Obama: grading his first year’s economic performance/Ed Harrison Credit WriteDown News"

[KoKo]

(For those of us Forced into 401-K's and IRA's..this is an EXCELLENT READ. If you have an interest in how Obama's Programs are going to affect all of Us...Please READ THE WHOLE THING...not JUST MY SNIP.

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Obama: grading his first year’s economic performance

By Edward Harrison of Credit Writedowns

The Democratic defeat in yesterday’s Massachusetts Senate race puts a punctuation mark on the grinding erosion of support for the Obama Administration and its economic policy in a tough first year. Clearly voters were sending the Administration a message that America is on the wrong course with Obama’s poll numbers slipping below 50% by December and Democratic defeats in both of the major state elections in which Obama campaigned in November (Gubernatorial races in Virginia and New Jersey).

But, I don’t think the President gets it. He is holed up in the echo chamber called the White House. If the catastrophic loss in Massachusetts’ Senate race and the likely defeat of his health care reform bill doesn’t wake Obama up to the realities that he is not in Roosevelt’s position but in Hoover’s, he will end as a failed one-term President.

With this in mind, I want to grade the President’s economic policy performance on his first year anniversary, putting Obama’s economic agenda and inheritance in historical terms. I will try to make this as comprehensive as a blog format allows. At the end, I will make some remarks about what to expect going forward.

b]Grade: Incomplete

If I were a university professor grading the Obama Administration’s economic policy, I would give it an incomplete – but with a warning that the final grade was unlikely to be good given what I have seen so far. Barack Obama has been in office for only one year; so, clearly he has a long way to go before we can make a definitive assessment of his economic policy.

Similarities: Reagan and Clinton

When I look at the polling data, two recent Presidents come to mind, particularly because of the economy: Ronald Reagan and Bill Clinton. Reagan entered office during a deep recession, at the tail end of what might be termed an inflationary depression due to secular issues involving fiat currencies, inflation, interest rates, equity market losses, currency depreciation, globalization of the money markets, and de-industrialization in the United States. And to top it off, Reagan suffered another deep recession right after he came to office. For the United States, the 1970s were a catastrophe economically.

The polling data for Obama and Reagan are very similar. The December chart below from Pollster.com demonstrates this.

So, clearly the economy has a lot to do with Obama’s falling poll numbers.

I also look at the early days of the Clinton Administration as a comparison. Clinton was a centrist, triangulating New Democrat who entered office during a period of lingering joblessness which engendered the term jobless recovery. Obama’s situation is similar given the rising unemployment rate today and the job losses despite a broad-based economic pickup (Goldman Sachs is estimating 5.8% GDP growth for Q4 2009). The centrality of healthcare reform in the President’s domestic agenda – and it’s potential failure and the resulting mid-term election losses for Democrats in Congress – makes this comparison even more apt.

However, there are critical differences which I will highlight after making another comparison.

The Roosevelt comparison

Given some of his statements in the past, I suspect the President sees these similarities to Clinton and Reagan. But, it is the comparison to Roosevelt which Obama and his people played up the most during the election campaign and the period just after it.

The media parroted this theme endlessly. As Time put it in the story accompanying the Obama as Roosevelt photo to the right:

Even in the calmest of times, the transfer of presidential power is a tricky maneuver, especially when it involves one party ceding the office to another. But not since Franklin D. Roosevelt took office in the midst of the Depression has a new President faced a set of challenges quite as formidable as those that await Obama. That’s why Obama has been quicker off the blocks in setting up his government than any of his recent predecessors were, particularly Bill Clinton, who did not announce a single major appointment until mid-December. As the President-elect put it in his first radio address, "We don’t have a moment to lose."

Obama is not Roosevelt

But Barack Obama is not Franklin Roosevelt – far from it. He enters office at a point much nearer the beginning of a cyclical downturn as did Clinton and Reagan. His people fail to realize that Obama is more Herbert Hoover than he is Franklin Roosevelt.

What historical period should Obama be looking to then? Clearly, he should be looking to Hoover. And I believe this is very important with the G-20 right around the corner. Any number of pundits from Simon Johnson to Wolfgang Munchau will tell you the G-20 summit will be a big failure. While the Americans are trying to reflate the bubble and bring back the same unbalanced system which got us here, the Europeans are putting their heads in the sand, wishing all of this would go away.

And that’s not a good thing at all. If one thinks back to Hoover again, after a long period of globalization, an interconnected world meant problems in one country quickly became manifest elsewhere. The world’s major nations failed to come together and build a common solution. Some thought themselves immune. But, when the depths of Depression finally came, it was little Austria which ushered it in. And soon, depression was everywhere.

This was 1931. Herbert Hoover was president, not Franklin Roosevelt.

-Barack Obama as Herbert Hoover, Apr 2009

Obama’s failure to understand where we are in the economic cycle and the relationship to historical precedent has been catastrophic to the conduct of economic policy and critical in his missteps. There is more to Obama’s misfortune than a bad economy (see Nate Silver’s take on the Massachusetts special election).

Reliving the Clinton days via Reagan’s silver tongue, Kennedy’s Camelot, and Roosevelt’s New Deal

I feel like the Obama Administration is stuck in the past. They talk about the transformative presidencies of Ronald Reagan or Franklin Roosevelt and the magic Camelot feel of JFK’s time in the White House. But, above all, stands the “Don’t Stop Believin’” retour of the Clinton era. These comparisons to past presidents is blinding the Obama Administration to the realities on the ground (see here and here).

The huge number of Clinton-era re-treads in the Obama Administration should tell you that. And the quote from Time Magazine shows you that lessons learned during the early Clinton days were very much on these policy makers’ minds. The policy agenda (think healthcare and deficit reduction in particular) makes them think that 2008 was a repeat 1992. It was not.

MORE..a LONG READ...but a GOOD ONE for DU "Progressives." Believe Me it's WORTH THE TIME TO READ!

http://www.nakedcapitalism.com/2010/01/obama-grading-his-first-years-economic-performance.html