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It Was Lyndon Johnson in the Roosevelt Room with the Tax Cut!

0,1020,249029,00.jpgI'm pretty confused by Robert Samuelson's column today. He's arguing that the press should be more skeptical of Barack Obama's policy initiatives, but the historical evidence he brings to the question seems peculiar:

All "reforms" do not succeed; some cause more problems than they solve. Johnson's economic policies, inherited from Kennedy, proved disastrous; they led to the 1970s' "stagflation." The "war on poverty" failed. The press should not be hostile, but it ought to be skeptical.

Mostly, it isn't. The idea of a "critical" Obama story is one about a tactical conflict with congressional Democrats or criticism from an important constituency. Larger issues are minimized, despite ample grounds for skepticism.

Huh? There's an argument to be made that the twin spending commitments of Vietnam and the Great Society caused some level of inflation. But I've never heard anyone blame them for the productivity slowdown that underpinned the era's stagnation. And that productivity slowdown -- a fall from 3 percentage points annually to 1.5 percentage points annually -- was the key confounding factor in the era's economic woes. If Samuelson has a theory on this, I'd like to hear it. (Dean Baker, in fact, is willing to extend a Nobel prize for the insight.) But it requires more than a simple assertion. And are we really absolving OPEC's embargo of any responsibility?

Similarly, the "war on poverty" might have failed to kill poverty, but it did a pretty good job wounding it. In 1959, 22.1 percent of Americans were beneath the poverty line. By 1973, 11.1 percent of Americans were impoverished. Medicaid has vastly increased access to health care among the poor. Head Start has done quite a bit to help children born into low-income households.

I do take his point on the nature of a "critical" story, however. But this isn't an Obama-specific problem. This is endemic to the press. Process stories tend to win out over policy stories. The positive coverage of Obama has focused intensely on high poll numbers, the disarray of Republicans, and the sense that his administration has momentum for its agenda. It has, in other words, been process-oriented also. A more negative approach would focus on squabbles between the administration and the Congress, or the administration and John McCain's twitter feed. It's really not as if the Bush-era featured a rigorous press corps obsessed with the outcomes of social policy. If the press turns against Obama, I'd expect a lot more stories on how Rahm Emmanuel's White House fell into angry dysfunction than on how the stimulus spending proved too backloaded to fully close the output gap.

(Photo credit: Wesleyan University.)

By Ezra Klein  |  June 1, 2009; 2:05 PM ET
Categories:  Economic Policy , History , Obama administration  
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Johnson's economic policies sapped our vital fluids, this was well known even to movie makers of the time.

Posted by: bdballard | June 1, 2009 2:50 PM | Report abuse

The productivity slow down did not start until 1974, long after LBJ policies had been in place. Productivity in the late 1960s-early 1970s was quite good.

Moreover, LBJ was aware of the problems of government spending on guns & butter and actually raised taxes in a futile attempt to offset the spending. But it did reduce the deficit. You can blame LBJ's guns & butter for laying the foundation of the 1970s inflation. but not for a productivity slowdown.

Posted by: seerrees | June 1, 2009 2:55 PM | Report abuse

Thanks Ezra for defending the War on Poverty: "Similarly, the "war on poverty" might have failed to kill poverty, but it did a pretty good job wounding it"

Posted by: vandrklw | June 2, 2009 8:54 AM | Report abuse

We lost the war on poverty because we never took seriously -- or never thought of in the first place -- the labor market. Not the way we think of the real estate or stock market.

In the labor market Americans (uniquely; naively?) rely on the "hidden hand" -- just work hard an play by the rules and the mysterious inner machinations of the market will see that you get your fair share -- no need for collective bargaining; least of all for legislated sector-wide bargaining as practiced all over the better paid OECD world.

The upshot: now as much as 25% of our workforce may earn less than the minimum wage? How can that be? I am talking about the minimum under, guess who: Lyndon Johnson -- $10/hr adjusted for inflation in 1968 when AVERAGE INCOME was half what it is now (before the average income of the top 1 percent of households became $1.2 million dollar a year!!! *).

We lost the war on poverty because we on this side of the Atlantic never paid any real attention to the labor market.

Posted by: DenisDrew | June 2, 2009 9:44 AM | Report abuse

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