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Short Term Thinking Hobbled BP -- Will it Hobble the White House?

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By now we all know the story of how corporate execs routinely crank out short-term profits to inflate both quarterly earnings and their executive bonuses while crippling the long-term health of their hosts (the company's they work for). We all know how BP took short-term savings in cut-rate Halliburton concrete instead of investing in the long-term health of the Deep Horizon well.

Unfortunately the Obama Administration has also made similar, corner-cutting short-term decisions at the expense of long term, systemic change. Where those chickens are coming to roost most destructively is with his short-term coddling of the deficit hawks. However the deficit chimera is only the latest in a string of similarly self-destructive moves.

THE STIMULUS

Even the most obstinate (though long discredited) supply siders agreed that the government needed aggressive short-term spending to defibrillate the economy. Hardly anyone felt that the administration's initial investment would be enough to pull us out of a recession strongly enough to encourage significant job growth but the young administration decided against making the case for the long-term fix and instead cut a quick deal for short-term political gain. They won an immediate political victory but the still-fragile economy (and the President's popularity) is now paying the price. The President didn't make the case for the right-sized fix.

HEALTH CARE REFORM

Health care reform was breathtakingly ambitious and long-term, but even here instead of leading with his demands for the best possible systemic solution he ended up having to settle for far less.

THE DEFICIT

Conservatives crow incessantly about deficit-reduction along with their near-anarchic disdain for every non-military government institution. They sing the same song whether the sky is blue or gray, through Clinton surpluses or Bush/Obama deficits. For them, deficit reduction and the concomitant reduction of government into something they could "drown in a bathtub" is a matter of religion and not rational economic thought.

Unfortunately, the president's religion is finding common ground no matter how shaky. He has been so determined to prove to his implacable enemies that he's not a "tax and spend" Dem that he has echoed their deficit hawkishness even though he knows that their policies would drive us into only more misery and persistent unemployment.

As Harold Meyerson wrote last month (and Krugman for over a year now), "The problem with this [aggressive deficit reduction now] is twofold. First, it conflates short-term deficits needed to stanch the recession with long-term issues of fiscal sustainability. Such thinking risks turning a short-term recession into long-term stagnation, much as Japan did in the 1990s by failing to stimulate its economy sufficiently."

The right, whether in the back seat or behind the wheel, wisely boil their messages down to simple mantras like "deficit reduction" or "drill baby drill" and the White House and congressional democrats rarely if ever forcefully push back until it's too late. They sit back while these wrongheaded, short-term ideas take root in the public imagination.

He's a brilliant man and understands the task at hand but his past deficit-hawk rhetoric cripples his ability to truly turn this economy around. As he wrote last week in a letter to congressional leaders: "We are at a critical juncture on our nation's path to economic recovery. It is essential that we continue to explore additional measures to spur job creation and build momentum toward recovery, even as we establish a path to long-term fiscal discipline. At this critical moment, we cannot afford to slide backwards just as our recovery is taking hold."

The problem is, he's making this case a year too late. The deficit hawks have already taken the hill. He will need much more than a letter or two to dislodge them. He will need a ruthless and concerted campaign.

Instead of taking America's pulse and reacting, the president will have to lead Americans into changing our minds.

He will have to win us over again with rhetoric, charm and bold, surprising actions. He needs to explain exactly how much short-term money needs to be spent where and how to get how many back to work. He needs to show us safeguards that the money will be spent wisely. The money needs to be more than just the short-term extended unemployment benefits and aid to states to keep existing workers from being laid off that he's talking about in this letter. He needs to lead with much, much more innovative ideas. He needs to swing the narrative around from their truth to his, through force of will and the moral leadership we crave.

The cynicism and malaise that plagued the country during the Bush years went utterly into remission when Obama was elected. Unfortunately a year later it's back in our bones. We need the medicine that cured it the first time. Inspiration from a leader. Sure, maybe we really are the ones we've been waiting for, but sometimes we need a spark from a transformative leader to remind us that the small-minded and the fearful do not always rule the day.


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