As insults fly between political parties as well as the U.S. and S&P, with nations like China chirping in, all the rest of us are left to do is wait.
Republicans insisted on a disastrous debt ceiling deal, but it was Pres. Obama who allowed it all to play out as it did instead of demanding a clean debt ceiling and sticking to it or invoking the 14th Amendment. The White House showed no leadership at all.
But since what’s past is prologue…
It was a story entitled “Flying Blind” that drilled home the importance of funding our federal government properly to make sure lawmakers we elect have the information they need to run the place. As Lawrence O’Donnell lays out in the clip above, with help from Howard Fineman, as well as Robert Reich, when you don’t have the correct data it’s really hard to enact the proper policies. It’s what got Pres. Obama started on the economic path that is threatening to take down his presidency.
From The Economist earlier this month:
Output in the third and fourth quarters fell by 3.7% and 8.9%, respectively, not at 0.5% and 3.8% as believed at the time. Employment was also falling much faster than estimated. Some 820,000 jobs were lost in January, rather than the 598,000 then reported. In the three months prior to the passage of stimulus, the economy cut loose 2.2m workers, not 1.8m. In January, total employment was already 1m workers below the level shown in the official data.
We can’t know exactly how things would have played out in a world in which key policymakers had better data. If the true scope of the economic disaster in the fourth quarter had been clear, however, it seems certain that Ms Romer’s models would have shown a need for more stimulus, that the White House would have agreed to push for more (and perhaps a lot more), and that Congress would have been much more receptive to a bigger bill. A drop of 8.9% does seem much more terrifying, after all, than a 3.8% decline. Bigger stimulus would have reduced the economic deterioration in subsequent months. The Fed might also have been more aggressive.
[…] What’s striking to me is that as new data have revealed the true dimensions of the 2008 collapse, the public’s perception of events hasn’t much changed. Critics still jeer the stimulus for its failure to deliver promised results, despite the now-obvious inadequacy of the package. Few in Washington seem willing to discuss how drastically officials underreacted in 2009, and how the results of that underreaction are still with us, waiting for a more appropriate policy response. I don’t know which tragedy is the more troubling: the failure to see the true scope of the disaster when accurate numbers weren’t available, or the failure to see it now that they are.
Stop and re-read those numbers in bold above.
The discrepancy is not only staggering, but would cause any White House to react much differently. Obama’s people had the wrong numbers, so they were operating under a horrifically frightening misconception.
George W. Bush had left the economy in a much worse state than anyone had previously known.
Of course, Obama and Democrats came into power in 2009 not wanting to look back and because of it Bush enjoyed a sort of rehabilitation when his memoir came out. It’s a tragic mistake made by amateurs.
The disconnect, however, is that Pres. Obama, Democrats and Republicans are willing to waste the entire month of August on vacation while our country heaves and gasps for economic leadership.
The lack of coherent, determined and fearless leadership, that’s the scariest part of this entire saga and no one has the confidence this element will change any time soon.