Saturday, January 16, 2010

CW Watch: Charlie Cook Edition

Drum: Healthcare vs. Jobs
Via Bruce Bartlett, here is political analyst Charlie Cook repeating a widely held piece of conventional wisdom:

Nearly a year after Obama's inauguration, judging by where the Democrats stand today, it's clear that they have made a colossal miscalculation. The latest unemployment and housing numbers underscore the folly of their decision to pay so much attention to health care and climate change instead of focusing on the economy "like a laser beam," as President Clinton pledged to do during his 1992 campaign. Although no one can fairly accuse Obama and his party's leaders of ignoring the economy, they certainly haven't focused on it like a laser beam.

....Much of the political debate, meanwhile, has been obsessed with details of competing health care reform bills. Some analysts have wondered whether Democrats in Congress would be better off passing an unpopular bill or risking the consequences of failing to pass one at all. More to the point, though, is the probability that if Obama and Hill Democrats had taken a more modest approach to health care reform, they could have pivoted back to jobs and the economy sooner. It doesn't take much imagination to envision Obama declaring, "Health care reform is a journey; not a single step. We are today laying a foundation on which America can build better health care."

I don't really understand this. Is it a purely political argument that, regardless of the merits, Obama should have been viewed as spending 24/7 hunkered down in the West Wing helping create jobs for American workers? Or is it a substantive argument that governments have limited bandwidth and Obama should have spent more of his on reducing the unemployment rate?

The former is puerile and the latter is mysterious. What exactly should he have done? He passed a big stimulus bill, and it's plain that there's no political will in Congress to pass another one of any size. He extended unemployment benefits. He tried to take action on mortgage foreclosures, and perhaps he could have done more along those lines. But the financial lobby fought him, Congress wouldn't support cramdown legislation, and banks have resisted taking part in his program. The Consumer Financial Protection Agency would be a nice pro-worker feather in his cap, but it wouldn't help anyone find a job and probably wouldn't have gotten through Congress any quicker even if they weren't busy with healthcare.

So exactly what would his "pivot" back to jobs1 have looked like? Nobody ever really says. But aside from giving rousing speeches, the big levers available to fix the economy are monetary, which is in the hands of the Fed; fiscal, which he's done; and meliorative, which he's largely done too. The rest is mostly window dressing.

1Assuming that this mythical "more modest" healthcare bill really could have passed any faster than the current one in the first place. Frankly, given the Republican Party's dedication to "What part of NO! don't you understand" as its political strategy, I doubt it.

Krugman: Talk Is Cheap — And Irrelevant

So there appears to be a spreading piece of conventional wisdom saying that instead of trying to pass health care reform, Obama should have “focused on the economy”. I’m with Kevin Drum: I have no idea what this is supposed to mean.

It would be one thing if pundits were saying that Obama should have passed a bigger stimulus plan and nationalized some banks. But if that’s what they mean, they should be saying that. And that then raises two questions: could the stimulus have been made larger, politically? (I say yes, but many disagree). And if so, why would that have conflicted with health reform later in the year?

Anyway, I’m quite sure that Charlie Cook and the like aren’t actually quarreling about macroeconomic policy. What they mean by “focusing on the economy” is, almost surely, talking about it — you know, just like the way to fight terrorism is to talk a lot about terrorism.

And why on earth does anyone think this would have helped? I guarantee you, more speeches on the economy would not have produced more job growth. Would they have made the public feel better about 10 percent unemployment? (Hey, Obama’s plan may not be working, but he sure sounds like he’s trying!)

Obama’s problem isn’t that he tried to do too many things; it’s certainly not a lack of focus. You can argue — I do argue, and did at the time — that he settled for too weak an economic plan in the first few weeks of his administration. But did any of the pundits now criticizing his lack of focus on the economy ever say anything like that? No.

Steve Benen:

To hear Cook tell it, Obama and congressional Dems should have pivoted from focusing on the economy to ... focusing some more on the economy. I'm wondering what it is, exactly, Cook has in mind. Policymakers had to wait as the recovery initiative began to improve the economy, and all the while, the administration not only pumped the funds into the system, while the Treasury and the Fed worked to bring stability to the system. As a result, the crisis has passed, and the economy is significantly stronger than it was.

What, literally, would Cook have had policymakers do differently? Wait for photographers to take pictures of the president and his team staring at charts? Give a bunch of speeches?

To be sure, the stimulus package should have been bigger and more ambitious, and the federal housing policy fell short in some key areas. But that's not the point Cook is making here -- he's saying major policy initiatives such as health care and energy, despite their direct impact on the economy and growth, should have been put off indefinitely while leaders "focused" on the economy.

It's obviously an argument made with hindsight, but in retrospect, the "miscalculation" wasn't tackling health care reform, it was taking so long to bring it to a vote.

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