high interest rates due to “crowding out,” increased inflation), and how none of these things have come to pass. If you think I’ve misinterpreted something — then by all means tell us what it is. If there’s an economic model that has a better track record than Krugman’s predicting the past three years, then please point us to it. Instead you seem to be saying: “Krugman is on the left, there are economists on the right who disagree. So I call a toss-up and will side with my party.” What would be more enlightening for us, I think, would be for you to identify the economists on the right who claim austerity is wisest. What are their criticisms of Krugman? What is their preferred model? How do they explain the incredibly low long-term interest rates we’re seeing and the absence of inflation? How have their predictions during the past three years held up?

    I cited Robert Reich not for his expertise in economics, but for his contacts in the White House and his knowledge of the President’s political calculations. I admire Professor Reich, but he would not claim to be an economist on par with Krugman.

  3. LR says:

    My point was not to call it a toss-up. I don’t think it is.

    My point was that the debate is not a one-sided walkover as you describe it. I don’t think it is that either.

    Another Guy N Texas

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