Last night, while guest-hosting for Hugh, I had David Frum on the program, and he set the phone lines ablaze by comparing Rush Limbaugh of today to Jesse Jackson circa 1984. But while the pitchforks are being gathered and torches set alight, I want to turn to David’s assessment of the order in which Obama is responding to the economic problems:
Fed Chairman Ben Bernanke testified to Congress this week that recovery depends on the restoration of credit markets. Yet it is precisely on this most urgent issue that action has been slowest. The big stimulus bill passed in record time. A plan to relieve distressed mortgage holders has been announced. But nearly half a year after Lehman Brothers failed, four months after the election and six weeks after Inauguration Day, the Obama administration still has not got its arms around the credit problem . . .
The measures the Democrats have been most eager to pass first are the measures the nation needed least. The measures the nation needs most are those that are taking longest. The responsibility for acting is now President Obama’s. And to him, too, will fall the political consequences of delay.
I’m not an economist. (Then again, I was talking about the housing bubble, the fallout, and government bailouts of those who bought more house than they could afford becoming a major political issue back in February 2007.) But I’m more optimistic about the medium-term future of the GOP than I am for the country. (Like most, I’m always long-term bullish on America . . . but it may take a while.)
The stimulus was a diagnosis that the problem with the country was that we weren’t making enough golf carts in North Dakota, the Coast Guard needed a new icebreaker, the Department of Homeland Security needed to furnish a new headquarters, and that Americans needed an extra $13 a week in their paychecks. If the Democrats in Congress were doctors, they would be painting the toenails of a patient with the flu.
I’m bearish in the medium-term because the country faces quite a few problems simultaneously. The credit issue described above, a massive supply of housing that is several years ahead of demand; housing prices just aren’t going to get back to the mid-decade peak for a long, long while. The Obama administration offers some signs of being protectionist, and even if the President were a fervent free-trader, many other nations are responding to the global slowdown by talking up trade restrictions. This slows their economic growth, which means they can buy fewer products and services made in America. This year looks rough, and improvement in 2010 is not certain. Beyond the planned income-tax hikes, the White House is determined to take a bigger chunk of earnings from capital gains, in those rarer and rarer circumstances when investors have them. The deficit is exploding this year, and all of Obama’s reductions presume rapid economic growth starting next year. Seems like an overoptimistic plan right now.
The lone bright spot in the recent economic troubles has been the sharp decline in gas prices — and this morning, Jeff Rubin on CNBC predicted that gas prices will go back up to $4 a gallon within a year.
Some of my liberal readers contend that Obama will fix things, and that when he does, much of the country will be convinced he’s as great as his most fervent supporters believe. I suppose if that scenario comes to pass, that may very well happen. But their supreme reluctance to provide a date on which they agree “it’s Obama’s economy” — a date when he can no longer blame his predecessor for economic troubles — suggests they know, deep down, that a booming recovery is not certain to follow Obama’s moves.
“Hope he fails”? Hope has nothing to do with it. Nobody’s crossing their fingers and hoping for further financial troubles. Obama’s opponents criticize his proposals because they’re convinced they won’t work, and will in fact make the economy worse.