As the Democrats gather for their convention in Charlotte, they face the burden of an incumbent president in a weak economy. Growth is tepid. Unemployment is above 8 percent. The nation continues to face a jobs crisis, with long-term unemployment a special problem. A record number of Americans are on food stamps.
To be sure, President Obama inherited an economy in freefall, in the worst collapse since the Great Depression. The banking panic was arrested. General Motors and Chrysler were saved. The Obama stimulus saved millions of jobs that would have otherwise been lost. As a result, gross domestic product has regained its recession losses. Exports have improved. Corporate profits have hit record highs. Household net worth is 7.6 percent higher than at the end of the Bush administration. Some 3.9 million jobs have been created, but too few to fill the losses of the downturn, government jobs cut and growth of the labor force. American growth has also been held back by the eurozone crisis.
On the other hand, Mr. Obama’s stimulus was too small to fill the deep hole in demand. Adviser Christina Romer wanted as much as $1.8 trillion — for political reasons it was whittled down to $800 billion, far too small. This was only the beginning of the missteps.
The administration embarked on a year-long effort to gain bipartisan support for a health-care overhaul. It failed in the face of a united GOP opposition, and the final Affordable Care Act failed to provide universal coverage or even a public option, but was a huge windfall for the big insurers and pharma companies. Meanwhile, too little attention and policy was being focused on adding jobs and addressing distressed homeowners.
Forward-leaning infrastructure such as high-speed rail was ditched. Mr. Obama, who admired the way Ronald Reagan changed the trajectory of politics and the nation, lacked Dutch’s experience as governor of the (then) second most populous state and his ability to use the bully pulpit to move opinion. Instead, Mr. Obama accepted the right’s framing of the issue: That debt, not growth or climate change, was the biggest issue.
Worst of all, Mr. Obama failed to apply the rule of law to the big bankers and Wall Street playerz that brought on the collapse with a raft of frauds, scandal and gambling. Not one major criminal prosecution. They got away with it. This was, to paraphrase FDR, a moment of infamy that should discredit this administration into history, were the alternative offered by the Republicans not so extreme and destructive. Mr. Obama apparently didn’t want to rock the boat. Wall Street is against him anyway and he is portrayed as “anti-business.”
Will Rogers said he wasn’t a member of an organized political party, he was a Democrat. The Democrats remain a mass party, with liberals, centrists and a few conservatives. The GOP was once this way, too, but is now a disciplined conservative party. So the Democrats might use this excuse for why they couldn’t get more done when they held Congress. Voters who haven’t made up their minds likely won’t buy it. Roger Cohen at the New York Times reports that Bill Clinton is urging the Democrats to use the convention to “explain in plain language how the United States came to its present pass and how he plans to set the country on a path to growth and jobs again. That in turn will explain why a second term would differ from the first.”
We shall see.
And Don’t Miss: We’re all dependent on government and it has long been such || Consider the Evidence.
Today’s Econ Haiku:
Summer passes on
Leaves quiver awaiting fall
Europe shudders, too