Since 2009, some economists have insisted that the stimulus was too small. White House defenders have responded that a larger stimulus would not have moved through Congress. But the [Larry] Summers memo barely mentioned Congress, noting only that his recommendation of a stimulus above six hundred billion dollars was “an economic judgment that would need to be combined with political judgments about what is feasible.”Passing health-care reform through "reconciliation":
He offered the President four illustrative stimulus plans: $550 billion, $665 billion, $810 billion, and $890 billion. Obama was never offered the option of a stimulus package commensurate with the size of the hole in the economy––known by economists as the “output gap”––which was estimated at two trillion dollars during 2009 and 2010. Summers advised the President that a larger stimulus could actually make things worse. “An excessive recovery package could spook markets or the public and be counterproductive,” he wrote, and added that none of his recommendations “returns the unemployment rate to its normal, pre-recession level. To accomplish a more significant reduction in the output gap would require stimulus of well over $1 trillion based on purely mechanical assumptions—which would likely not accomplish the goal because of the impact it would have on markets.”
There were two ways for the Senate to approach Obama’s health-care plan: the normal process, which required sixty votes to pass the bill, or a shortcut known as “reconciliation,” which required only a simple majority and would bypass a possible filibuster. Baucus and several other key Senate Democrats opposed reconciliation, and Republicans decried its use on such major legislation as a partisan power grab. Mitch McConnell, the Republican leader in the Senate, complained that using reconciliation would “make it absolutely clear” that Obama and the Democrats in Congress “intend to carry out all of their plans on a purely partisan basis.” On April 10th , Obama’s aides sent him a memo asking him to decide the issue. The White House could still fashion a bipartisan bill, but it was important to have the fifty-one-vote option as a backup plan, in case they weren’t able to win any Republican support and faced a filibuster. They recommended that he “insist on reconciliation instructions for health care.” Below this language, Obama was offered three options: “Agree,” “Disagree,” “Let’s Discuss.” The President placed a check mark on the line next to “Agree.”The pivot from jobs to the deficit:
Obama’s moderation didn’t sway Republicans, nor did his attention to interest groups or his cuts to beloved liberal programs. Through the rest of 2009, as the anti-government Tea Party movement gathered strength, and conservative voters began to speak of creeping American socialism, Obama’s aides quarrelled over how the President should respond. [Christina] Romer wanted him to press the Keynesian case for his policies—to defend the proposition of increased government spending to fight the recession. [Peter] Orszag argued that he needed more support from Washington’s deficit hawks, and urged him to create a deficit commission, partly because “it can provide fiscal credibility during a period in which it is unlikely we would succeed in enacting legislation.”Summary:
It presented Obama with a common Presidential dilemma: Should he use the White House bully pulpit to change minds or should he accept popular opinion? He chose the latter. In his speeches, he began saying, “Americans are making hard choices in their budgets. We’ve got to tighten our belts in Washington, as well.” Romer fought to get such lines removed from his speeches, arguing that it was “exactly the wrong policy.” She thought the President should emphasize that the government would seek to use taxpayer money wisely, and leave it at that. Instead, he seemed to be accepting the Republican case against stimulus and for austerity. She thought he was losing faith in Keynesianism itself.
... Axelrod and other Obama political advisers saw anti-Keynesian rhetoric as a political necessity. They believed it was better to channel the anti-government winds than to fight them. As much as it enraged Romer and outside economists, the White House was on to something. A President’s ability to change public opinion through rhetoric is extremely limited. George Edwards, after studying the successes of Franklin Roosevelt, Lyndon Johnson, and Ronald Reagan, concluded that their communications skills contributed almost nothing to their legislative victories. According to his study, “Presidents cannot reliably persuade the public to support their policies” and “are unlikely to change public opinion.”
Predictions that Obama would usher in a new era of post-partisan consensus politics now seem not just naïve but delusional. At this political juncture, there appears to be only one real model of effective governance in Washington: partisan dominance, in which a President with large majorities in Congress can push through an ambitious agenda. Despite Obama’s hesitance and his appeals to Republicans, this is the model that the President ended up relying upon during his first two years in office. He had hoped to use a model of consensus politics in which factions in the middle form an alliance against the two extremes. But he found few players in the center of the field: most Republicans and Democrats were on their own ten-yard lines. (The Tea Party, meanwhile, was tearing down the goal posts and carrying them away.) This situation is not unprecedented. During much less polarized periods, when it was easier to build centrist coalitions, Franklin Roosevelt and Lyndon Johnson suffered similar fates. “When Johnson lost 48 Democratic House seats in the 1966 election, he found himself, despite his alleged wizardry, in the same condition of stalemate that had thwarted Kennedy and, indeed, every Democratic President since 1938,” Arthur Schlesinger noted in his 1978 biography of Robert Kennedy. “In the end, arithmetic is decisive.”Via Paul Krugman.
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