Thursday, November 17, 2011

Further to Ron Suskind's "Confidence Men"

UPDATE: I've read more of the book now, and would like to re-phrase the below. Ezra Klein is in fact *far* too kind to Obama. The "vice" he speaks of is largely of Obama's own making, through his cowardly inaction and unwillingness to lead. More on this later...

Nevermind, Dan Froomkin does it for us, and much better:

Meanwhile, in a more rigorous critique, Washington Post columnist Ezra Klein, writing in the New York Review of Books, accused the book of "incoherence" largely based on what he called a contradiction between Suskind's description of Summers as all-powerful -- and Suskind's own reporting about the several times Summers' more progressive ideas were rejected as too radical.

But in the book, Suskind never suggested that Summers or Geithner won all their battles; what he described was an environment in which Summers or Geithner -- or Emanuel -- all won some and lost some; an environment in which any one of the old Clinton hands could shoot down a bold idea as untested, too radical, unsellable, or too likely to spook the markets.

The only consistent theme, especially when it came to dealing with Wall Street or job creation, was that whoever was most cautious tended to emerge the victor, either outright, by winning over the president, or because they could block the execution.

Klein also argued that, while Obama clearly underestimated the severity of the financial crisis, the insufficient response was largely the fault of Congress. "The president is but one actor in the drama of American politics, and he is quite constrained in his capacity to make -- or remake -- American policy," Klein wrote.

But Suskind documents case after case in which the White House didn't even try -- and certainly never came even close to twisting arms the way, say, Lyndon Johnson might have.

Words And Deeds

Politically, Obama's economic policy has been a disaster. There was enormous political will to make the banks pay for their mistakes back in 2009 -- and judging by the Occupy movement, it's still there. It remains unsatisfied.

Ezra Klein cuts Obama some slack, and probably has a point:

The problem is political. Having very publicly passed a very big policy that you promised would revive the economy, the country blames you when the economy does not, in fact, revive. Your policies are discredited and your opponents are emboldened. You lose seats in the next election and your leverage over lawmakers. So you can’t, with any prospect of success, go back to the well and ask for a bigger stimulus or more money to buy up bad mortgages. And then, when the economy gets worse, you’re simultaneously in charge and out of options. You came to Washington promising change and now you’re begging for patience. It’s a crummy situation, and there’s no combination of policy proposals or speeches that can get you out of it. But this is the vise that has tightened around Barack Obama’s presidency.

Read the whole thing.

So now we appear stuck in precisely the sort of "lost decade" Japan experienced after merely bailing out its elites. The same "lost decade" Obama wished–and failed–to avoid. The stimulus was too small, as many predicted, and now there's no political capital to go back for the necessary larger one. Why did Obama fail? Because he didn't even try to break up the banks Because his stimulus was too small. Geithner, more than Summers, deserves large credit for this failure. On that score, I think Ron Suskind's verdict is actually pretty fair.

Of course, the bully-pulpit and other tools of both public and private persuasion and pressure are still very much available to any President, should he or she ever choose to use them, for instance in laying down a genuinely motivational, actually truthful narrative. But professionals hate scenarios of real bravery for which there is no preexisting data.