Obama And The Economy: What Is He Liable For ?
When President Obama first took office I indicated that I was going to try and adopt a policy of giving him time to have an impact on the economy. I was never happy when some on the left started blaming Bush for things the day after he took office and so I felt it fair to give Obama a chance. I chose to adopt the policy of the first President Bush by giving the new President a year before I blamed him for major impacts on the economy
At the same time I can hardly go a whole year without making any comments on the President and the economy, especially given the fact that the economy is the center focus of the new administration. This raises the question of what things he can be called to account for and what things he should not yet be blamed for.
I am still somewhat working through the issue but thought I would post my early thoughts for your consideration. It seems to be that the key is to differentiate between short term and long term economic indicators. While I am hardly an expert economist I do know that there are some things that can be affected by the events of today while others are the result of policies set into place months or even years ago.
Similarly some economic indicators look at the economy as it is today while others look to the way that the economy is expected to be in the future. In these areas I think we can find a way to decide which things should be laid at the White House door and which should not.
For example, unemployment figures came out last week showing a spike to over 8%. This is something that I do not think we can yet blame on Obama. Decisions made now about hiring or not hiring, choices about layoffs or closures are largely the result of prior policies. In that vein I do not think Obama is responsible for the problem.
Indeed given the complex factors at play in the current economy I think if you wanted to blame it on any administration it would have to be the Kennedy-through-Bush administration since most economists agree that our current mess is the result of decades of policies from both parties.
On the other hand I think when you look to the continuing slump in the stock markets, that is something that you can at least partly lay on Obama. The markets are very much affected by decisions of today and by attitudes on what the economy will do tomorrow. In both cases these are things within the control of the current administration. Of course there are also longer term factors at hand, but I don’t think you can say Obama is blameless here.
Of course as time goes on the picture will become clearer because we will be well in to the economic stimulus package and the policies of the Obama administration. But for now I think a two track attitude is proper, blaming the administration for the now, but not as much for the then.
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13 Responses to “Obama And The Economy: What Is He Liable For ?”
How, exactly, can you pin the stock market on Obama? The market has been dropping consistently from mid-2008 to today. True, Obama hasn't stanched the drop-off. But he hasn't actually accelerated it either. Between September and December 31 the Dow lost 20%. Between January 1 and today the Dow lost 20%.
The reason the stock market has dropped is that the fundamentals of the economy are atrocious. And those have to do with structural problems dating back, as you say, decades. Overvalued assets around the globe need to come down to size again before the market will see any possibility of a turnaround. And the banking crisis is as acute as ever. In fact, if Obama can be blamed re: the stock market, it was his failure to manage expectations when Geithner came out with his shell of a plan. Wall Street thought he'd have a detailed plan with answers right away, when all he offered was a stress test and possible answers in a month or so. While that may be prudent in the end, Obama never clued Wall Street in to the fact that a detailed plan was not forthcoming at that time.
So, no, you can't blame Obama for the continuing drop in the stock market unless you thought he would be some miracle worker who would magically remove the toxic assets from the banks, eliminate foreclosures, and re-create a function manufacturing sector overnight.
Who, exactly, on the left blamed Bush for what, exactly, the day after he took office?
Your posts would be much better if you would name names and provide evidence or you would stop whining about some bogeyman left as if there weren't some on the right who do the same thing from different angle.
Especially if you're going to be otherwise reasonable.
“When President Obama first took office…I was going to try and adopt a policy of “ seeing how long it would take before ideologically motivated pundits would begin blaming him for the apocalyptic stew of the economy, federal budget deficit, divisive politics, broken government and domestic policy and regulatory failures, and disastrous wars and foreign policy quagmires, that the policies advocated by the ideologues bequeathed him. Of course, I didn’t have to wait long. They began blaming him for these long before he ever laid his hand on the Lincoln bible.
Mr Edaburn, on the other hand, has patiently endured a full 46 days (32 trading days) before reaching the “moderate” conclusion that he doesn’t “think you can say Obama is blameless here.” It seems only lunacy, folly, idiocy, or ideology could explain how someone could be critical of the president for the decline of an arbitrarily chosen index that behaves chaotically, that responds to an extremely broad range of parameters, which is only very tangentially and remotely related to his ultimate responsibility, which has been in decline for more than 17 months, while the president has been in office less than 50 days during an historically unprecedented global economic crisis.
Let’s be clear and frank about this: those who would “blame” President Obama for the current state of the DJIA are indistinguishable in their fundamental understanding of cause and effect, in their analytical sophistication, from those who would offer up human sacrifices to the Gods to end a drought. It is, indeed, unfortunate that I feel I the need to add that the latter category may not be terribly far from making a comeback.
Thanks for the comments so far.
As to Obama being liable for the DJIA, you will note I said he is 'partly responsible' and in that I am backed up by a number of economists on both sides of the spectrum, in fact on Chris Matthews show a majority of their panel said he was partly to blame, and they are hardly conservatives.. The market is one place where confidence plays a major role in how things go from day to day and the markets are hurt when the President talks down the economy.
What I don't see is why people seem to think it has to be all or nothing, either he is totally to blame or totally innocent. He is *partly* to blame for what has happened in the market.
On the other hand I do not blame him for long term indicators like unemployment because that would not be fair.
As to those on the left blaming Bush, I would have to go back and do some research to get names (and frankly doubt that would do any good) but people were calling it 'the Bush recession' in early 2001 even though the tech bubble burst in 2000.
Obama has had very little impact on the state of the economy but the stock market is based at least partially on expectations, and that aspect of it can be blamed/credited at least partially to Obama. Are buyers of stock comfortable that Obama's bailouts, tax changes and new programs going to help the economy? So far apparently not.
Now we hear that Obama's already getting worn out from the workload. From where I sit he's trying to do too much at once. Some of what he's doing is truly urgent but he seems to be using the crisis to justify other programs that really could go on the back burner right now. Either he has to prioritize better, delegate better, or both. His approach doesn't seem to be inspiring confidence in investors, that's for sure.
Thanks Da Goat for summarizing what I was saying
Mr. Edaburn,
With all due respect, my argument has at least as much to do with ignorant vs. rational as it does with liberal vs. conservative. Who are these brilliant economists? The same ones who said that “none of this could be foreseen”, even when I, barely paying attention, foresaw much of it? And , yes, that marvelous Chris Matthews panel, Brooks, Mitchell, O’Donnell, and O’Donnell, Klein, Sullivan and so on that voted 7-5 that Obama is in part responsible for the condition of the stock market, I think I recognize them, weren’t they pretty much the same crew that warned us loudly and repeatedly over the past 4, 5, 8, 10 years that the economy might be headed for disaster, that the titans of Wall Street were leveraging America’s very future. Oops, no, maybe I got it wrong – I think, perhaps, they were the ones using the goat entrails. You might consider their track record before you take their judgment to the bank.
And it seems merely a cover for the real meaning of a determination against President Obama on this matter to defend it as “moderate” by pointing out that the claim is that he is only “partly to blame.” Which part? GE stock prices? Proctor and Gamble? General Motors? 1%? 2.2% For Pete’s sake my DOG is “partly to blame” for stock prices because she’s overweight and we’re cutting back on her food. Iams stock is taking a hit! Seriously, which part? Further, implicit but cleverly unstated in the accusation that he is “partly to blame” is that he should do something about it, that he should do something different, that his attention should be more focused on the stock market, because, lord knows, national policy MUST satisfy traders on the NYSE and bolster Chris Matthews portfolio as a first priority, and for the rest, let the chips fall where they may. At its core, the claim is pure, unadulterated punditry, with the most minuscule, trivial, shreds of objective evidence in its support, and its only conceivable meaning at this point in the administration can be in the service of discrediting President Obama, to what end? To what end?
Having taken a deep breath and considering the situation, I conclude that President Obama is “partly responsible” for preventing the DJIA from plummeting to 3000 and so we really should be thankful for his careful and thoughtful stewardship of the economy over the past 46 days.
There is precisely the same quality of evidence and analysis supporting this proposition as Mr. Edaburn’s “partly to blame” formulation.
Can’t you see, these are simply goat entrails punditry, they are empty blather, analysis disconnected from content or context or meaning other tnan ideological sniping. Look, you have serious concerns about President Obama’s policies, fine, I do too, bring them up for open debate. I just think it’s unconscionable to snipe at them from the vantage of these meaningless proxies. It’s a large part of what is so deeply flawed in our punditocracy media.
The stock market doesn't know what to make of the economic situation. On the one hand you have Republicans screaming that Obama is a socialist (which belief doesn't help the market), but then more Republicans are calling for the nationalization of some banks. Which is totally against what other Republicans want. But the markets are in a turmoil because Obama believes in capitalism and does not want to nationalize the banks.
It doesn't surprise me that the markets don't know what to think. The markets won't be happy until Obama nationalizes the banks. Then half the country can claim that they were right all along and Obama is really a socialist (and start to call him a facist) and the other half can say that a temporary nationalization is necessary. Though the Republicans who are now calling for the banks to be nationalized won't support Obama's decision and will say that they never really supported it…. They were keeping all options on the table and that Obama's plan (IF he were to nationalize some of the banks- despite his statements to the contrary) would cost the taxpayers trillions of dollars.
As far as whether some of Obama's (and administration) words have an effect on the markets: of course they do. Has Obama's words and policies a reason why the market has dropped so much since he has been in office: No way. It took years for us to get here and it will take years for us to get out of this whole. If we had the best policy announced right now, the market would still go down due to past policies, until such time the new policies could take effect. A student who is doing poorly just doesn't start to make A's overnight if he gets a new teacher who knows who to engage him productively.
Back the the economy- no one knows what to do or make of these once in a hundred year times. Everyone is expecting the worse and the media just plays up the drama.
Patrick and GeorgeSorwell: with regards to names and dates of those on the left who blamed Bush for the continuing dropping of the economy once Bush took office:
I don't remember anyone saying this, though quite frankly I would have dismissed them as loons. It also wouldn't surprise me if there were some people (especially given the fact that many people felt that Bush “stole” the WH from Gore and that Gore did win the popular vote) that people blamed the downward stock market on Bush.
But I seriously doubt that any Democratic leaders (or de facto leaders) or other high profile Dems blamed Bush for the economic problems a couple months into his presidency. Unlike today where Limbaugh is hoping for Obama (and by extension the country) to fail and the Republicans as a group continue to be hyper-partisan in an economic climate that is destroying millions of lives. And some of these Republican leaders are even refusing to accept hundreds of millions of dollars in assistance for their states because of their “principles”. I didn't know that refusing money that could help hundreds of thousands of people from being hungry was considered a principle.
So while I think that there were some who blamed Bush for not reforming the economy on his first day in office, I believe those people were pretty far down the food chain. Unlike many of today's Republicans who are blaming Obama for everything, even before he took the oath of office.
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On the one hand you have Republicans screaming that Obama is a socialist (which belief doesn't help the market), but then more Republicans are calling for the nationalization of some banks. Which is totally against what other Republicans want. But the markets are in a turmoil because Obama believes in capitalism and does not want to nationalize the banks.
I doubt the markets care at all what the GOP is saying because the GOP is almost irrelevant at this point. The Democrats hold the House, Senate and presidency plus are still more popular than the GOP. You can blame the bad economy on the GOP, but the Democrats now own the recovery.
DaGoat: “You can blame the bad economy on the GOP, but the Democrats now own the recovery.” It's not entirely the fault of the Republicans… there were (are) some Democratic enablers to blame. But whoever caused the mess I agree with you that the Democrats do own the recovery, to the extent that the Republicans don't interfere…. which they are…
“I doubt the markets care at all what the GOP is saying because the GOP is almost irrelevant at this point.”
The GOP is still relevant at this point and millions of Americans follow them. But I think the larger point is that no one really knows what to do regardless of one's political party. Obama hasn't been president long enough to have come through any test. Also the markets BELIEVE they are getting mixed signals from the government. Even though Obama claims he is against nationalization he continues to bailout companies, which many investors see as the first (or second) step towards nationalization.
I've expressed my preference for the banks (mostly) to remain private because if they are nationalized then millions of shareholders will lose all their money. But I've also expressed a belief that nationalization may be the only way to go. Personally I don't think we should nationalize the major banks (except maybe Citi). As much money as the shareholders have lost, as long as the banks remain private the shareholders will get some of their money back. These banks will survive and one day their shares will increase in value. In other words I think nationalization is probably the best short-term solution for one of the many problems facing us. I think the best long-term solution for the economy and investors would be to keep the banks private while helping them through this “rough patch” (to put it mildly). Then capitalism, with a crises intervention from the government will continue and the individual investors who do own financial companies stocks will not have lost everything, with gains.
This time in our history is tough for everyone and people claim they want to make sacrifices. Yet when they are asked to make a sacrifice that they deem unfair (or the media starts in on it) suddenly people don't want to make a sacrifice. I didn't think sacrifices were fair…. and in the end when we do pull out of our malaise then everyone will be better off for it.