Obama Owes Us An Explanation

President Barack Obama owes us an explanation for why the economy has been working so much better for financial behemoths than it has for ordinary people.
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President Barack Obama wipes his face at a campaign event at Iowa State University, Tuesday, Aug. 28, 2012, in Ames, Iowa. (AP Photo/Pablo Martinez Monsivais)
President Barack Obama wipes his face at a campaign event at Iowa State University, Tuesday, Aug. 28, 2012, in Ames, Iowa. (AP Photo/Pablo Martinez Monsivais)

When President Barack Obama takes the stage this week at the Democratic National Convention, inside Charlotte's aptly chosen Bank of America Arena, he owes us an explanation for why the economy has been working so much better for financial behemoths than it has for ordinary people.

He needs to enhance our understanding of why, nearly four years after he moved into the White House, millions of Americans are still threatened with the loss of their own homes. He needs to bring us up to speed on why tens of millions of working-age people are scrambling to find adequately paying jobs.

He may well have a decent explanation to give us. He didn't create this bleak economy. He inherited it from a long line of irresponsible stewards: Ronald Reagan, who introduced the ruinous idea that prosperity comes via tax cuts; Bill Clinton, who allowed Wall Street to turn itself into Las Vegas-on-the-Hudson; George W. Bush, who made these problems immeasurably worse, while tacking on a couple of calamitous wars, financed with debt.

Obama stepped in just as this disaster reached its worst proportions. He confronted the immediate catastrophe of the Great Recession, plus the financial crisis -- all layered atop a quarter-century of stagnant wage growth. That's a lot of problems to fix. One can reasonably argue that Obama managed it as well as anyone might have, and particularly in the face of obstructionist Republicans in Congress, who sabotaged recovery in pursuit of electoral gain.

The roughly $800 billion package of stimulus spending measures that Obama unleashed made the job market better than it would have been without this infusion. That may not make for good campaign fodder -- "Less Awful Than Otherwise!" -- but it's still true.

And as Michael Grunwald's terrific new book, "The New New Deal," lays out convincingly, we are likely to reap the benefits of that stimulus package for many years via substantial public investments in renewable energy, education and infrastructure.

Obama never promised a quick fix to a crisis that was at least a quarter-century in the making. "The challenges we face are real, they are serious and they are many," Obama said in his inaugural address. "They will not be met easily or in a short span of time."

The month in which he delivered those words, January 2009, saw the economy shed more than 800,000 net jobs, according to the Labor Department, bringing total job losses during the recession to more than 4.4 million. The losses would continue before bottoming out in February 2010. In the 29 months since, the economy has added more than 4 million jobs, or an average of 138,000 per month.

That's not enough. It's not even enough to absorb new entrants to the labor force. It leaves millions of formerly middle class people staring at poverty. It leaves continued economic anxiety in virtually every community. But the relative improvement cannot be denied.

And yet, anyone who has been paying attention has the right to ask whether recent years could have been much better, especially in light of the Obama administration's appalling failure to address the housing crisis, the single largest impediment to a vigorous recovery.

Many experts understood before Obama took office that millions of borrowers owed the bank more than their homes were worth, and this put them in danger of sinking into foreclosure while depressing their spending, which in turn made employers reluctant to hire. This required a muscular program to write down loan balances.

But the president listened to his Treasury Secretary, Timothy Geithner, who had just helped the Bush administration craft a $700 billion taxpayer-financed bailout of major financial institutions. Forcing those banks to absorb fresh losses by relieving homeowners was a no-go.

This is how the Obama administration came to embrace a doctrine that has proven terrible both politically and economically: Bailouts for 'too big to fail' financial institutions, and token assistance for homeowners.

What has President Obama -- who lacks neither intelligence nor analytical skills -- learned from his years in the White House, in terms of guiding the world's largest economy? We have little idea, and we ought to have more. He owes us a full accounting, along with a clear sense of what we can expect from a second term.

Will he dispatch Ed DeMarco, the ideologue who oversees the government-controlled mortgage financiers, Fannie Mae and Freddie Mac, and who has refused to allow them to write down loan balances for distressed homeowners?

Will he give us a Treasury secretary who serves the taxpayer and working people, rather than the interests of Goldman Sachs and JPMorgan Chase?

What can we hope for on the job-creation front? Or should we simply accept that what we have in the way of policy is all that we are going to get? If this is because of the impossibility of dealing with Congress, what lessons has Obama divined from tangling with Republicans on Capitol Hill, and how would he apply them going forward?

On all of these subjects, your guess is as good as mine.

The president has talked little about such things because he has been busy reveling in the feast of political roadkill that is the Romney campaign -- a ceaseless run of inane statements served up by the candidate, making him look like an out-of-touch and insensitive rich guy, all reinforced by his refusal to offer up his tax returns.

This has provided great theater if you're a Democrat. It has surely aided Obama's reelection prospects, reinforcing the central idea of his campaign, that this election is a choice between an America run by and for plutocrats, and one governed in the interest of people worried about paychecks and retirement savings.

But it has also deprived us of enlightenment on the internal lessons of Obama's first term and how he would proceed if given a second.

It is said with legitimacy that Romney's only hope for victory rests on the campaign being dominated by talk of the economy. He wins if and only if he can make the election a referendum on Obama's economic record. But forget Romney and his personal prospects. The nation as a whole needs a serious discussion about the chronically weak economy, for the simple reason that this is the defining issue of these times.

Maybe Obama delivered the best lift he could, given the toxic politics of Washington. Maybe he erred and can do better. In any event, we are due an accounting of how the president sees his own record, in order to assess his plans for another go. And given the suffering that much of the country has endured while watching the wealthiest and most powerful prosper, we are owed such an accounting.

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