Live at The Nation – Reviewing a Wasted, Lost Year on the Economy

I have a piece up at The Nation discussing this morning’s job numbers as well as a the entire year of 2011 – a wasted, lost year.

It is also a response to Jonathan Chait’s argument that liberals are unreasonable when it comes to Obama and the economy.  The piece covers the range of economic ideas motivating the government this year – from “Win the Future” to the failed Grand Bargains behind the debt-ceiling fight.  A sample:

…So the administration spent much of 2011 engaging in the wrong analysis of the economy, one that looked like that of the far right. Early in the year the administration brought in new advisors, notably Bill Daley as chief of staff, in order to repair relationships with business in the wake of financial reform. This incorrectly diagnosed the problem as a liberal government beating up on unappreciated job creators, instead of weak income and mass unemployment among workers. In his 2011 State of the Union, Obama argued that we needed to “win the future” by investing in education and bringing “discretionary spending to the lowest share of our economy since Dwight Eisenhower was president.” Recent college graduates are suffering from high unemployment and there’s no real reason to worry about government debt levels, but you wouldn’t understand that from that speech.

During the debt ceiling showdown this past summer, when the administration was trying to drum up support for long-term deficit reduction, economic advisors like Gene Sperling argued that new confidence in deficit reduction itself would help the economy, ignoring the fact that the markets, with negative real interest rates, were screaming for the government to run a bigger deficit. Meanwhile, President Obama made references to “structural” issues in the labor market, as if the pain of unemployment wasn’t shared broadly across all occupation, industries and types of workers.

Thus the Democrats spent 2011 – which could have been a crucial year for the recovery – in a futile debate with the Republicans over the budget.

Regular readers will note that it formalize a lot of points that have been floating around this blog over the year.  There’s also sections on the battles over monetary policy and housing/foreclosure fraud in 2011 – check it out!

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3 Responses to Live at The Nation – Reviewing a Wasted, Lost Year on the Economy

  1. ZeroInMyOnes says:

    Collectively, we vastly underrate the extent to which we are ruled by public relationists.

    Our Founders would be aghast.

  2. Edwin Herdman says:

    I think the problem wasn’t just Republicans, but just as much the insinuation of rich interests into the political platform and the leadership of critical blocs of both ruling parties. For the Democrats, leaders in the Capitol seemed as clueless about the proper organization of priorities (jobs first, austerity last) although some individual legislators rebelled at hints of attacks on entitlement programs – unfortunately, not enough to come through as anything like an organized bulwark of defense for the poor and middle class.

    The White House has fared even worse, in part because of the occasional reminders of its apparent transience (those few reminders that escape this mostly opaque Administration). The reviews of Ron Suskind’s “Confidence Men” suggest to me that even the President has had little success in steering his Administration, as that same Administration is staffed with those who will even stoop to mocking whatever policy stands he wishes to make when it doesn’t fit that pro-Wall Street agenda (perhaps trite to say, but “markets” doesn’t really cover the narrowness of it).

    Even last year I thought the calls to oust Timothy Geithner as being too close to Wall Street were obnoxious; now they look much more responsible. Of course, the candidate himself, Mr. Obama, spoke of Wall Street, corruption, and “punishment for those who set this fire.” The memory of his most recent evidence of engagement with the problems of unemployment in America, at the “Pass This Bill” speech, has been swept away like the last tenacious fall leaves clinging to barren branches.

    Amazing to think of the wealthy infiltrating the Democratic Party like fifth columnists, but there you have it. The average American is aware, at some level, of this, but so far I haven’t seen a push back against the people in the party who sell out their constituents.

    There is one other piece of the puzzle, however. How did this Austerian, or Debt Clock, or Norquistian, view of economics take hold so much that there was no pushback when the debt analysts (like Moody’s) all decide to spring demands on the government at a politically fortuitous moment (for Republicans), without suffering any credible pushback?

  3. Sebastian says:

    Really interesting discussion about the global economy with Chris Martenson and GoldMoney’s James Turk:

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