He could have said what all his advisers claim they told him at the time: the stimulus was not large enough and we would likely need more. He could have used his presidency to explain basic economics to the public and the reporters who cover budget issues.Yes, yes. If only Obama had enough colorful graphs. Between a bigger, continued stimulus package and a presidential signature stood the lack of colorful graphs, not an intransigent Republican opposition to everything Obama. Don't we know that it was Obama's failure to use more colorful graphs from the presidential podium, not a Republican House swept to power thanks to a rising, hateful Tea Party aided by Professional Leftists urging Democrats to stay home in 2010, that lead us to the debt ceiling crisis in 2011?
He could have told them that we need large deficits to fill the hole in demand that was created by the collapse in private sector spending. He could have shown them colorful graphs that beat them over the head with the point that there was very little room for investment to expand even under the best of circumstances.
Never mind that the stimulus package the president signed shortly after taking office in 2009 was the largest such package in US history. Never mind that it made unprecedented investments clean energy and infrastructure, gave targeted tax breaks for middle class families, and created 3 million jobs. Never mind that the 2009 stimulus package was only a portion of total stimulus this president injected into the economy over his first term in office.
Never mind that Dean Baker seems to have slept through the times when the president and Democrats in Congress again and again extended unemployment benefits (a rather significant stimulus measure), gave aide to states to save them from massive layoffs in public safety and education. Never mind that the president almost single-handedly turned around the American auto industry and brought back manufacturing job growth for the first time since the '90s. Never mind that Baker and his buddies on the Professional Left seem to be catching selecting amnesia about the payroll tax holiday the president instituted for two years except when they decided to bash him for letting it expire at the beginning of this year.
Baker's real problem seems to be that the president is not fighting an arcane battle and casting today's budget debate as a choice between exploding the deficit and creating jobs.
The basic story is incredibly simple. Demand from the private sector collapsed when the housing bubble burst. We lost $600 billion in annual demand due to residential construction falling through the floor. We will not return to normal levels of construction until the vacancy rates return to normal levels. Vacancy rates are still near post-bubble record highs.That is a plain dumb debate. Here at TPV, we have pointed out more than once why deficits and debt should be a major concern to progressive activists and economists: first, without the public's confidence that you are a good steward of taxpayer dollars, we will not be able to invest where needed. Second, we pay more in interest to the national debt than any other item on the discretionary budget save defense - payments that buy us nothing.
We also lost close to $500 billion in annual consumption spending due to the loss of the $8 trillion in housing-bubble-generated equity that was driving this consumption. This demand will also not come back. [...]
In this context the only choice in the near term is between larger budget deficits and higher unemployment.
Furthermore, I am not sure exactly how an economist like Dean Baker missed it, but we are not trying to build an economy based on the same bubble and bust cycles our economy has been suffering through - whether it was the tech bubble or the housing bust. We are not trying to artificially inflate home prices aided by banks selling subprime loans to unsuspecting customers. We are instead trying to build an economy based on advancements, innovation, infrastructure, and sustainable middle class growth. If Baker's idea of an economic recovery is to bring back the housing bubble, I'm glad he didn't become our treasury secretary.
Oh, and speaking of colorful graphs, how about these?
So... here's what I can "blame" President Obama for:
- Getting home prices back at pre-crisis levels.
- More manufacturing growth than at any time since the 90's.
- 6.1 million new private sector jobs since the end of the recession.
- Consistent growth in consumer spending (so much for the "hole in demand" never being filled).