No Jobs, No Leadership: Obama's Big Fail
You can parse the numbers however you like, but the latest snapshot of the labor market released by the government on Friday tells a dismal story that is already familiar beyond the realm of professional economists and policymakers: The American economy is in grave trouble.
We have no engine for growth, no good reason for businesses to believe that actual human beings will soon have more money to spend, which means employers are inclined to hunker down and keep their costs low by limiting their writing of paychecks. In short, a feedback loop of declining fortunes.
The worst part is what most Americans know in their bones, not from government reports and the abstract musings of economists, but from the everyday fears that accompany glancing at their checkbooks and their latest credit card bills: There is no relief in sight. No one in a position to influence this depressing picture is expending real energy to improve it, and least of all inside the White House, where leadership is imperative.
It would be disingenuous to pin the blame for the chronically lean job market on the Obama administration. The blame goes back over more than a quarter-century: to Ronald Reagan, who turned tax-cut pandering into high art, thus making it politically impossible for his successors to tax the wealthy, thereby accelerating the economic inequality that has left so many Americans unable to spend; to Bill Clinton, who helped turn Wall Street into a wild-west casino, laying the ground for the worst financial disaster since the 1930s; to George W. Bush, who continued both of these projects while wasting our treasure on a pair of ill-conceived wars.
But we have every right to demand that the president of the moment lay out a serious and ambitious plan to dig ourselves out of this hole. On that score, Barack Obama -- who came into office with such grand plans and such a capacity to instill hope -- has proved a disappointing failure.
His task was no less than finding a way to engineer an economic transformation, one that would restore the traditional promise of middle-class American life: ample reward to finance the necessities of life -- housing, food, health care -- for anyone willing to work for them. The disaster he inherited had rendered that promise inoperative. The economy had become dependent on the next fix from the fantasy dealer. First, the technology bubble of the 1990s, which juiced job growth through the willingness of investors to pour money into anything connected to the Internet. Then, the housing bubble, which unleashed a lucrative orgy on Wall Street while handing paper riches to anyone willing to buy a home -- all premised on the crackpot notion that housing prices could only rise.
Obama had to help us back to reality, forging a sustainable form of commerce. That was never going to be easy. It would require investments into education and national infrastructure, and into potentially productive emerging industries, such as clean energy and the life sciences. Yet time and again, faced with the need to reach for something dramatic and game-changing, Obama started out in compromise mode, quickly settling for initiatives that satisfied little more than the ability to declare progress on one front or another.
Early on, he delivered the $800 billion stimulus spending plan, which certainly made things less awful than they would have been absent that government largess, but fell well short of injecting the economy with lasting vigor. And virtually everything he has engineered since has been weak, ineffectual and -- worst of all -- seemingly calculated for political benefit more than appreciable economic impact.
The administration’s housing rescue plan, which failed to grapple with the financial incentives guiding the mortgage industry, handed out modest payment relief to people patient enough and lucky enough to navigate the process, but it was really an attempt to kick the can down the road: Persuade the markets that help was on the way, and hope that, meanwhile, the economy would heal itself, enabling more people to make their monthly payments.
The bailouts of the financial system, which staved off a feared slide into the abyss, were calculated to buy time while health returned, spurring bankers to start lending anew to businesses hungry for capital. The bailouts restored order in a fashion: fat banking profits are back, along with bonuses for the people with the corner offices. But none of this has translated into healthy flows of capital to productive parts of the economy.
The bankers don’t feel like lending, because they have no confidence there are good loans to be made in a weak economy. Worst of all, the would-be customers – even the creditworthy ones – don’t feel like borrowing, because they don’t see many productive ways to invest money, not in an economy with permanently elevated unemployment.
We do not live in an autocracy, of course. Obama must contend with another branch of government known as the Congress, where political posturing and stagecraft always seems to trump the actual needs of the regular people. Anyone who thinks Obama could have easily prescribed and administered the proper medicine is in cosmic denial about the extent to which dysfunction grips Washington.
That said, this White House has aided and abetted its adversaries through a strategically foolish attempt to carve out a position of seeming responsibility on the federal budget deficit. Back in 2009, just as he stepped into office, Obama could have told us that all options were bad (not to mention inherited from his predecessor): We could add to our debts, accepting the long-term risks, while investing in a meaningful future that holds the promise of putting Americans back to work; or we could obsess about the deficits, listen to Republicans who delivered it (via wars, reckless tax cuts, and the Great Recession) and start hacking away at spending. Instead, Obama began talking like a deficit hawk, even as he unleashed the stimulus spending package, thereby handing the Republicans the club they have been using to beat him with (along with the national interest) ever since.
This is why all the talk in Washington these days is about what to cut, what program to cancel, what aid not to deliver to strapped states, and which layoffs to accept as the unavoidable cost of so-called fiscal responsibility. This is how we got to this moment of permanently diminished expectations and tacit acceptance of the current state of American life: broken to the core and supposedly no will, no money, no political capital to direct at fixing it.
We are fundamentally a better country than this. We have geniuses in our universities, full of promising ideas. We have brilliant entrepreneurs, and hard-working people. We have what remains the largest market on earth for most goods and services.
The military figured out how to swoop into Pakistan and execute Osama bin Laden. Google, Apple and Amazon seem daily capable of exceeding past limitations of one variety or another. Surely we have the capacity to fix our problems.
We have so much work to do -- schools that need to be fixed, potholes in need of filling, a laughably backward railroad system, an antiquated energy grid -- and so many people in need of work. What we lack is the will to connect those two elements. It is far past time we got serious about trying.
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First Posted: 06/03/11 02:14 PM ET Updated: 08/03/11 06:12 AM ET