The Financial Times’ Martin Wolf, arguably the most important financial columnist in the world, pens a blistering appraisal of President Obama’s response to the economic decline, and the Republican Party’s counterfactual contention that the stimulus didn’t work and tax cuts don’t increase the deficit. He seems to get the politics exactly right, and I trust his judgement on the macroeconomics.
So what is going to happen? I assume that, after the midterm elections, resurgent Republicans will offer new tax cuts and ignore the fiscal deficits. They will pretend that this has nothing to do with any reviled stimulus, though it is much the same thing – increasing fiscal deficits, thereby offsetting private frugality. That would put the administration on the spot. It would have to choose between vetoing the tax cuts and accepting them, so allowing the Republicans to get the credit for their “yacht and mansion-led” recovery.
Thus Obama will be forced into a corner by an incredible irony: The big solutions he has been proposing for the economic downturn, which the American people have significantly rejected, were not big enough. Read Wolf’s entire column here. Really. It’s worth it. If you don’t want to register for Financial Times, which is free if you only want to view a few stories, you should be able to find the story outside the wall by searching “Obama Was Too Cautious In Fearful Times” in Google.