Obama's Economy

In Michigan last week, President Obama took full ownership of the economy, Bush legacy assets and all. This couldn't be more welcome as we move into the second wave of recovery.

More than a year ago, candidate-Obama had stood on a General Motors shop floor in Janesville, Wisconsin and delivered a landmark campaign speech setting out his economic philosophy. He diagnosed our malaise as the result of almost thirty years of misdirected investments. Our beggar-thy-neighbor approach had favored the privatization of privilege over the common good.

Obama spoke of how decades of these failed government policies had undermined worker security and wages. The answer was a renewed investment strategy, a reforging of the basic public-private partnership underpinning our social compact. Obama's portfolio would be judged by its ability to promote the common good.

Seventeen months later, as Obama returned to the Rustbelt, much had changed. The Janesville GM plant closed before his inauguration. Supporters are growing anxious. Thankfully, his investment strategy is not the Bush Iraq War-style shock-and-awe that we have grown used to. Instead, Obama's road to reinvestment is planned and methodical-accountable. Still, urgency not delayed gratification is Obama's overriding aim and mandate.

The American Recovery and Reinvestment Act has moved its first tranche to market. Whatever its inefficiencies, it has still provided more bang for taxpayer buck than the TARP money to date. Despite thirty years of attack on our government institutions, cities and states remain better investment vehicles than our banks. Even setting the ethic of public service off to one side, governors and mayors hope for reelection rather than to extract spectacular bonuses from the public purse.

The second tranche of stimulus money will, however, be different from the first. The typical description of the Reinvestment Act as combining direct grants with tax breaks is a mischaracterization. In fact, the Act promises two types of public works money, the direct grants in the first half and then the generous tax bond incentives in the second. This second half is now on the way.

We have yet to feel the full force of the second half of the Recovery Act. Through these tax provisions, it aims to create overwhelming incentives to move TARP money into public works. These projects are called P3s. When combined with pension fund capital and sovereign wealth, by some estimates, we are talking about upwards 450 billion dollars. This is the second wave of our recovery. It promises jobs, bridges and clean energy.

However, the specter of Bush and thirty years of privatization still haunts this public money parked in Goldman, Citi, Morgan Stanley and elsewhere. The stubborn insistence on enormous bonuses, on bypassing environmental regulation and on sidelining public participation in basic planning decisions as a precondition to cutting these P3 deals pervades. The pull by beggar-thy-neighbor privatizers to re-direct this public money to create a massive company town, where tax haven planners formulate our public policy and equal opportunity into a ponzi scheme, is still strong.

Thus, President Obama's return to the Rustbelt to make clear that the economy is now his was a reassuring sign. If the TARP banks are to be a main investment vehicle for the next stage of recovery -- as they should be, it is after all our money not theirs -- it is heartening to have someone elected rather than board appointed as our commander-in-chief.

Comments

[sc300nc]

How big of Obama to finally take responsiblility for his failed economics that have led us to where we are today. Tax and spend will not work, yet he goes forward spending more money than any president ever has. He should have taken responsibility months ago and inititiated some responsible programs that would reduce our plight instead of adding to it.

[Corve DaCosta]

You could have fooled me. I thought Bush was still in the whitehouse because everything bad in the economy he is still being blamed for it. What a pity the president hasn't realized it yet. Obama is wrecking the god damn economy. I wish Biden will come out and tell us what is really going on.

[marinara]

In the blog post's second paragraph, Likosky says Obama's criticism was of our beggar thy neighbor approach that opposes the common good. And Obama's plan would benefit the common good.

The problem is that if the recession continues, doing good isn't really good enough. It doesn't really matter if you have the best arrangement of deck chairs, if your cruise liner is busy sinking after an iceberg collision. I want to know if the blogger thinks that Obama is qualified to handle this recession.

[Nicholas Leavens]

(part 2)
You don't even have to look as far as the Treasury to see things that appear shady. Look no further than the President's closest Aide- Chief of staff Rahm Emanuel. Rahm was on the Board of Directors for Freddie Mac for 14 months. "On Emanuel's watch, the board was told by executives of a plan to use accounting tricks to mislead shareholders about outsize profits the government­-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass." http://www.chicagotribune.com/news/politics/obama/chi-rahm-emanuel-profit-26-mar26,0,5682373.story?page=11)

Also, I fail to see how Obama's road to reinvestment is "planned and methodical­-accountab­le", as you claim. You don't offer anything to back it up with, and you contradict another huff post article in the process.

("States Failing At Stimulus Accountability" -
http://www.huffingtonpost.com/2009/06/12/states-failing-at-stimulu_n_215043.html)
and
("House Dems Take On Geithner Over Bailout Funds" -
http://www.huffingtonpost.com/2009/07/13/house-dems-take-on-geithn_n_230833.html)

So, yes, It is Obama's Economy, and he and Democratic members of Congress will take it on the chin in November 2010 if they continue to provide more of the same economic "leadership" that they have provided recently.

[marinara]

I want to chime in here. The banks the stimulus saved have just paralyzed credit markets by hoarding credit. Meanwhile the federal reserve is in top gear fighting what it thinks is deflation. I want to blame the government for these mistakes, and Obama comes to mind first. I think economic snake oil is plenty effective in good times, but during a recession we need the real stuff.

I also want to point out that the next election will be dominated by defense and our wars and Al Queda, only because that's the only issue the republicans have an edge on.

[Nicholas Leavens]

When you appoint Timothy Geithner to the post of Secretary of the Treasury, it is pretty clear that you wish to NOT change the way things work in Washington. Many examples can be provided of how President Obama's economy is nothing more than more of the same, or is becoming worse due to interfering with the way the free market system works.

While Geithner was President of the NY Federal Reserve, he, "forged unusually close relationships with executives of Wall Street’s giant financial institutions". http://www.nytimes.com/2009/04/27/business/27geithner.htmll) In May 2007, Geithner praised the strength of the nation’s top financial institutions while fighting to allow banks to lower their required capital reserves.

Less than 2 years later, he bailed out these same financial institutions with Taxpayer money. Now, even the special inspector general overseeing the $700 billion financial-sector bailout said the Treasury Department isn't disclosing enough information about how taxpayer money is being spent. http://online.wsj.com/article//SB124810729729665611.html)

[scoops2]

It was obama's economy the second he ran for office. You do not aspire for a position unless you want full responsibility for that position(and everything that comes with it). Also, Obama was a senator. This economy is just as much his as it was bush's.

[pragmaticdallasite]

Um no it's not