Preventing a crisis vs. fixing a crisis

PREVENTING A CRISIS VS. FIXING A CRISIS…. In most of his recent public speeches and town-hall events, President Obama talks a great deal about health care, but not before setting the stage a bit with some talk about the economy.

“This is obviously a tough time for families all across America,” the president tends to say. “Six months ago, we were in the middle of the worst recession of our lifetimes. I want you to remember what things were like in January and February. We were losing about 700,000 jobs per month. And economists of all stripes feared a second-coming of the Great Depression. That was only six months ago. That’s why we acted as fast as we could to pass a Recovery Act that would stop the freefall….”

Now, from there, Obama talks up his strategy that prevented an economic catastrophe, before transitioning to the importance of laying a new foundation for future growth — starting with health care reform. But the implicit message of these introductory remarks always strikes me the same way: the president wants us to know he saved the United States from catastrophic economic consequences, and he’d probably like a little credit for it.

E.J. Dionne Jr. noted today that it’s not an easy pitch to make.

The hardest slogan to sell in politics is: “Things could have been a whole lot worse.” No wonder President Obama is having trouble defending his stimulus plan.

If governments around the world, including our own, had not acted aggressively — and had not spent piles of money — a very bad economic situation would have become cataclysmic.

But because the cataclysm was avoided, this is an invisible achievement. Many whose bacon was saved, particularly in the banking and corporate sectors, do not want to admit how important the actions of government were. Antigovernment ideologues try to pretend that no serious intervention was required.

So everyone goes back to complaining about high deficits and the shortcomings of government as if nothing had happened.

But something did — we were on the cliff, partially hanging over. The possibility of a full-blown depression was very real. Australian Prime Minister Kevin Rudd told Dionne, “This is a case study in bringing the world back from the brink, and it was American leadership from President Obama that was the key to that.”

Ezra Klein added, “[T]he Obama administration made the mistake of effectively managing the financial emergency when they entered office. They faced a serious threat, but they never let it become a serious crisis. As such, the normal laws of political gravity never lifted, and everything went on pretty much as normal…. That’s to the Obama administration’s credit. Serious crises are bad things. It’s one of the system’s more perverse incentives that you don’t get political capital from preventing them so much as pulling the country out of them.”

I haven’t spoken to anyone at the White House directly about this, but I imagine there are probably a few folks in the West Wing who, in their weaker moments, might admit, “Our guy just prevent Great Depression II! His approval ratings should be huge. The Republicans who voted against the stimulus — and recommended a five-year spending freeze instead — ought to be laughed at when appearing in public. After steering the ship away from the abyss, health care reform should be easy.”

Alas, it doesn’t exactly work that way. The default of the American political system is institutional resistance to change. Cataclysmic disasters open the door wide to systemic change; averted cataclysmic disasters apparently don’t.