Obamanomics: Year One and Beyond

The great strength of Barack Obama's economic policies - in health care, fiscal stimulus, and stabilizing the banking system - has been not to allow the perfect to become the enemy of the good. But, with the time for crisis management coming to a close, he now needs to aim higher if he is to fulfill his promise of a more economically just society.

BERKELEY President Barack Obama has not had an easy first year economically. He inherited a financial system on the verge of collapse. He was bequeathed an economy in recession and an unemployment rate destined to rise. And he faced a Congress and an economics profession with a tendency to confuse these real demons with imaginary ones.

His strength has been not to allow the perfect to become the enemy of the good. His $787 billion fiscal stimulus was good. To be sure, it was based on unrealistically optimistic assumptions about the depth of the recession, the strength of the recovery, and the level at which unemployment would peak. It was too heavily tilted toward tax cuts that would tend to boost saving rather than consumption. And, unaccompanied by a credible medium-term fiscal strategy, it unnecessarily excited the apostles of fiscal doom. But, having said all that, the stimulus package gave the economy a necessary shot in the arm.

Obama’s efforts to stabilize the banking system, it almost pains me to acknowledge, succeeded despite themselves. I would have preferred bigger capital injections. I would have liked to see his administration use its leverage to replace the management responsible for creating the financial mess in the first place.

To continue reading, please log in or enter your email address.

To access our archive, please log in or register now and read two articles from our archive every month for free. For unlimited access to our archive, as well as to the unrivaled analysis of PS On Point, subscribe now.

required

By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in

http://prosyn.org/5yeBXrz;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.