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I am not aware of any body of literature in macroeconomics -- orthodox, heterodox, whatever -- that would justify such a claim.

The justification was likely Obama's compulsion to engage in preemptive concessions which yield him nothing - unless he really is a right wing mole. Richard Koo clearly demonstrated the cost of NOT providing sufficient counter-cyclical spending in The World in Balance Sheet Recession (PDF) with the case of Japan post '89. Where the Government fails to use fiscal policy to make up the lost production the society suffers a permanent loss of the work that could have been done and adds debt that does not result in an increased ability to repay that debt. Wise fiscal policy creates a self liquidating debt. US policy is, of course, "All Money To The Banks!" - the perfect Capitalist translation of "All Power to the Soviets!".

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jul 27th, 2013 at 03:05:22 PM EST
I honestly don't think it's intentional on Obama's part.  Obama's a law professor.  He's only going to be as good as the people around him, and it's difficult to expect a politician to be able to distinguish between various economists' arguments.  Especially given that, from his perspective (and that of the conventional wisdom), Summers oversaw a period of growing prosperity.

At some point one should expect him to get it, but he got reelected -- so, again, from his perspective, it worked out.

In short, stupid, not evil.  I hope anyway.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Jul 27th, 2013 at 03:11:50 PM EST
[ Parent ]
Obama was a Professor of Constitutional Law who has vigorously followed a policy of 'regulatory forbearance with regard to the financial sector. Of all of the explicit and implied promises he made during his first campaign the ones he has really kept were those he made to the financial sector 'to be there for them' during the '08 campaign when catastrophe was looming. And on issues Obama is probably just to the right of Eisenhower - which doesn't make him a right wing mole, but a right wing candidate. Reminds me of the Toles cartoon showing a mole in a suit setting at a desk at the CIA with the caption " "No one noticed that Aldrich Ames was a mole"

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jul 27th, 2013 at 03:38:41 PM EST
[ Parent ]
Back in 2006, before Democrats retook the House with a platform of economic populism, the Wall Street wing of the Democratic party went on warpath, creating the Hamilton Project. They wanted to attack growing populism in the party.  

Guess who the keynote speaker for the launch of this group was....... Barack Obama......

Other speakers on the panel he participated on:

RESTORING AMERICA'S PROMISE OF OPPORTUNITY,
PROSPERITY AND GROWTH
Washington, D.C.
Wednesday, April 5, 2006

MODERATOR:
PETER ORSZAG
Senior Fellow
Brookings Institution

PANEL ONE -- RESTORING AMERICA'S PROMISE OF OPPORTUNITY, PROSPERITY AND GROWTH:

ROGER C. ALTMAN
Chairman, Evercore Partners
Former Deputy Secretary of the Treasury

SENATOR BARACK OBAMA
Democrat, Illinois
United States Senate

ROBERT E. RUBIN
Director and Chairman of the Executive Committee
Citigroup, Inc.
U.S. Treasury Secretary [1995-1999]

THE REVEREND JIM WALLIS
Founder, Sojourners
Author, God's Politics

Read the speech, and tell me whether you still think that Obama was clueless about what was going on.  The surprise for me hasn't been the extent to which Obama has adopted neo-liberal ideas.  It's the extent to which he's resisted what is obviously the inclination he brought into office.......

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sat Jul 27th, 2013 at 07:30:21 PM EST
[ Parent ]
SEN. OBAMA: Thank you. Thank you very much.

I would love just to sit here with these folks and listen because you have on this panel and in this room some of the most innovative, thoughtful policymakers, people who have both ideas but also ways of implementing them into action. Our country owes a great debt to a number of people who are in this room because they helped put us on a pathway of prosperity that we are still enjoying, despite the best efforts of some.

(Laughter)

SEN. OBAMA: I want to thank Bob and Roger and Peter for inviting me to be here today. I wish I could be here longer. I am going to have to run after a few minutes because we do have an important issue relating to U.S.-India relations.

But when Roger originally called to invite me, not only to this forum but to invite me to engage in this project, I couldn't help but think that this was the sort of breath of fresh air that I think this town needs.

We have all known for some time that the forces of globalization have changed the rules of the game--how we work, how we prosper, how we compete with the rest of the word. We all know that the coming baby boomers' retirement will only add to the challenges that we face in this new era. Unfortunately, while the world has changed around us, Washington has been remarkably slow to adapt twenty-first century solutions for a twenty-first century economy. As so many of us have seen, both sides of the political spectrum have tended to cling to outdated policies and tired ideologies instead of coalescing around what actually works.

For those on the left, and I include myself in that category, too many of us have been interested in defending programs the way they were written in 1938, believing that if we admit the need to modernize these programs to fit changing times, then the other side will use those acknowledgements to destroy them altogether. On the right, there is a tendency to push for massive tax cuts, as Peter indicated from my speech at Knox College, no matter what the cost or who the target is, a view that stems from the belief that there is no role for government whatsoever in the challenges we face. Of course, neither of these approaches really works.

Before we came here, somebody was asking me, how do I maintain my idealism? I do because I think the American people know that neither of these approaches works. I think there is a broad consensus out there in the Country that we should be looking for common sense, practical solutions to the problems that we face. I think that there is a market. I think that there is a demand for solutions that are practical, that are based on facts, that are tested, and that
require us to think in new ways.

A lot of the people who are here today have done that in the administration. Not only have they succeeded on many of their policies, but almost just as importantly, they have failed occasionally and have acknowledged those failures and adjusted their views. I think that is the kind of experimentation and attitude that all our policymaking has to pursue. One thing that we all know is that when you invest in people, people will prosper. When you invest in education and health care and benefits for working Americans, it pays dividends throughout every level of our economy. When you keep the deficit low and our debt out of the hands of foreign nations, then we can all win.

 Now, the economic statistics of the nineties that we are all so familiar with speak for themselves--income growth across the board, 22 million new jobs, the lowest poverty rate in three decades, the lowest unemployment in years, and record surpluses. None of this, I would argue, happened by itself. It happened because the leadership we had, including many in this
room, was willing to take on entrenched interests and experiment with policies that weren't necessarily partisan or ideological.

That is what I hope we will see from The Hamilton Project in the months and years to come. You have already drawn some of the brightest minds from academia and policy circles, many of them I have stolen ideas from liberally, people ranging from Robert Gordon to Austan Goolsbee; Jon Gruber; my dear friend, Jim Wallis here, who can inform what are sometimes dry policy debates with a prophetic voice. So I know that there are going to be wonderful ideas that are generated as a consequence of this project.

Not every idea will I embrace, and I hope that one of the roles that I can play, as a participant in this process, is to not only encourage the work but occasionally challenge it. I will give one simple example. I think that if you polled many of the people in this room, most of us are strong free traders and most of us believe in markets. Bob and I have had a running debate now for about a year about how do we, in fact, deal with the losers in a globalized economy. There has been a tendency in the past for us to say, well, look, we have got to grow the pie, and we will retrain those who need retraining. But, in fact, we have never taken that side of the equation as seriously as we need to take it. So, hopefully, this is not just going to be all of us preaching to the choir. Hopefully, part of what we are going to be doing is challenging our own conventional wisdom and pushing out the boundaries and testing these ideas in a vigorous and aggressive way.

But I can't think of a better start, given the people who are partic ipating today. I am glad that Brookings has been willing to provide a home for this wonderful effort.

Just remember, as we move forward, that there are real consequences to the work that is being done here. There are people in places like Decatur, Illinois, or Galesburg, Illinois, who have seen their jobs eliminated. They have lost their health care. They have lost their retirement security. They don't have a clear sense of how their children will succeed in the same way that they succeeded. They believe that this may be the first generation in which their children do worse than they do. Some of that, then, will end up manifesting itself in the sort of nativist sentiment, protectionism, and anti-immigration sentiment that we are debating here in Washington. So there are real consequences to the work that is being done here. This is not a bloodless process.

I think that as long as all of us retain that sense of passion about the ultimate outcome that we want, which is a stronger, more prosperous America than we are passing on to our children, then I think we will do well in this process. I am glad to be a part of it.

Thank you very much.
(Applause)

So the Clinton years were as good as they come, globalisation is good (even though some see their jobs eliminated and have no prospects) and there is an inherit need to modernize the new deal programs. On the other hand it is important to take care of the human stock with education and health care. And it would be good if something could be done for the saps in Illinois so that they don't seek other political options.

Standard third way.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sun Jul 28th, 2013 at 01:46:33 AM EST
[ Parent ]
When you keep the deficit low and our debt out of the hands of foreign nations, then we can all win.

Two fallacies in one cliche! The only real advantage of the Clinton surplus was as a club with which to beat the Bush 46 administration and even then the Chinese were accumulating US debt instruments. Aristotle claimed that mastery of metaphor was the mark of genius. Here, at a minimum, Obama demonstrates mastery of the fallacious cliche to rhetorical advantage.
There has been a tendency in the past for us to say, well, look, we have got to grow the pie, and we will retrain those who need retraining. But, in fact, we have never taken that side of the equation as seriously as we need to take it.

But Walmart, McDonald's, etc. do their own training and how can you talk of re-training as a solution for shrinking overall employment? At least he mostly got unemployment insurance extended until his second term started even if he 'settled' for half a stimulus.

To do more Obama would have had to seriously engage, himself or via clear proxies, with the rampant tangle of fallacies that is 'mainstream economics' and vigorously deconstruct it in favor of something that works. But that would anger much of the financial sector - with whom he identifies - so, instead, we got 'regulatory forbearance'.    

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jul 28th, 2013 at 09:17:33 AM EST
[ Parent ]
I have to preface this by noting that I don't know a lot about the Hamilton Project.

Echoing ASKOD below, this sounds like the typical middlebrow horseshit that Dem VSPs have been spewing since the Clinton administration.  It was the dominant view among the party powers, especially back in 2006 before the world blew up.  (I think it's less so now, although they still hold a ridiculous amount of influence.)

It still -- again, taking the preface into account -- strikes me as stupid rather than evil, a politician betting on what seems to have worked for the last guy in his party to hold the White House and wanting to be seen as Serious.

I'd also add out of my personal experience that politicians, in general, are not very bright people.  They're half a step above journalists, and you guys know how I feel about journalists' intelligence.  They listen to the people around them, and the people around them are usually there on the advice of the old guard within the party, due to their perceived competence as far as making policies that have gotten other politicians elected to higher offices or reelected to their current offices.  Bill Clinton pretty much acknowledged this in apologizing for his deregulation policies in the '90s.

In that sense, Larry Summers looks great on paper.  Clinton to this day, even after the crisis, has a reputation for sound economic management and was reelected in a landslide.  (Dems should be thankful for that, too, as it undoubtedly helps Hillary should she choose to run.  Hopefully she's bright enough to have learned a few lessons from Obama and her husband.)

None of this is to say that Obama and Clinton don't ultimately own it.  They're their appointments, and it falls on them to make good appointments.  I'm just saying I think it's not surprising to find them making bad ones here, because neither is -- or was, in Clinton's case (to his credit he admits he fucked up) -- really going to know how to distinguish Summers from a competent guy.  It doesn't help either that the guys who are capable of taking him down intellectually also happen to be his longtime friends (although even they seem to be either backing off him or -- in Krugman's case -- sandbagging him).

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Jul 28th, 2013 at 09:06:13 AM EST
[ Parent ]

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