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Barack Obama Economics Financial Crisis

The Obama I Remember

[digg-reddit-me]This is the Obama I remember – the one I’ve been waiting to appear since his election back in November:

If you wonder where his urgency comes from, check out the following graphs:

This first one is from Nancy Pelosi’s blog, The Gavel:

[Click on the above image for a full size version.]

CNN released this graph at the beginning of this year, attempting to place 2008’s job losses in historical perspective:

What’s scarier is that before September, 2008 was not shaping up to be a bad year in terms of job losses. Instead, in the last four months of the year, almost 2 million jobs were lost. 

This final graph is from Stephen at Live Granades:

As you can see, the 1974 decline was steeper – and the economy was able to bounce back from that quickly – although that recession was controlled all the way by the Fed – which now has exhausted it’s power.

The escalating rhetoric out of Washington today actually reminds me a great deal of the Bush administration’s reaction to September 11. After the attack, Cheney and Bush and the rest of the team demanded unfiltered intelligence briefings regularly – and as they saw the scope and depth of the dangers that might be facing us, they panicked. Every moment, they were staring into the abyss – and they decided to take any measures possible to prevent “the next attack” which everyone saw as imminent. Their fear was an existential fear – which led them to mistake the threat from Al Qaeda for an existential threat. They weren’t entirely wrong – but where they went extremely wrong was in how they refused to back down from their emergency measures after it became clear that another attack was not imminent – or that we were not under constant assault. 

Today, Obama faces a similar crisis – one that seems – with it’s precipitious declines in economic and financial measures – to be existential. It may be so. No one knows exactly what to do to fix this problem – but they know they must do something. As with the George W. Bush administration, mistakes will be made – and given the size of the government, they will probably be large mistakes. 

But the difference will come in the next step. Responding to an unprecedented crisis, any administration will likely screw up. If you get it right, it will largely be by accident. But following the crisis – when things are beginning to improve and the imminence of the threat to the nation is no longer pressing – we must reevaluate our entire strategic framework, see what worked and what didn’t, what backfired and what might be able to be improved. The great tragedy of the Bush administration was that they refused to do this for the War Against Terrorism. They never took a step back from the emergency mentality that set in after September 11 to evaluate if our strategy was actually working – and instead attacked as weak and even traitorous anyone who suggested doing so. 

Obama will do well to remember that the measures he is taking now are emergency measures to rescue the economy – and to be prepared to re-think America’s financial and economic model as soon as this crisis has passed. He has indicated he plans to do so – with his talk of a Grand Bargain. We need to make sure he follows through.

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