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Obama and the Politics of the Stimulus



President-elect Barack Obama will deliver a speech this morning to make the case for his stimulus plan -- and begin his defense of the office he has not yet taken.

When President-elect Barack Obama takes to the podium at George Mason University this morning to make the case for swift passage of his economic stimulus plan, he'll be delivering the first major address of his reelection campaign.

Say what?

Yes, we know Obama has not even been sworn in to his first term yet. But, given the titanic shifting of both the American and international economy over the past few months and the high levels of concern/anxiety among average Americans, how Obama handles the ongoing financial crisis will be the single biggest factor in his political viability in four years time.

The president-elect and his inner circle clearly recognize the import of the issue. Unlike his hands-off approach on foreign policy to date, Obama had dived into fixing the economy with relish -- holding a series of high profile and public meetings with his economic team and today using his greatest tool, his gift for oratory, to make the case to the American public.

Judging from Obama's recent remarks -- as well as excerpts provided by the transition office this morning -- the president-elect's strategy on the economy is to give the public a little straight talk (with apologies to John McCain) in hopes that they both understand the depth of the problem and grasp that it will not be a quick fix.

"A bad situation could become dramatically worse" if his economic stimulus plan is not passed, Obama will warn; "our nation will sink deeper into a crisis that, at some point, we may not be able to reverse," he will offer at another moment in the speech.

Obama is working hard to make sure that the frame through which voters see this issue is that of needed sacrifice and patience; that while no one wants the government to simply throw good money after bad, government intervention and spending (not to mention a ballooning deficit in the short term) is the only way to begin to solve this problem.

It's a direct counter to what is almost certain to be the Republican line of attack against Obama in both the near term and the campaign of 2012, that he is a tax and spend liberal who wants government involved in every aspect of American life.

It's also an acknowledgment that the economy is THE issue of the first term of the Obama presidency -- barring some sort of unforeseen event (a la Sept. 11, 2001) that has the potential to change that equation in the blink of an eye.

Expectations for Obama on the economy are high.

In a mid-December Washington Post/ABC News poll, 46 percent said they expected Obama to do either a "great deal" (15 percent) or a "good amount" (30 percent) to improve the economy while 38 percent said they expected him to do "some" and 14 percent said he wouldn't do much. A CNN/Opinion Research Company survey done around the same time showed that eight in ten of those tested had either "a lot" (37 percent) or "some" (43 percent) confidence in Obama's ability to handle the economy.

The stakes for Obama on the economy couldn't be higher. Convince the public that short term and long term actions are being taken to correct the problems, communicate that things may get worse before they get better, and put in place programs that over the next four years will strengthen the economy, and Obama will be sitting pretty for reelection. Fail on any of those fronts and Republicans will be licking their chops as 2012 approaches.

The reelection campaign begins today.

By Chris Cillizza  |  January 8, 2009; 9:20 AM ET
Categories:  White House  
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Comments

If you want to look at early campaign speeches, go back and reread Obama's 2004 address to the Dem Nat'l Convention. I finished 'Dreams From my Father' last night; the speech is included in the edition I have. The entire speech reappeared throughout his campaign this year - we're not a red America or blue America, but a United States, etc. Gov't can play an important, even vital role in citizen's lives - particularly the poor - without getting in the way.

It was either an amazingly prescient speech, or it is a depressing reminder of how little anything changed in the last 4 years of the Bush administration.

Posted by: bsimon1 | January 9, 2009 9:59 AM | Report abuse

leapinin, that's neolib bull. All will spend money recouping debt or tryng to streamline processes, with most companies using it to further outsource sending most of the benefits overseas. What is economically efficient for a global economy won't inherently benefit the US economy (as the last eight years clearly demonstrate). Targeted government spending on programs that produce jobs, on the other hand, will.

Posted by: kreuz_missile | January 8, 2009 4:07 PM | Report abuse

The recession/depression will be longer and more severe by letting government disperse money through government programs instead of consumers and business having more money to spend through lower taxation. Consumers will generally make wiser and more efficient decisions with a dollar while a dollar in government hands turns into pennies through misguided programs, fraud, waste, and bureaucracy.

Posted by: leapin | January 8, 2009 3:59 PM | Report abuse

The best way to increase fast economic activity is to give "personal tax-holiday for a year" instead of doing "this & that". When state governments give tax holidays for a week, the sales goes up, employment increases, industrial production increases and increases overall consumers spending. Why not Federal Government does this simple approach? All the famous economists and their suggestions failed and the economy is going down after spending ~500 Billion. Now new government wants to add another trillion to the same "black hole". As a Scientist, I always look to the simple approaches rather than complex methods. Consumer is simple minded. He could see the numbers in the paycheck. If that increase in the paycheck will stay as increased for some time he will buy a new car, he will expand on house; he will use his credit card for consumer goods. This economic activity will produce more goods and services and more employment. MIT/Princeton/ Howard/Columbia/ U Penn economists failed anyway. Why consumers should follow their new economic stimulus plan?
Manixthoughts.blogspot.com

Posted by: madayilnair | January 8, 2009 3:32 PM | Report abuse

President Bush increased the deficit more than all previous Presidents combined and what do we have to show for it?, a wrecked economy, another 500k jobs down the tubes in December alone and two ongoing wars.

I have nothing against spending tax dollars to create jobs and transform our country to energy independence.

Guys like Boehner have a lot of gall to cry fiscal conservatism after marching lock-step with Bushinomics for the past 8 years.

Posted by: JRM2 | January 8, 2009 3:17 PM | Report abuse

"Two months ago I was two days late and my Capital One rate was changed from 3.99% to 20.1%. "
------
I would advise everybody to get rid of Capital One, they are among the worst credit card companies in existence and seek to screw their customers at every turn. I learned a hard lesson and built up 14k in credit card debt. Over the years I managed to pay it off and now I pay my credit cards off in full EVERY MONTH.

Posted by: JRM2 | January 8, 2009 3:08 PM | Report abuse

Actually, the reelection campaign for 2052 began last night, when our president elect decided she wants to be a two-term president when she grows up and thus resolved to devote an extra 30 minutes to her homework each night.

Posted by: jmink4a5 | January 8, 2009 2:47 PM | Report abuse

"Does anyone else here think that tax rebates or credits for individuals are as silly now as they were when GWB and Congress implemented them last year?"

They are silly, and they won't work for stimulating the economy, but that's not why Obama's put them in the package, it's about winning broader support. He doesn't want this to be a Democratic bill, he wants buy-in from everyone, and that means throwing in tax cuts to appease those pure free marketeers (and by him proposing them, to define the terms-focused lower in the economic spectrum). Tax cuts will only stimulate the economy if the money is spent on goods, services, or investments, not by paying down debt, which is what most folks will do (I'm getting about a $2,000 return under the current system, and every dime of that will be paid to reduce debt, good for me, but not the national economy stimulus wise).

In this sense, tax cuts aren't so much about stimulating the economy as they are about transferring debt from individuals to the government, where it is more manageable and less of a drag on short term growth while outlays in spending will stop the bleeding and make the markets workable again.

Posted by: kreuz_missile | January 8, 2009 2:03 PM | Report abuse

If President-elect Obama wants to jump start this economy his first priority should be to reign in the banks and credit card industry whose policy of slapping usury-style interest rates on card holders has become a national disgrace. The House and Senate have given these companies a license to steal.

I heard stores about 24% and 28% interest rates being charged but always thoughts they were exaggerations until it happened to me. First off, I have a credit score of 790, my wife's is 820 which should indicate our credit worthiness. I have never paid a normal monthly payment on a credit card, I always pay 50% to 100% more than the payment due. Two months ago I was two days late and my Capital One rate was changed from 3.99% to 20.1%. Not being able to alter this absurd situation I paid off my card and will never use them again... but most people are not in the position to pay off a $12,000 balance and they are imprisoned in this kind of debt with the blessing of Barney Frank and Christopher Dodd and their like-minded criminals in the House and Senate who do not seem to have a conscience. These elected officials are no different than loan sharks or the mafia by giving their blessings for this behavior.

It is time that President-Elect Obama take action and clamp down on the credit card industry that resorts to this kind of behavior that destroys lives and our economy.

Posted by: gmbooks | January 8, 2009 12:42 PM | Report abuse

This plan counts on the market improving faster than the interest on the debt. It counts on things that haven't been invented yet or sold. It counts on all things around the world being equal as of today. It really is that much money. The rush to commit it like with the Bush ballout should give all of us pause. A person making $20,000 a year would / should think twice if they get a loan approved for $500,000...Maybe the loan is a bad idea unless you are scared into it!

Posted by: star_key2 | January 8, 2009 12:30 PM | Report abuse

This is not the 1930's. They do this plan and people don't see fast enough results...We will see.

Posted by: star_key2 | January 8, 2009 12:22 PM | Report abuse

Only the mentally challenged are focused on the politics of the next election. Thankfully Obama's attitude is focused on reality. We face difficult problems. His attention needs to be focused on coping with those problems. The significance of the outcome will be in what happens with those problems. The politics of future elections will be defined by that context. But those who cannot get beyond a focus on politics at this point are born losers.

Posted by: dnjake | January 8, 2009 12:22 PM | Report abuse

All this spending is wrong no matter who does it. I want to here the word "cut" in this context..."I will cut government spending." Investing tax money in welfare, unemployment and further entitlements will not grow the enconomy very fast if at all. We should have never given any money to failed banks and investment firms to start with. We already spent / mortgaged ourselves with Bush. The Obama plan will lead to even worse inevitable inflation. Clinton reduced the debt, but obama will historically expand it. Clinton was much more financially conservative.

Posted by: star_key2 | January 8, 2009 12:18 PM | Report abuse

The positive poll numbers for Barack Obama on the economy now are rediculous, since they measure nothing but expectations. The Obama-supporters when asked will always give Obama high numbers, even though he's done nothing but give them promises. In two years though when Obama's Socialist and Marxist ideas kick in that will surely put the American economy into the tank, these polls will tell a different story. He and the Democratic Party--controlled Main Stream Media will blame President Bush of course (and they'll probably get away with it) but it'll be they, and their Socialist tax-and-spend policy chickens comming home to roost. Call it schadenfreude, but it'll be fun when the Obama ahole supporters have to face reality and stop believing in Obama's fairy tales.

Posted by: armpeg | January 8, 2009 12:12 PM | Report abuse

He's got to do something bold, or at least appear to be bold.

The first salvo of the $500 per taxpayer didnt really do anything to provide comfort to those who are worried. I was a little surprised to see $500 (and I'm sure its phased out for anyone making over about $75K or so - i.e., most white collar jobs in Metro DC). $500 for most people is gas $ and utilities for a single month - IF that.

Posted by: wahoo_Mike | January 8, 2009 11:22 AM | Report abuse

"Does anyone else here think that tax rebates or credits for individuals are as silly now as they were when GWB and Congress implemented them last year?"

I think writing checks is as or more silly now than it was then. I'm more open to changing the payroll tax to reduce contributions from people at the low end of the wage scale. I'm marginally open to tax credits designed to accomplish the same thing.

Posted by: bsimon1 | January 8, 2009 11:22 AM | Report abuse

This may be the first major address of his not-yet-presidency, but not his re-election campaign. There is such a thing called governing. Unless you interpret every act of governance through the lens of the next election, this does not count as campaigning. It is governing. Chill out on the re-election stuff until he's taken his first vacation sometime next summer. Then we can begin to assess the issues that may predominate in 2012. In 2004 was anyone prediciting that the economy would make it all but impossible for a Republican to win the White House? We just don't know what issues will be dominant so long from now.

Posted by: psears2 | January 8, 2009 11:15 AM | Report abuse

The next new economic position will be to appoint Bill Clinton as Master of the Oral Office...we must keep smut alive and well. Flint will gladly assist Bill with Photo Documentation and availabilty of "new interns" But only after 5billion bail out, of coarse.

Posted by: doggit1 | January 8, 2009 11:15 AM | Report abuse

Obama's only mistake so far was his failure to demand that Commander-in-Chief security software be installed on his Blackberry. What use is the Pentagon if it can't secure a Blackberry?

Posted by: blasmaic | January 8, 2009 11:12 AM | Report abuse

Chris,

Be a reporter and report the facts, criticize the decision based on facts.
But don't try to politicize the facts and events. These are serious time and we have serious issues to be solved.

Be a part of the solution or shut up !

Think about your upcoming baby before you politicize national issue just after 2 years of election cycle.

Posted by: rakeshpol | January 8, 2009 11:09 AM | Report abuse

Well put, bsimon.

Does anyone else here think that tax rebates or credits for individuals are as silly now as they were when GWB and Congress implemented them last year?

The proprietor of a MX restaurant I favor with my biz gave me an earful yesterday at noon about how silly $300B in tax rebates at $500/taxpayer was. He asked me rhetorically how well that had worked to stimulate the economy last spring/summer. He suggested that $30B of stimulus through the SBA to expanding small businesses would go a lot further, using 10x less funds.

I hasten to add that this man's entire extended family, as far as I can see, are small biz people - relatively successful restauranteurs, auto shop owners, and cosmetologists.

Posted by: mark_in_austin | January 8, 2009 11:08 AM | Report abuse

To extend bsimon's remarks, Chris's post reeks of self interested wishful thinking. The type of thinking that has resulted in extreme partisianship/gridlocked government of the last 8-10 years.

Posted by: adhardwick | January 8, 2009 11:05 AM | Report abuse

Another vote of support for bsimon1's comment.

Posted by: Kili | January 8, 2009 10:44 AM | Report abuse

To quote one awful Washington Post reporter, "yaaaaaaawwwwwnnnnnn."

Posted by: havok26 | January 8, 2009 10:40 AM | Report abuse

amen, bsimon1

Posted by: kreuz_missile | January 8, 2009 10:14 AM | Report abuse

The Fix writes
"The reelection campaign begins today."

This fits the adage that if the only tool you have is a hammer, every problem looks like a nail. If your job is to analyze politics and elections, every speech looks like a campaign event.

Posted by: bsimon1 | January 8, 2009 10:09 AM | Report abuse

" Unlike his hands-off approach on foreign policy to date, Obama had dived into fixing the economy with relish"

I think some read a bit too much into this. The PResident-Elect can never have a positive impact on foreign affairs, thye have no power at their disposal to impact policy until sworn in, and the nature of their bully pulpit can only serve to show division in the US, undermining whatever our foreign policy is. The domestic economy, however, is a whole different story. Economics is in large part about expectations, and the President's power is as much about the ability to set positive expectations for the future through policy, both current and planned for the future. Setting policy for foreign relations is done by the executive branch, but fiscal policy (taxes, spending, etc), though it may begin with presidential proposals, begins at the policy level in Congress and must work its way to the PResidents desk. For all these reasons, Obama is already beginning to take control of economic policy but can't touch foreign policy- the the inherent differences in the policymaking apparatus.

Posted by: kreuz_missile | January 8, 2009 10:00 AM | Report abuse

I think the public figured out last summer that the economy was falling apart. Subsequent events on a global level show how deep and potentially long this recession will be. Obama (and other global leaders) have their work cut out for them. However, quite a bit is out of their hands. Unless the banks start lending again, nothing much will happen anywhere.

That said, I don't think the Republicans are going to have an easy time painting Obama as a tax & spend liberal when W did his best to raise government spending and the deficit. They'll also have a difficult time pinning this recession on Obama as W will leave office with the unemployment rate north of 7%.

Obama has already laid the groundwork in terms of letting people know there won't be a quick recovery. I think people are willing to give him the benefit of the doubt. There will be a greater indication of this after the 2010 elections. But at this point, I think the public is tired of thinking about elections and want to see their leaders in action.

Posted by: RickJ | January 8, 2009 9:56 AM | Report abuse

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