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Key takeaway:
Lack of leadership: There was nothing in this speech that we didn't want to hear. You would think that's a good thing. It's not. The essence of leadership is to get us to do things that we need to do, but would rather not.
Key takeaway:
Lack of leadership: There was nothing in this speech that we didn't want to hear. You would think that's a good thing. It's not. The essence of leadership is to get us to do things that we need to do, but would rather not.
Economy policy has had a big few weeks. The Senate has been huffing and puffing about Federal Reserve Chairman Ben Bernanke. President Obama gave his first State of the Union Address. The world's beautiful people gathered in Davos for the World Economic Forum.
This stuff matters, enormously. The global economy is still in a precarious place. Here then is my rundown on the biggest developments (in roughly chronological order), along with the grade I would give them if they were in one of my intermediate public policy courses.
1. The Senate Votes Down an Independent, Bipartisan Budget Commission. (Grade: F) This is one of the most distressing economic events of 2010. The Senate broached the idea of doing something that I've long embraced -- bring in some objective, credible outsiders to outline the tough, unpopular things that Congress has to do in order to stave off fiscal meltdown. An independent commission would inform the public about these difficult choices and give political cover to the politicians who will ultimately have to make the tough votes.
The commission was killed by a Senate filibuster. Some Democrats feared that the commission would call for cuts in entitlement programs; some Republicans feared a recommendation for tax increases. Earth to the Senate: Both of those things are going to have to happen if we plan to pay our bills in the long run, which is almost certainly what a sane, bipartisan, objective, economically-literate commission would have reported. When the Senate votes against even seeking this outside wisdom -- not binding on anyone -- it's a sign that we as a nation are still deep in fiscal denial.
2. The Senate Confirms Bernanke for Another Term as Fed Chair. (Grade: B) This is good news and would have earned an A if the whole thing had not been so fraught with political posturing. I suspect that history will be kind in evaluating Bernanke's response to the extraordinary events of the 2008 financial crisis.
Bernanke may deserve some blame for not spotting the problems earlier, and he has not been a great communicator. But as an expert on financial panics and the Great Depression he was the right guy in the right place at the right time [Clearly Dr. Wheelan is a monetarist!]. The Fed has been creative and aggressive in dealing with a situation that could have spiraled into a complete global financial meltdown. Bernanke deserves a second term.
3. President Obama Freezes Federal Non-Security Discretionary Spending for Three Years. (Grade: F) If we're in a fiscal hole, how can a spending freeze get an F? Because it's worse than doing nothing. Obama's spending freeze exempts the places where most of our money is going -- the military and entitlements. In fact, our entitlement spending is so out of control (particularly Medicare for an aging population) that if we eliminated ALL federal discretionary spending without touching entitlements we would still have to borrow money from China to pay the bills in 20 or 30 years (assuming we're still credit-worthy by then).
If the U.S. were a household in fiscal distress -- overdue mortgage payments, big credit card bills coming in the mail, not enough savings for college -- Obama's spending freeze would be the equivalent of shopping for a cheaper cable TV provider.
4. Obama's State of the Union Address: (Grade: C-) The president gets some credit for creating, by executive order, the Budget Commission that the Senate refused to approve. He also, rightfully, called on the Republicans to put up or shut up. They've been successful at foiling Democratic plans (which on health care is probably not a bad thing). Now the Republican minority with their new 41st senator needs to help govern, which means playing a constructive role in doing sensible things at the federal level.
On the whole, however, this was the most disappointing speech I've ever watched Obama give. I met him many years ago, when he was still a no-name guy running for the Senate from Illinois. He was thoughtful and articulate and refreshing for a politician. Most important, he came across as smart, whether one agreed with him or not. I felt like he was addressing me as an intelligent, mature adult. In stark contrast, the State of the Union felt like it was pitched at fifth graders. (I haven't chosen that age arbitrarily; my sixth grade daughter found the speech simplistic and annoying.)
This was a speech worthy of a political hack, not of the smart, thoughtful former University of Chicago law professor lurking somewhere within President Obama. Lest this be interpreted as partisan: Not only did I run for Congress as a Democrat last year, but I co-hosted a fundraiser for Obama in New Hampshire when he was running for president. And the Republican response was just as bad, only much less relevant.
There was plenty to critique in the State of the Union, but here are my three main objections:
What was the point? The speech was roughly 70 minutes. It was too long and covered too much. A few days or weeks later, how much of it do you remember? Which parts are people still talking about? My first job out of college was writing speeches for a U.S. governor, so this criticism comes from the former speech writer side of my brain. The purpose of a speech like this -- a unique opportunity to stand in front of Congress and the nation -- is to chart a clear legislative path, or to mobilize national support, or to get us to think about a few key priorities in a new way.
If this were our pep talk in the locker room at half time, we'd run back out on the field with no idea of how we're supposed to play differently.
Bad economics: It wasn't just the speech-writing side of my brain that was disappointed. The president rightfully drew attention to our fiscal challenges, but then rattled off all kinds of new tax breaks, as if these aren't just a different kind of government spending. If I pay less in taxes because of one these tax credits, and we don't cut spending, then the rest of you are going to have to pay more to make up the lost revenue.
Some of the points were just goofy, such as the pledge to double U.S. exports. It is not obvious that doubling exports is possible, or even desirable. For example, one quick way expand exports would be to promote a collapse of the U.S. dollar, which would make our products much cheaper to the rest of the world. I don't think that’s a good idea.
Most important, the speech grossly oversimplified the economic challenges we face, usually by creating villains (banks, insurance companies, greedy CEOs). These parties obviously share some culpability, and politics demands some hyperbole. But the problem is that if you sell the public on an oversimplified diagnosis of a problem, then it becomes darn tough to sell them on the complex solutions that actually make economic sense.
If a student in a mid-level undergraduate course had given this speech as an oral exercise to demonstrate knowledge of public economics, he or she would not pass.
Lack of leadership: There was nothing in this speech that we didn't want to hear. You would think that's a good thing. It's not. The essence of leadership is to get us to do things that we need to do, but would rather not. An army commander makes us take the next hill. A visionary business leader streamlines a company. A personal trainer makes us keep running when we'd rather stop and have a donut.
Public policy is the same. The president needs to be the guy urging us to do the economic equivalent of taking the next hill, whether it is fixing entitlements, curbing health care costs, raising the cost of carbon-based fuels, saving more, or doing anything else that requires some sacrifice in the short run in order to get us to a better place in the long run.
A political campaign is all about promising us dessert. Governing is more about fruits and vegetables. I'm not convinced the Obama administration has made that transition yet. And the Republicans are mostly just throwing food at this point.
5. Davos World Economic Forum. (Grade: Incomplete) I have no idea what these people are doing. Really.
That's not a lot of good grades. If this were a student at midterm, the message would be clear: You can do better. In the case of President Obama, and his very talented team of economic advisers, I know that to be true. His classmates, the Republicans, could help a little. We should demand as much.
This stuff matters, enormously. The global economy is still in a precarious place. Here then is my rundown on the biggest developments (in roughly chronological order), along with the grade I would give them if they were in one of my intermediate public policy courses.
1. The Senate Votes Down an Independent, Bipartisan Budget Commission. (Grade: F) This is one of the most distressing economic events of 2010. The Senate broached the idea of doing something that I've long embraced -- bring in some objective, credible outsiders to outline the tough, unpopular things that Congress has to do in order to stave off fiscal meltdown. An independent commission would inform the public about these difficult choices and give political cover to the politicians who will ultimately have to make the tough votes.
The commission was killed by a Senate filibuster. Some Democrats feared that the commission would call for cuts in entitlement programs; some Republicans feared a recommendation for tax increases. Earth to the Senate: Both of those things are going to have to happen if we plan to pay our bills in the long run, which is almost certainly what a sane, bipartisan, objective, economically-literate commission would have reported. When the Senate votes against even seeking this outside wisdom -- not binding on anyone -- it's a sign that we as a nation are still deep in fiscal denial.
2. The Senate Confirms Bernanke for Another Term as Fed Chair. (Grade: B) This is good news and would have earned an A if the whole thing had not been so fraught with political posturing. I suspect that history will be kind in evaluating Bernanke's response to the extraordinary events of the 2008 financial crisis.
Bernanke may deserve some blame for not spotting the problems earlier, and he has not been a great communicator. But as an expert on financial panics and the Great Depression he was the right guy in the right place at the right time [Clearly Dr. Wheelan is a monetarist!]. The Fed has been creative and aggressive in dealing with a situation that could have spiraled into a complete global financial meltdown. Bernanke deserves a second term.
3. President Obama Freezes Federal Non-Security Discretionary Spending for Three Years. (Grade: F) If we're in a fiscal hole, how can a spending freeze get an F? Because it's worse than doing nothing. Obama's spending freeze exempts the places where most of our money is going -- the military and entitlements. In fact, our entitlement spending is so out of control (particularly Medicare for an aging population) that if we eliminated ALL federal discretionary spending without touching entitlements we would still have to borrow money from China to pay the bills in 20 or 30 years (assuming we're still credit-worthy by then).
If the U.S. were a household in fiscal distress -- overdue mortgage payments, big credit card bills coming in the mail, not enough savings for college -- Obama's spending freeze would be the equivalent of shopping for a cheaper cable TV provider.
4. Obama's State of the Union Address: (Grade: C-) The president gets some credit for creating, by executive order, the Budget Commission that the Senate refused to approve. He also, rightfully, called on the Republicans to put up or shut up. They've been successful at foiling Democratic plans (which on health care is probably not a bad thing). Now the Republican minority with their new 41st senator needs to help govern, which means playing a constructive role in doing sensible things at the federal level.
On the whole, however, this was the most disappointing speech I've ever watched Obama give. I met him many years ago, when he was still a no-name guy running for the Senate from Illinois. He was thoughtful and articulate and refreshing for a politician. Most important, he came across as smart, whether one agreed with him or not. I felt like he was addressing me as an intelligent, mature adult. In stark contrast, the State of the Union felt like it was pitched at fifth graders. (I haven't chosen that age arbitrarily; my sixth grade daughter found the speech simplistic and annoying.)
This was a speech worthy of a political hack, not of the smart, thoughtful former University of Chicago law professor lurking somewhere within President Obama. Lest this be interpreted as partisan: Not only did I run for Congress as a Democrat last year, but I co-hosted a fundraiser for Obama in New Hampshire when he was running for president. And the Republican response was just as bad, only much less relevant.
There was plenty to critique in the State of the Union, but here are my three main objections:
What was the point? The speech was roughly 70 minutes. It was too long and covered too much. A few days or weeks later, how much of it do you remember? Which parts are people still talking about? My first job out of college was writing speeches for a U.S. governor, so this criticism comes from the former speech writer side of my brain. The purpose of a speech like this -- a unique opportunity to stand in front of Congress and the nation -- is to chart a clear legislative path, or to mobilize national support, or to get us to think about a few key priorities in a new way.
If this were our pep talk in the locker room at half time, we'd run back out on the field with no idea of how we're supposed to play differently.
Bad economics: It wasn't just the speech-writing side of my brain that was disappointed. The president rightfully drew attention to our fiscal challenges, but then rattled off all kinds of new tax breaks, as if these aren't just a different kind of government spending. If I pay less in taxes because of one these tax credits, and we don't cut spending, then the rest of you are going to have to pay more to make up the lost revenue.
Some of the points were just goofy, such as the pledge to double U.S. exports. It is not obvious that doubling exports is possible, or even desirable. For example, one quick way expand exports would be to promote a collapse of the U.S. dollar, which would make our products much cheaper to the rest of the world. I don't think that’s a good idea.
Most important, the speech grossly oversimplified the economic challenges we face, usually by creating villains (banks, insurance companies, greedy CEOs). These parties obviously share some culpability, and politics demands some hyperbole. But the problem is that if you sell the public on an oversimplified diagnosis of a problem, then it becomes darn tough to sell them on the complex solutions that actually make economic sense.
If a student in a mid-level undergraduate course had given this speech as an oral exercise to demonstrate knowledge of public economics, he or she would not pass.
Lack of leadership: There was nothing in this speech that we didn't want to hear. You would think that's a good thing. It's not. The essence of leadership is to get us to do things that we need to do, but would rather not. An army commander makes us take the next hill. A visionary business leader streamlines a company. A personal trainer makes us keep running when we'd rather stop and have a donut.
Public policy is the same. The president needs to be the guy urging us to do the economic equivalent of taking the next hill, whether it is fixing entitlements, curbing health care costs, raising the cost of carbon-based fuels, saving more, or doing anything else that requires some sacrifice in the short run in order to get us to a better place in the long run.
A political campaign is all about promising us dessert. Governing is more about fruits and vegetables. I'm not convinced the Obama administration has made that transition yet. And the Republicans are mostly just throwing food at this point.
5. Davos World Economic Forum. (Grade: Incomplete) I have no idea what these people are doing. Really.
That's not a lot of good grades. If this were a student at midterm, the message would be clear: You can do better. In the case of President Obama, and his very talented team of economic advisers, I know that to be true. His classmates, the Republicans, could help a little. We should demand as much.
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