|
| Points for effort |
| James Pethokoukis / Jan 29, 2010, 00:11 IST |
|
Obama: The White House political team loves comparing Barack Obama to Bill Clinton and Ronald Reagan, predecessors who easily won second terms despite early stumbles in their first ones. But the economic and fiscal pincers which constrain Obama are much tighter. None of the president’s proposals in Wednesday’s State of the Union speech can do much to free him.
Obama said high unemployment would be his number one focus this year. No wonder, as it is the issue of most concern to voters, and the biggest reason their support for the president and Congress is falling.
The president made some proposals — money for small business lending and a tax credit for hiring — which may help at the margins. But the new initiatives would probably cost less than $100 billion, a fraction of the $300 billion or so in stimulus spending so far, which has not prevented the unemployment rate from climbing to 10.0 per cent currently from 7.7 per cent at the start of 2009. Good luck finding an economist — even inside the Obama administration — who has great expectations from the proposed new spending.
On unemployment Obama is falling behind his comeback predecessors. Most forecasters see an unemployment rate around 10 per cent heading into 2011. The first full year of the Reagan recovery in 1983 saw the rate fall by 2.5 percentage points, while Clinton inherited a growing economy and a falling unemployment.
Looking at the political damage caused be high joblessness, Obama would no doubt have preferred to announce something bolder. The liberal Economic Policy Institute has a $400 billion plan that takes in everything from tax credits to government make-work positions.
But that price tag doesn’t go with the double-digit deficit, which spooks financial markets and independent voters. Obama nodded in their direction with a proposed idea-seeking commission and a very limited three-year spending freeze. While not exactly a frugal Hooverite response, it’s not exactly New Deal II, either.
Forget Reagan and Clinton. One-term Jimmy Carter might be the better historical comparison.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
Content Guide
