Thursday, September 02, 2010

National Review is Delusional

National Review does a hatchet job on our current president with their comparison to Reagan. In an article titled "Obama: More a Carter than a Reagan", the unidentified columnist (I wouldn't want my name on it either) goes off on supposed ways that Obama is not up to Reagan's snuff. But I will not let you get away with it this time, my nameless nemesis. Let's break you down:
"Both men faced seemingly intractable economic problems with no easy solution, but Reagan understood that curing the nation’s debilitating inflation was going to involve a good deal of short-term economic pain and political unpopularity, and he was prepared to endure that. By contrast, Obama has done everything in his power to avoid painful corrections — at great cost to future taxpayers."
This is patently false. Reagan and Obama both took actions that caused/will cause our national debt to grow significantly. It was OK then and it's OK now. Not the best place to be, but it beats stagflation (in Reagan's case) and the collapse of our whole economic system (in Obama's case). How do Reagan's debts come at a greater cost than Obama's debts?
"Reagan was candid about what needed to be done, according to the late Bob Novak’s reporting on the subject: “I’m afraid this country is just going to have to suffer two, three years of hard times to pay for the [inflationary] binge we’ve been on,” Reagan said. It is impossible to imagine Obama speaking such unpopular truths in public or in private after having so often expressed the opinion that a massive debt-fueled government-spending program would create millions of jobs and reconstruct an economy torn asunder by years of binging on debt."
Obama has been candid about the difficulties we face, not just to Bob Novak, but to anyone who would listen, obviously not the editors at National Review. And a report just came out that Obama's spending program did create over 3 million jobs, not enough to get us out of the slump, but maybe enough to begin to bring us back toward "normal". Yes, between Bush/Obama's TARP plan and the stimulus, we laid out a lot of money, but this deficit spending is exactly what Reagan did as well.
"We can look back now and say that the solution to stagflation was obvious, but that’s only because the Reagan/Volcker approach worked. At the time, the idea that simply raising interest rates would be sufficient to alter inflationary expectations was a contested proposition."
Is National Review suggesting we raise interest rates? Well, not exactly. Rates have been at the bare-border bottom since we started stimulating the economy after 9/11. The low rates, in large part, helped cause the housing/mortgage crisis. They're still so low that we have no power left to raise/lower it to stimulate the economy. That tool is useless now. Unless you think we need higher interest rates. Is that what National Review is advocating?
"Instead of forcing the bondholders of TARPed banks to share in the sacrifice, Obama opted for a slow-motion bailout that allowed banks to rebuild their balance sheets gradually by borrowing from the Fed at zero and lending to the government at 4 percent."
I am not sure that TARP called for the bondholders to "share in the sacrifice" when the deal was the Bush administration. Had Obama tried to retroactively tax the bondholders, I'm sure "the right" would have been fine with that (rolls eyes). Let's face it, our economic train nearly came off the tracks... what if Goldman/Chase/CITI/BOA etc all were really allowed to face the pain instead of getting a hand from Uncle Sam? What if we had allowed every financial institution to cascade into the abyss we faced? It seems that is what National Review and the Tea Party folks are advocating, now that the bridge has been crossed, and difficult decisions need to be made.
"Instead of letting housing prices find their floor, the administration tried to prop them up with a variety of ill-advised programs."
Those programs have not worked well, but that's more the fault of the banks. Obama has tried to institute help for homeowners in need, but it requires cooperation from the banks. Maybe National Review is advocating more regulations to force banks to do what is needed? I hope so.
"Obama decided to shake things up even more by borrowing at record levels to effectuate a bailout of insolvent state governments, passing a raft of new financial regulations, and attempting to pass a total overhaul of the way the nation uses energy."
Say we don't borrow the money. State governments go unfunded, teachers lose jobs, national parks close, Medicaid payments stop, emergency responders get cut, roads and bridges go without repair, the economy slows more. Good plan, National Review! So, after the greatest near collapse of our economy, you're suggesting we don't "pass a raft of new financial regulations"? Yeah, 'cause things were going so well the way they were, right National Review? Total overhaul of the way the nation uses energy? Why, that sounds like something that could be beneficial in the long run....creating jobs and securing our own energy needs.... who does this Obama think he is??
"So far, we have seen no evidence that Obama’s unpopular policies will pay those kinds of dividends."
Yeah, well so far, Obama is only a year and a half Reagan was in 1982.

You know, this article never even compares Obama to Carter.... what a misleading headline. It should have been "Obama: We will never think he's that great, even if he turns out to be better than Reagan".

The article misses out on a couple of other points. When Reagan took office, our biggest competitor the USSR was bogged down in a difficult war with Afghanistan. Fast forward to Obama's, and guess what....we're the ones fighting a difficult war in Afghanistan. Plus one in Iraq. Kinda makes Reagan's first years look like a cakewalk.

Except Reagan got shot early in his first term. And he deserved and got lots of sympathy. But he was still at the same place in the polls then as Obama is now.

Once Reagan's plans went into effect, yes, the economy grew and that was terrific, but we didn't conquer the deficit spending until Clinton in his last year. Reagan's "heir" George W. Bush blew it all. And it's not like Reagan's policies didn't create problems of their own.... the plight of the many homeless in the 80's comes to mind. And ultimately, Reagan's core belief that regulations were the problem has been proven false, even by the likes of its proponents, Alan Greenspan and David Walker. Obama will make mistakes too, and some bad things will happen no matter what choices he makes, just like happened with Reagan. (Can you spell mujaheddin? Me, either. Thanks spell check!)

I liked Reagan in the 80's and I like Obama now. We don't have to destroy one to appreciate the other.