Dean Baker Debunked: If Only Barack Obama Would Show More Colorful Graphs...

Dean Baker, the Co-Director of Left Ideologue economic "think tank" Center for Economic and Policy Research (CEPR), blames President Obama for the sequester. Not, he quickly says, because the president proposed the sequester, but you see, Barack Obama bought into the deficit hawkery being peddled by the economic elite. Not surprisingly, Baker's column rehashes the Professional Leftists dogmatism to blame the president for a stimulus package too small, too great a focus on the deficit, and of course, the lack of adequate podium-pounding.
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.

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.
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?

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.

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.
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.

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?

Job growth:

GDP growth:
Consumer Spending:

(Courtesy: CNN Money Snapshorts, quoted by The Pardu's Scroll)

Manufacturing Index:
(Courtesy: CNN Money Snapshorts, quoted by The Pardu's Scroll)

Home prices:
(Courtesy: CNN Money Snapshorts, quoted by The Pardu's Scroll)

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).
Jobs are being created. Consumer demand is rising. Manufacturing is on the rise. Slowly but surely, the president's basic plan is working - he concentrated on measures to keep the economy afloat (the stimulus) and Americans consuming (unemployment benefits, payroll tax cut) to the greatest extent possible, while investing in infrastructure, education, and American ingenuity. Now that the private sector is creating jobs again, consumer demand is slowly replacing the need for additional government demand so that the infusion does not need to continue perpetually.

Yes, growth could come faster. Yes, 7.9% unemployment means that too many people are still hurting. Yes, we're recovering from the greatest economic downturn since the Great Depression and Washington seems intent to throw a roadblock every couple of months or so. But the idea that a supposedly "liberal" economist finds President Obama responsible for it rather than the obstructionist, mean-spirited actions of the Republican party to stand in the way of progress is as grossly ridiculous as it is preposterous. The president has almost miraculously brought our economy back from the brink of disaster despite the howling class - both on the Republican side and on the Professional Left.

As I have said before, it's best if economists stay away from the role of political adviser. The least the likes of Dean Baker can do is have the humility to recognize that the first African American president - a re-elected one, nonetheless, has the political chops for the job he's been elected to, and he does not need podium-pounding or use-more-colorful-graphs advice from Dean Baker.

If the Left's professional howling class wants to help, please do. But if all you can do is moan and bitch about how Obama didn't give you a series of ponies, then please, get out of the way. We have work to do.

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