WHITE HOUSE ECONOMISTS VS. THE WHITE HOUSE POLITICAL TEAM…. The NYT had an item today that noticed in passing that within the White House, President Obama’s “political aides have tended to emphasize voter worries about the deficit, while his economic advisers have been urging additional stimulus spending.”
The Times‘ Jackie Calmes had a detailed report on this debate over the weekend. I found it more than a little disconcerting.
Not since the first years of the Clinton administration has a White House had to debate whether to give precedence to stimulating the economy or reducing budget deficits. Now, as the recovery shows signs of faltering, that debate is playing out within the Obama administration, with a twist compared to the 1990s: the economic and political teams have switched sides.
While President Bill Clinton’s political advisers favored more spending and tax cuts coming out of the recession of the early 1990s and his economic team pushed to start reducing deficits, in President Obama’s circle the opposite is true. Political advisers are channeling the widespread public anger at deficits while the economic team argues that the government should further spur the economy to avert another recession.
In Mr. Clinton’s day, the economic team, asserting that a credible commitment to fiscal responsibility would reassure financial markets and lead to greater long-term growth, won the argument in favor of deficit reduction, helped by moderate Democrats in Congress. These days, the Obama political team has the edge, again in the cause of emphasizing deficit reduction and with an assist from Congressional Democrats nervous about the midterm elections.
This isn’t good. It’s not good at all.
I don’t doubt that the political team has credible polling data that tells them Americans want to see spending cuts and deficit reduction. The constant Republican rhetoric of the last 17 months, coupled with sluggish growth and inadequate Democratic messaging, has actually convinced much of the country that what’s bad for the economy is good, and what’s good for the economy is bad. For political advisers anxious to give the public what it wants, the path seems clear.
But it’s the economists who know what they’re talking about here.
The stimulus pulled the economy back from the edge of a cataclysmic fall, but more investment is necessary to create the robust growth the nation needs.
It seems vaguely unpleasant to acknowledge, but public opinion can occasionally be fickle, uninformed, and confused. The vast majority of Americans want policymakers to focus on economic growth and job creation, but aren’t really in a position to know how to make that happen. Many have a viscerally negative reaction to spending and deficits — at least they do now; the reaction was oddly in check during throughout the Bush/Cheney era — but don’t appreciate the larger consequences.
For the WH political team, there’s an understandable desire to shape policies to cater to voter demand. But it’s wise to think ahead — if the economy falters badly, it’s not as if Obama will impress the public by saying, “Well, we could have improved matters, but instead we listened to the public.” If the economy gets better, the political team will adapt and offer new advice based on changed attitudes. If the economy takes a turn for the worse, it doesn’t much matter what the political team notices in terms of public attitudes, since a president’s fortunes tend to rise and fall based on the health of the economy.
According to the NYT piece, Christina Romer, Jared Bernstein, Tim Geithner, and Lawrence Summers all want additional stimulus. David Axelrod and Rahm Emanuel are “more focused on deficits — or at least on positioning Mr. Obama to show his concern.”
The more the president listens to the former, the better. If Obama’s public remarks are any indication, he seems to get this, which is one of the reasons he took the right message to the G-20.
Ultimately, it may not matter — President Obama could become the most aggressive advocate of additional stimulus in America, but if the votes aren’t there on the Hill, nothing will happen. But doesn’t it make more sense for the president to at least fight as hard as possible and take his case to Congress and the public, putting the onus on conservatives for standing in the way of a stronger economy?
