Rewarding Sabotage

June 23rd, 2011

From TPM:

They’ve made it explicit. Democrats are accusing Republicans of trying to sabotage the recovery — or at least stall it — by blocking all short-term measures to boost the economy, even ones they previously supported.

Ya think?

And this is news? It’s been happening since Obama took office. When most economists were saying that we needed boosts in infrastructure and other job- and value-creating spending, and that more tax cuts were the least stimulating, Republicans fought tooth and nail for less stimulus and more tax cuts. While the Dems, and especially Obama, have been far too conciliatory and indulgent with right-wing demands, they have worked in mostly the right direction for recovery (or at least a much better direction), and, were it not for the changes they allowed Republicans to wheedle them into making, we’d be in a lot better shape right now.

Much of it may just be Republicans favoring their more wealthy constituents or following the party line, opposing anything Obama and the Dems propose–but it does, in fact, have the overall effect of sabotaging any economic recovery.

Republicans have demonstrated, repeatedly, that they consider their own hold on power as a far higher priority than the health and welfare of the people and the country. Boehner said it clearly enough: “The single most important thing we want to achieve is for President Obama to be a one-term President.” The Republican leadership knows full well that a wrecked economy will hurt Obama and the Dems while they are in office, and that when Republicans take power back, the absence of them wrecking the economy can be played as them “saving” it. In the meantime, they are quite happy to threaten shutdowns and defaults and everything else that could make the economy tank, knowing that so long as Obama is in the White House, everything they do to trash the economy will be “his” fault.

The real tragic irony is that, in 2010, and probably again in 2012, the people, as a result of this purposeful slowing of the recovery, have rewarded and will likely reward those who harmed them the most.

  1. Tim Kane
    June 24th, 2011 at 06:07 | #1

    I don’t think the public is completely at fault for voting Republican. They voted for change in 2008. That was clear. Change in the economy meant demand side bias policies over the supply side bias that had been going on for nearly 30 years. Obama as much said so the week after he was elected. But that was the last we heard of demand side bias policies from him. Krugman warned him in January 2009 that he’d only get one bite at the apple for a stimulus, so he should go big. Obama went for a nibble. That’s not the public’s fault. That’s Obama’s fault.

    It’s a two party system. If you don’t like Republican policies you vote the opposite. The public did that in 2008. Unfortunately, the guy they elected doesn’t like or understand demand side economic policies. So everyone voted for change BUT Obama. So then the public punished him in 2010. That’s not the public’s fault: they have only two choices. If Dems won’t deliver then they vote the other way. The problem isn’t Republicans being Republicans, its Democrats being Republicans, specifically, Obama.

    It appears Obama may finally be figuring things out.

    I think the release of oil from the strategic reserve into the international supply is a big event. To wit:

    It signals awareness on Obama’s part (1) that the economy has a demand problem, meaning it needs demand side bias solutions – cheaper gas prices will give people greater purchasing power in other areas of the economy and thus increase demand. (2) That Obama knows that he’s not going to get any help from the Republicans at all.

    These, if true, are big inflection points for the Obama administration, and made strictly out of desperation. Churchill said, “Americans always do the right thing, after having tried everything else first.” Recall that we were the last major economy out of the Great Depression, after having started it in the first place. Here we see signs, belatedly, of Obama shifting to demand side bias policies. Hello! McFly!! Anybody home?!!! Long over due arriving at the obvious.

    Obama’s options on improving the economy are limited to only the unilateral actions he has available to him. And the oil card is one of the few he has available to him. One barrel is equal to $110 – so every barrel that gets released is like injecting $100 dollars into the economy.

    Obama needs higher employment to get re-elected. That means more demand. Nothing else will work. His options are limited because congress won’t implement a stimulus. He does have unilateral control of the Strategic Oil Reserve. The 30 million barrels he is releasing over the next two months are worth about $3 billion in the open market. That’s not a lot of money, but it’s a start. Presumably help can come from other areas, such as the Fed, left over money from other programs such as TARP and the stimulus.

    Of course it’s complicated because oil is an internationally traded commodity: the act is being coordinated with allies in Europe and the Far East. The real affect takes place in the international markets.

    The release of that oil could also have an effect on speculators as well. If any oil is being held off market by speculators Obama has just sent a signal that he’s going to break them.

    There are tons of other possible effects of this move. Will Saudi’s reduce production? Will China increase purchases by like amounts? Could increase demand from cheaper oil be enough of a spark that sets off a virtuous cycle increase spending leading to increased investment leading to increased spending again, and so on?

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