The Financial Times’ Martin Wolf, who is probably the world’s best (and most respected) financial columnist, argues that Obama’s fate was sealed much earlier than Leonhardt suggests below: Back when the Obama Administration decided on the size of the stimulus.
Unfortunately, the Republicans have succeeded in persuading a large enough portion of the American public that if the patient had been left entirely alone, he would be in perfect health today. This is surely a fairy story. . . . The president’s willingness to ask for too little was, it turns out, a huge strategic error. It allows his opponents to argue that the Democrats had what they wanted, which then failed. If the president had failed to get what he demanded, he could argue that the outcome was not his fault. With a political stalemate expected, further action will now be blocked. A lost decade seems quite likely. That would be a calamity for the US – and the world.
And why did Obama not ask for more? One reason is he did not feel he could afford to pick a fight out of the gate with filibuster-wielding Republican moderates like Arlen Specter, Olympia Snowe and Susan Collins. There was so much more that he wanted to do, including health care reform, a tax on carbon and financial reform. (There is also evidence to suggest that his economic advisers at the time did not do enough to warn him of the long-term risk he was taking with a smaller package.)
Wolf, a master of charts and figures, adds this revealing fact to his analysis: “[F]iscal stimulus was less than 6 per cent of GDP and so accounts for less than a fifth of the cumulative deficits of 2009, 2010 and 2011.” The continuing financial malaise–setting aside the costs of the Bush tax cuts of 2001 and 2003–will likely add far more to the deficit rolls.
To read the Wolf column, which I highly recommend, click here (a free Financial Times registration is required). The story can also be found outside the firewall by searching the headline through Google, “Why US voters are suing Dr Obama.”