Why the Obama Plan is working

[mustang84isu]

Businessweek

 

Why the Obama Plan Is Working

Polls say the economy is heading in the wrong direction. Markets say it's back on track. This time, the markets are right

 

By Mike Dorning

 

It's never easy to separate politics from policy, and the past 18 months have only increased the degree of difficulty. The U.S. has been through a historic financial crisis followed by a historic election and a series of historic federal gambles—from bailing out AIG and GM to passing a $787 billion stimulus and a $940 billion health-care reform bill. All that risk has made policy more complicated and politics more fraught ("You lie," "Babykiller").

 

A Bloomberg national poll in March found that Americans, by an almost 2-to-1 margin, believe the economy has gotten worse rather than better during the past year. The Market begs to differ. While President Obama's overall job approval rating has fallen to a new low of 44%, according to a CBS News Poll, down five points from late March, the judgment of the financial indexes has turned resoundingly positive. The Standard & Poor's 500-stock index is up more than 74% from its recessionary low in March 2009. Corporate bonds have been rallying for a year. Commodity prices have surged. International currency markets have been bullish on the dollar for months, raising it by almost 10% since Nov. 25 against a basket of six major currencies. Housing prices have stabilized. Mortgage rates are low. "We've had a phenomenal run in asset classes across the board," says Dan Greenhaus, chief economic strategist for Miller Tabak + Co., an institutional trading firm in New York. "If Obama was a Republican, we would hear a never-ending drumbeat of news stories about markets voting in favor of the President."

The rallying markets haven't been bothered by these differences, largely because of their context. Martin Baily, who was a chairman of the Council of Economic Advisers during the Clinton Administration, says he suspects Rubin and the rest of the Clinton economic team would have made similar decisions—on bailouts, fiscal stimulus, and deficit spending—had they faced a crisis of similar magnitude. "I think we would have gone the same way," he says. The Obama team, he continues, navigated the financial crisis while never losing sight of the importance of private enterprise and private markets (a point Obama stressed in his Feb. 9 interview with Bloomberg BusinessWeek). "A lot of people on the left were urging them to nationalize banks. Instead they injected capital, and now they're pulling capital out. That looks more like Rubinomics than a set of socialist or left-wing economic policies." The Obama economic team looks a lot like Rubin's, too; three of its most prominent members—Treasury Secretary Tim Geithner, National Economic Council Chairman Larry Summers, and White House budget director Peter Orszag—are Rubin protégés.

"When you take it all together, the response was massive, unprecedented, and ultimately successful," says Mark Zandi, chief economist at Moody's Economy.com (MCO). Even Obama critics like Phil Swagel, assistant Treasury secretary for economic policy under George W. Bush, acknowledge that White House policies have been successful. "They could have done a better job" by spending more of the stimulus on corporate tax cuts to boost hiring and investment, says Swagel, now an economics professor at Georgetown University's McDonough School of Business. "But their economic policies, including the stimulus, have helped move the economy in the right direction."

[RangerM]

I'll go along with what is said here, including your headline, if you can elucidate what the Obama plan is.

 

I seem to recall the "plan" included passing a huge stimulus to prevent unemployment from rising above a certain threshold, and yet it did, and remains so even today.

 

Is the "plan" saying we're going achieve something, so the opposite happens?

 

As far as the market, it's good news for my 401(k). It's also little solace to the out-of-work, since much of the business profits come from the efficiency gains via reduced payrolls.

[napfirst]

Here's part of the "plan" that's not working:

 

 

Defaults Rise in Loan Modification Program

The number of homeowners who defaulted on their mortgages even after securing cheaper terms through the government’s modification program nearly doubled in March, continuing a trend that could undermine the entire program

Read more

[taxman100]

In a nutshell, Obama's economic plan is to have the Federal Reserve print a lot of paper money, and give it to people to spend.

 

The rally in the stock market has been on historically very light volume. There is not a lot of conviction from the big money that the government spending recovery is going to stick.

[Trimdingman]

The plan is doing nothing more than buy time by having America consume a part of itself. A real plan has to be implemented fast. If that plan fails, the only viable alternative is war. We are probably at that stage already.

[NickF1011]

The plan is doing nothing more than buy time by having America consume a part of itself. A real plan has to be implemented fast. If that plan fails, the only viable alternative is war. We are probably at that stage already.

 

Overreact much?

[grbeck]

The article assumes that the plan is responsible for the improved results. Yet a case could be made that the bailout of financial institutions - which, as we all know, was started by the despised George W. Bush - is what really saved the economy. The rest of the garbage had to work itself out of the system, and Obama had very little to do with that. In some cases, he has attempted to slow down that process.

[suv_guy_19]

Of course, if can also be argued that both programs contributed to things not getting as bad as they otherwise would have. The TARP program prevented the banks from collapsing, while the stimulus spent so far helped to smooth out the decline so that the economy didn't fall by as large of a percentage. It can be (and really should be) argued that both programs worked as designed...fortunately.

[Trimdingman]

Overreact much?

 

If anything, I am under-reacting. The boat is sinking, yet people are partying like the good times are rolling again. Compare the increase in the stock market to the increase in the price of gold to get the true picture. We are on a downward spiral which can't be reversed. All we can do is plan on how to deal with the aftermath. Instead, we are being told that everything is fine. The government's agenda is to hide the truth from the people until after the mid-term elections in November.

[NickF1011]

If anything, I am under-reacting. The boat is sinking, yet people are partying like the good times are rolling again. Compare the increase in the stock market to the increase in the price of gold to get the true picture. We are on a downward spiral which can't be reversed. All we can do is plan on how to deal with the aftermath. Instead, we are being told that everything is fine. The government's agenda is to hide the truth from the people until after the mid-term elections in November.

 

Well I hope you enjoy life in your bunker.

[Mark B. Morrow]

I'll go along with what is said here, including your headline, if you can elucidate what the Obama plan is.

 

I seem to recall the "plan" included passing a huge stimulus to prevent unemployment from rising above a certain threshold, and yet it did, and remains so even today.

 

Is the "plan" saying we're going achieve something, so the opposite happens?

 

As far as the market, it's good news for my 401(k). It's also little solace to the out-of-work, since much of the business profits come from the efficiency gains via reduced payrolls.

 

The ridiculous assertion is that the Stimulus was a failure because unemployment exceeded 10%. First, the stimulus passed was smaller than the plan originally proposed which lessened its effectiveness. Second, a large part of the Stimulus was made up of TAX CUTS pushed by Republicans who in the end, despite many compromises made to alter the bill to include their ideas, refused to vote for it. Third, another large segment of the Stimulus went to aid the States who would have laid off tens of thousands without it.

 

So unemployment peaked at just over 10%. It isn't hard to imagine where it would have peaked with out the Stimulus. Where was the Republican Plan to stimulate the economy? What assumptions were they making about unemployment?

[NickF1011]

Where was the Republican Plan to...

 

Is anyone else sick of this blame the other guy bullshit that permeates all levels of government these days? And no, it wasn't always like this.

[grbeck]

The ridiculous assertion is that the Stimulus was a failure because unemployment exceeded 10%.

 

It was the president himself who said that, if this plan were not passed, unemployment would exceed a certain figure (I believe it was 9+ percent).

 

The plan was passed, and unemployment still went above that figure.

 

So, if anyone is making an assertion about the stimulus package that could be characterized as "ridiculous," that is because they were recalling the president's own words, not because they are making up stuff to make him look bad. Someone needs to learn the meaning of "underpromise and overdeliver."

[napfirst]

It was the president himself who said that, if this plan were not passed, unemployment would exceed a certain figure (I believe it was 9+ percent).

 

The plan was passed, and unemployment still went above that figure.

 

So, if anyone is making an assertion about the stimulus package that could be characterized as "ridiculous," that is because they were recalling the president's own words, not because they are making up stuff to make him look bad. Someone needs to learn the meaning of "underpromise and overdeliver."

It was not supposed to go above 8%

[RangerM]

The ridiculous assertion is that the Stimulus was a failure because unemployment exceeded 10%. First, the stimulus passed was smaller than the plan originally proposed which lessened its effectiveness.

The propose plan was $775 Billion. The one passed was $787 Billion, iirc.

Second, a large part of the Stimulus was made up of TAX CUTS pushed by Republicans who in the end, despite many compromises made to alter the bill to include their ideas, refused to vote for it.

So what? Does that make the question of whether or not the plan is working moot?

Third, another large segment of the Stimulus went to aid the States who would have laid off tens of thousands without it.

 

So unemployment peaked at just over 10%. It isn't hard to imagine where it would have peaked with out the Stimulus.

If you recall, they said where it would peak. Here's the President, in his own words.

http://www.youtube.com/watch?v=cTDln2f0GvQ&feature=player_embedded

 

Here's his plan, as written.

 

Here's what was forcast in that report:

What was the reality?

Where was the Republican Plan to stimulate the economy? What assumptions were they making about unemployment?

It was there, you just didnt hear about it. Search for it if you want.

 

Again I'll ask, what is the Obama plan, and by what measure do we know it's working? If you can give me a realistic answer, I'll go along.

Edited April 19, 2010 by RangerM

[Mark B. Morrow]

Is anyone else sick of this blame the other guy bullshit that permeates all levels of government these days? And no, it wasn't always like this.

 

 

The point is that it is the Republicans who have been dumping all over the Stimulus, all the while taking credit for the Stimulus Projects in their States and Districts. Even the conservative economists have concluded that the situation would be far worse had there been no Stimulus Plan.

 

‘Vital’ to Economy. Indiana Republican Steve Buyer, who last year called the stimulus bill a “sham,” wrote LaHood -- a former Republican congressman from Illinois -- to seek $80 million for a highway construction project that “is vital to the economic health of North Central Indiana.” At the end of the letter Buyer wrote: “Ray, appreciate your personal attention. Steve.”

 

Oklahoma Representative Tom Cole opposed the stimulus a year ago, calling it a “recipe for disaster” instead of a road to recovery.

 

‘Catalyst’ for Jobs

 

In September, Cole sought funding for a grant to help develop an international trade center on a 2,700-acre industrial park, a project he called “a catalyst for the potential creation” of almost 30,000 jobs. “It is with pleasure that I write this letter in support of the Ardmore Development Authority,” Cole wrote. Cole didn’t comment on the request after a series of e-mails to his office.

 

 

 

http://www.bloomberg.com/apps/news?pid=20601109&sid=aPeLiub0jnQE&pos=10

 

So 10% unemployment is worse than 8%, 15 % would be even worse. The cost of doing nothing would have been worse than what was done. It wasn't a G-D guarantee. I guess everytime a politicial is off on his estimate he's a failure. Wow, Wall Street was pretty far off. So were Cheney and Rumsfeld about the duration of Afghanistan and Iraq.

 

Ranger, They underestimated the unemployment rate with the Stimulus. The same assumptions would have been wrong as to the effects of no Stimulus i.e. even higher unemployment.

Edited April 19, 2010 by Mark B. Morrow

[NickF1011]

The point is

 

No, my point is, whether Democrat or Republican (of which I am neither), politicians are both doing nothing but harm to our country while this petty blame game continues to boil over.

[Mark B. Morrow]

January 27, 2009

 

"I think it's a reasonably well-designed package," said Mark Zandi, the chief economist for forecaster Moody's Economy.com and a former adviser to the presidential campaign of Republican Arizona Sen. John McCain.

 

Private-sector economists who support the stimulus plan say that it could be made better, and, yes, bigger.

 

"I would make the package bigger . . . increase the package to over $1 trillion," Zandi said.

 

 

"Aiding states will prevent them from taking actions to balance their budget — cutting spending and raising taxes — that will make the recession worse," said Alice Rivlin, a former Fed governor and a prominent economist with the center-left research center The Brookings Institution. Most state constitutions require budgets to be balanced.

 

Read more: http://www.mcclatchydc.com/2009/01/27/60859/gop-may-vote-no-but-economists.html#ixzz0lZO3gYcz

 

The republicans in Congress made a POLITICAL calculation that opposing every obama program would energize their base. The opposition has been on that basis not on what's in the best interests of the Country. They want Obama to Fail and are working for that end...Just like Limbaugh told them to do.

[NickF1011]

The republicans in Congress made a POLITICAL calculation that opposing every obama program would energize their base. The opposition has been on that basis not on what's in the best interests of the Country. They want Obama to Fail and are working for that end...Just like Limbaugh told them to do.

 

And just like Democrats did for 8 years of the Bush presidency. They both suck to their core.

[grbeck]

So 10% unemployment is worse than 8%, 15 % would be even worse. The cost of doing nothing would have been worse than what was done. It wasn't a G-D guarantee. I guess everytime a politicial is off on his estimate he's a failure. Wow, Wall Street was pretty far off. So were Cheney and Rumsfeld about the duration of Afghanistan and Iraq.

 

The point isn't that 10 percent is worse than 8 percent. The point is that you accused critics of making "ridiculous" assertions that the stimulus wasn't effective, and it turns out that the president himself set a target and this stimulus package failed to achieve it. The critics were only using HIS criteria, not just pulling numbers out of a hat, or making stuff up to make him look bad, as you suggested.

 

As I said, "underpromise and overdeliver."

 

And there is no proof that the cost of doing nothing - letting this play itself out - would have been worse over the long haul. And please note that the stimulus packages used by Roosevelt in the 1930s constituted a BIGGER portion of the total GDP than the Obama stimulus does today, yet they still failed to pull the country out of the Great Depression. So one wonders just how big people think that this stimulus package should be.

 

As for the handling of Iraq and Afghanistan - I seem to recall that the Republicans paid a heavy price (the loss of Congress) for the Bush Administration's handling of the Afghanistan and Iraq wars during the 2006 midterm elections, and voter unhappiness with the duration of those wars played a role in Obama's victory in 2008. So it's not as though Bush or the Republicans got away with anything - at least, if we look at elections results, they didn't. On the other hand, someone recently called Iraq a "success." I believe that a certain vice president named Joe Biden pronounced that judgment. Unless he is now part of the vast right-wing conspiracy.

 

And I also seem to recall that the current president campaigned as someone who would operate differently, and not do things like that (i.e., whip up hysteria to get a bill passed, engage in unsavory horse-trading or legislative bribery during the legislative process, or make unsustainable promises to get what he wanted). Either we can take this as evidence that he really is more of the same, or he is discovering that governing is a lot different from campaigning.

 

Are people being hard on him? Sure, to some extent, but HE and his supporters set up those lofty expectations. Right after the election, it was hard to tell whether we had elected a president or installed a new pope.

 

And he's the president of the United States, not just another hand-picked, coddled back bencher installed by the Chicago Democratic political machine in some tenured office. People and pundits are harder on the president. Just ask George W. Bush or Bill Clinton, or the first Bush.

 

To put this in automotive terms - people were very disappointed when the original Ford Taurus turned out to be a lemon in many ways (faulty transmissions, fragile head gaskets on the 3.8 V-6), while they shrugged when the Chevrolet Celebrity turned out to be a turd. The Taurus really did seem to be new and different at first, while the Celebrity looked like more of the same old stuff from day one.

 

In the end, they both sold lots of Honda Accords.

 

Unfortunately, we don't have viable third party right now.

Edited April 19, 2010 by grbeck

[RangerM]

So 10% unemployment is worse than 8%, 15 % would be even worse. The cost of doing nothing would have been worse than what was done. It wasn't a G-D guarantee. I guess everytime a politicial is off on his estimate he's a failure. Wow, Wall Street was pretty far off. So were Cheney and Rumsfeld about the duration of Afghanistan and Iraq.

 

Ranger, They underestimated the unemployment rate with the Stimulus. The same assumptions would have been wrong as to the effects of no Stimulus i.e. even higher unemployment.

I'm sure you'd admit that it's not how it was portrayed.

 

Regardless, I'll agree that you're probably right in that without the outlays to the State, the effect on States' budgets would have been more severe.

 

But, at the risk of being harsh I'll ask, so what? As it is, the only growth in employment has been public sector. While that may be a feel good policy, it doesn't defray the costs that will endure even after recovery. We've added to overhead expenses, that only take more monies from the producers of society and slow economic expansion.

[RangerM]

How reliable are the numbers?

 

The number of jobs in the U.S. is currently 129.7 million. So to justify the Administration’s current claim of 2.8 million jobs “created or saved” by stimulus, they need to also claim that without that stimulus there would be only 126.9 million jobs. That’s exactly what they do, displayed as the “baseline projection” level in the graphic below from an April 14, 2010 report:

An inconvenient truth, at least for the Obama Administration, is that once upon a time, in their January 2009 Romer/Bernstein Report they told America that without their stimulus there would be 133.9 million jobs. That’s right, in order to make it look like their stimulus has “created or saved” 2.8 million jobs, the Obama Administration first had to whack 7 million jobs from their previous estimates.

 

Before you attack the source, please explain why the math is wrong.

Edited April 20, 2010 by RangerM

[xr7g428]

Ranger,

 

Mark is REQUIRED to:

 

Attack the source.

 

Attack the writer.

 

Remind us that the problem was inherited from Bush.

 

Tell us that the situation would have been worse if not for Obama.

 

Remind us that Bush caused the problem.

 

Blame the stimulus program on Bush.

 

Claim that all conservatives secretly like the program.

 

Point fingers at any Republican that got stimulus funds in their district.

 

Call any opposition obstructionist.

 

Play the birther, tea-bagger, or race card.

 

Mention any recent morals scandal involving Republicans.

 

Blame any flaws in any program on attempts at bipartisanship.

 

Ignore any facts that are "inconvenient".

 

Claim that Limbaugh, Fox ,or Beck, is the source of all dissent.

 

State that the Republicans never offered any kind of plan.

 

Insist that policy criticism is really just wanting Obama to fail.

 

And this is just the first page!

 

 

Now how can you have time to deal with the facts given that work load?

 

It's comes so naturally it's scary: deflect and dismiss.... deflect and dismiss....

[napfirst]

Ranger,

 

Mark is REQUIRED to:

 

Attack the source.

 

Attack the writer.

 

Remind us that the problem was inherited from Bush.

 

Tell us that the situation would have been worse if not for Obama.

 

Remind us that Bush caused the problem.

 

Blame the stimulus program on Bush.

 

Claim that all conservatives secretly like the program.

 

Point fingers at any Republican that got stimulus funds in their district.

 

Call any opposition obstructionist.

 

Play the birther, tea-bagger, or race card.

 

Mention any recent morals scandal involving Republicans.

 

Blame any flaws in any program on attempts at bipartisanship.

 

Ignore any facts that are "inconvenient".

 

Claim that Limbaugh, Fox ,or Beck, is the source of all dissent.

 

State that the Republicans never offered any kind of plan.

 

Insist that policy criticism is really just wanting Obama to fail.

 

And this is just the first page!

 

 

Now how can you have time to deal with the facts given that work load?

 

It's comes so naturally it's scary: deflect and dismiss.... deflect and dismiss....

I think that describes him well, I don't think you missed a single one.

[Mark B. Morrow]

Ranger,

 

Mark is REQUIRED to:

 

Attack the source. Where the source is biased or wrong.

 

Attack the writer. Where the writer is biased, wrong or hypocritical, having taken the opposite position on similar facts in the past.

 

Remind us that the problem was inherited from Bush. That is just a fact. Obama inherited a mess from Bush.

 

Tell us that the situation would have been worse if not for Obama. I believe that the situation would be worse under President McCain or (shudder) President Palin. That is my opinion.

 

Remind us that Bush caused the problem. See above. Bush had 6 years of control over both houses and never vetoed a single spending bill while deficits rose and taxes were cut. He also kept the cost of 2 wars off budget.

 

Blame the stimulus program on Bush. The need for the Stimulus was based on the economy Obama inherited. Bush had his own Stimulus programs. Remember the $300 tax rebate?

 

Claim that all conservatives secretly like the program. Not all conservatives, but many conservative economists. Many of the ideas now decried by conservatives were once touted as their ideas. See the Republican response to the Clinton Healthcare proposal that included an individual mandate.

 

Point fingers at any Republican that got stimulus funds in their district. Only those who claimed that the Stimulus was a failure or that it didn't create any jobs and then lobbied for Stimulus funds and took credit for the jobs created in their district. Hypocrisy goes directly to the credibility of their statements and should be exposed.

 

Call any opposition obstructionist. Only when it is obstruction for the sake of obstruction. See Richard Shelby's hold on all nominees, Bunning's hold on unemployment compensation and McConnell's lies about the resolution authority in the finance reform bill being a "Bailout".

 

Play the birther, tea-bagger, or race card. Pointing out that some participants in the tea partys are birthers and racists is fair game. If the tea partiers want to be taken seriously they should eliminate the whack jobs, just like the conservatives criticize Code Pink and whack jobs on the left.

 

Mention any recent morals scandal involving Republicans. If you are gioing to hold yourself out as morally superior you should walk the walk. The democrats have their failings as well like Reps Jefferson and Rangel. The Republicans welcomed Vitter back to the Senate despite his Family Values campaign while he was whoring around in DC. The same goes for Ensign.

 

Blame any flaws in any program on attempts at bipartisanship. I have blamed the attempts at bipartisanship that resulted in not a single Republican vote as failures. Obama and some Democrats got nothing for the compromises they made with the Republicans. Bipartisanship works both ways.

Ignore any facts that are "inconvenient". I try not to ignore any actual Facts, "inconvenient" or otherwise.

 

Claim that Limbaugh, Fox ,or Beck, is the source of all dissent. They are not the source of ALL dissent. They are a significant source of dissent for the purpose of dissent alone ( "I want Obama to fail") and a source of misinformation http://www.politifact.com/personalities/glenn-beck/statements/

 

State that the Republicans never offered any kind of plan. In many cases they have not offered a competing plan.

 

Insist that policy criticism is really just wanting Obama to fail. Where it is. See Limbaugh, DeMint, Shelby, Baughmann and others.

 

And this is just the first page!

 

 

Now how can you have time to deal with the facts given that work load?

 

It's comes so naturally it's scary: deflect and dismiss.... deflect and dismiss....

 

 

That didn't take long at all.

Edited April 20, 2010 by Mark B. Morrow