Spending Jitters Don't Change the Fundamentals

By Dan Froomkin
1:21 PM ET, 06/18/2009

According to the latest polls, the American public appears to be increasingly uncomfortable with all that money President Obama is spending -- and its effect on the deficit.

But economists say massive government spending was essential to prevent a much deeper recession -- and that the $787 billion stimulus package passed by Congress may not actually have been big enough. Furthermore, as David Leonhardt pointed out in a seminal New York Times story last week, stimulus spending only accounts for about seven percent of the enormous projected deficit over the next decade.

So when a majority of Americans say, as they do in both of today's major polls, that it's more important to reduce the deficit than stimulate the economy, this indicates two things to me. It suggests a political vulnerability for Obama -- one the GOP is already working hard to exploit. But it also suggests that the public is underinformed about some basic economic realities.

You could say that in turn suggests a second political vulnerability for Obama -- that he's failing in his role, as George W. Bush famously described it, of "explainer in chief." But it could also say something about the media coverage of important issues. Yes, the media routinely fawns over Obama, with over-the-top celebrity coverage that devotes countless stories to what he eats, where he takes his wife and his darling new puppy. But perhaps we're not doing a very good job of reporting on what he's doing and why he's doing it.

The good news for Obama is that the public overwhelmingly thinks the economy -- not the deficit -- is the most important problem facing the country -- by a 38 percent to 2 percent margin, according to the New York Times/CBS Poll. (Jobs and health care came in at 19 and 7 percent, respectively.)

And, overall, his approval rating remains very high. The New York Times finds him stable at 63 (down from all-time high of 68 in April; but consistent with his five-month average.) The Wall Street Journal/NBC poll pegs him at 56 percent approval, down from an all-time high of 61 percent in April.

The polls also find that Americans are growing more confident about the economy. They don't think Obama has taken on too many issues. When his health plan is described to them, they like it, by a 55 to 35 percent margin in the Wall Street Journal poll. In fact, they overwhelmingly support the "public plan" part of his proposal, widely considered its most controversial element.

The problem, then, is all the spending -- and the cumulative federal intervention in private industry. Asked this somewhat loaded question by the Wall Street Journal poll -- "Recently there has been some discussion about areas in which the federal government has taken a greater role, such as taking an ownership stake in General Motors, limiting levels of compensation that corporate executives can receive, and the role the government would play in a new health care system. How much does this concern you––a great deal, quite a bit, just some, or very little?" -- 49 percent said it concerned them a great deal and 20 percent said quite a bit.

Interestingly, Obama himself weighed in on the issue of public perceptions in an interview with the Wall Street Journal on Tuesday. Consider what he said:

I think that if you have an argument made frequently enough — whether it's true or not — it has some impact. I think this particular argument just doesn't bear much scrutiny — but it's a handy cliché. If you want to attack a Democratic President, how are you going to attack him? Well, you're going to talk about how he wants more government and he wants to socialize medicine and he's going to be oppressive towards business. I mean, that's pretty standard fare.

And I'm a little amused by the argument since those who make it seem to have a pretty short memory about where we were just a year ago under all their economic theories — or not even a year ago; six months ago — where we had a pretty good experiment in the approach that they thought we should take. And we — knock on wood — had just barely averted disaster....

And so now the real argument seems to boil down to not dealing with health care or energy. I mean, that's really what this comes down to. And the question I would have is how we can avoid dealing with a health care system that everyone acknowledges is massively inefficient and that is a huge drain on our economy, that leaves 46 million people uninsured and is guaranteed, if we do nothing, to bankrupt both federal and state budgets? Or, alternatively, how can we avoid dealing with a energy dependence that not only helps fund many of our enemies and unfriendly regimes, but is responsible for huge balance-of-payment deficits and a potentially disastrous rise in global temperatures?

Now, I suppose we could just stand pat and not do anything on either of those fronts. Again, that's been tried for four or five decades. And in both energy and health care, the problems have gotten worse, not better. So I think it's my obligation to try to solve these deep-rooted structural problems, because if we are able to solve them in an effective way, then we are creating the foundation for long-term prosperity and economic growth. If we don't, then try as we might, our competitive position in the world is going to continue to erode. And that's not a legacy that I'm interested in bequeathing to my children.

In Obama's view, the stimulus spending is not so much adding to the deficit problem as it is paving the way for a solution. In an interview with Bloomberg's Al Hunt on Tuesday, Obama said he was "confident" that he won't be faced with having to raise taxes on most Americans in order to lower the deficit. But, as he pointed out, "one of the biggest variables in this whole thing is economic growth....If we've got anemic growth, if we don't have a strategy for recovery without bubbles, which is essentially what we've had over the last couple of recovery cycles, then we're going to continue to have problems."

Jeff Zeleny and Dalia Sussman write alarmingly in the New York Times:

A substantial majority of Americans say President Obama has not developed a strategy to deal with the budget deficit, according to the latest New York Times/CBS News poll, which also found that support for his plans to overhaul health care, rescue the auto industry and close the prison at Guantánamo Bay, Cuba, falls well below his job approval ratings.

A distinct gulf exists between Mr. Obama's overall standing and how some of his key initiatives are viewed, with fewer than half of Americans saying they approve of how he has handled health care and the effort to save General Motors and Chrysler. A majority of people said his policies have had either no effect yet on improving the economy or had made it worse, underscoring how his political strength still rests on faith in his leadership rather than concrete results.

But Zeleny and Sussman are twisting some of the numbers here. Fewer than half of Americans approve of his handling of health care only because so many are undecided. In fact, a plurality -- 44 percent -- do approve, compared to 34 who disapprove.

And similarly, when it comes to whether his policies have made the economy better, a large plurality -- 48 percent -- say they haven't had any effect yet. Of those who do see an effect, 32 percent say it's been positive compared to 15 percent who say it's been negative.

Zeleny and Sussman do note, however:

But with a job approval rating of 63 percent, Mr. Obama has the backing of Democrats and independents alike, a standing that many presidents would envy and try to use to build support for their policies. His rating has fallen to 23 percent among Republicans, from 44 percent in February, a sign that bridging the partisan divide may remain an unaccomplished goal....

While Republicans have steadily increased their criticism of Mr. Obama, particularly on the budget deficit, the poll found that the Republican Party is viewed favorably by only 28 percent of those polled, the lowest rating ever in a New York Times/CBS News poll. In contrast, 57 percent said that they had a favorable view of the Democratic Party.

Chuck Todd began his report on the NBC Nightly News this way last night: "The honeymoon is coming to an end." Mark Murray writes for NBC News:

Obama remains a popular figure in the poll. But these numbers on the deficit and the government's intervention seem to mark a new period for the administration, as the public moves from welcoming his inauguration and first days in office to examining his initial actions as president.

Laura Meckler writes in the Wall Street Journal:

After a fairly smooth opening, President Barack Obama faces new concerns among the American public about the budget deficit and government intervention in the economy...

These rising doubts threaten to overshadow the president's personal popularity and his agenda, in what may be a new phase of the Obama presidency.

And in one more bit of poll news, Lydia Saad writes for Gallup that while the public's confidence in Obama to recommend the right thing for reforming health care (58 percent) is lower than it is in doctors (73), it's a lot higher than it is in pharmaceutical companies (40), insurance companies (35), and Republican leaders in Congress (34).

Quick Takes

By Dan Froomkin
1:20 PM ET, 06/18/2009

Helene Cooper and Mark Landler write in the New York Times: "As tens of thousands of Iranian protesters take to the streets in defiance of the government in Tehran, officials in Washington are debating whether President Obama's response to Iran's disputed election has been too muted....[S]everal administration officials acknowledged that Mr. Obama might run the risk of coming across on the wrong side of history at a potentially transformative moment in Iran."

Glenn Kessler writes in The Washington Post: "The administration's stance is practical -- the real power in Iran rests with [Ayatollah Ali] Khamenei, not with whoever is president -- but pressure for a shift in policy will mount if the protests continue to grow and begin to threaten the government's hold on power.

Gary Kamiya writes for Salon: "The shameless fools whose Iraq folly empowered Iran's hard-liners are back, smearing Obama as an appeaser."

Mark Z. Barabak writes in the Los Angeles Times: "President Obama offered a modest expansion Wednesday of benefits for the same-sex partners of federal employees, but failed to quell the anger of many who called the gesture inadequate....Some disappointed by the substance of Obama's act were at least heartened by the symbolism of the Oval Office ceremony."

Said Obama: "Now, under current law, we cannot provide same-sex couples with the full range of benefits enjoyed by heterosexual married couples. That's why I'm proud to announce my support for the Domestic Partners Benefits and Obligations Act, crucial legislation that will guarantee these rights for all federal employees....It's a day that marks a historic step towards the changes we seek, but I think we all have to acknowledge this is only one step. Among the steps we have not yet taken is to repeal the Defense of Marriage Act. I believe it's discriminatory, I think it interferes with states' rights, and we will work with Congress to overturn it."

Scott Wilson writes in The Washington Post: "Lawmakers in many parts of the country are moving far faster and further than the president on issues important to gays. Six states have legalized same-sex marriage, which Obama says he opposes because of his religious beliefs."

Robert Pear and David M. Herszenhorn write in the New York Times: "Partisan anger flared Wednesday as senators began the public drafting of legislation to remake the health care system. By day's end, lawmakers had settled in for a long, hard slog that may not fit with President Obama's goal of signing a bill within four months."

David S. Hilzenrath writes in The Washington Post that Obama's plan to rein in federal spending on health care could make health care more efficient for everybody -- or it could end up simply shifting costs to the private sector.

Ezra Klein blogs for The Washington Post: "Health reform is, I think it fair to say, in danger right now."

There are competing views about the importance of bipartisanship on today's Washington Post op-ed page. E.J. Dionne Jr. writes: "Where did we get the idea that the only good health-care bill is a bipartisan bill? Is bipartisanship more important than whether a proposal is practical and effective? And if bipartisanship is a legitimate goal, isn't each party equally responsible for achieving it?" Meanwhile David S. Broder extolls the virtues of -- you guessed it -- a bipartisan plan.

Carrie Johnson writes in The Washington Post: "A Justice Department report focusing on possible ethics violations by Bush administration lawyers who approved waterboarding of terrorism suspects is still 'a matter of weeks' from release, Attorney General Eric H. Holder Jr. told lawmakers yesterday.... The conclusions of the five-year-long probe are hotly anticipated because they could shed new light on the interplay between the Bush White House, the Justice Department and the CIA in formulating an interrogation policy that critics assert included torture."

Nick Baumann writes for Mother Jones: "Citizens for Responsibility and Ethics in Washington (CREW), which sued the Bush White House over millions of missing White House emails, has released a treasure trove of documents relating to the loss of the emails.... CREW says the headline item is that the documents seem to confirm that emails subpoenaed by Patrick Fitzgerald regarding the leak of Valerie Plame's CIA identiy were among those missing from Dick Cheney's office."

Ann Sanner writes for the Associated Press: "The national service agency's inspector general, fired by President Barack Obama, disputed on Wednesday claims from the White House that he was 'confused' and 'disoriented' at an agency meeting." Here's more from the New York Times.

Tom Hamburger and Peter Wallsten write in the Los Angeles Times: "Neil Barofsky, inspector general of the Troubled Asset Relief Program, is embroiled in a dispute with the Obama administration that delayed one recent inquiry and sparked questions about his ability to investigate without interference."

The New York Times editorial board calls for the repeal of Congress's 2008 revisions to the Foreign Intelligence Surveillance Act: "We do not believe that Mr. Obama is deliberately violating Americans' rights as Mr. Bush did, and it is to his credit that the government acknowledged part of the problem in April. But this nation's civil liberties are not predicated on trusting individuals to wield their powers honorably. They are founded on laws."

Mark Silva blogs for Tribune: "In the realm of presidential interviews, the one promised on Sunday, Father's Day - 'Barack Obama, an American Dad'' - has the potential to outdo even Brian Williams' recent fawning look at the first family inside the White House. Harry Smith of CBS News will conduct this one, interviewing the president on Friday at the White House and presenting his work Sunday morning in the 9 to 10:30 am slot."

Chris Ariens wriets for TVNewswer about the reaction from Fox Newsers to Obama's comment Tuesday that he has "one television station entirely devoted to attacking my administration." "Look, we are just balancing things out. When you watch the other channels, the news channels, it's all -- you know, you don't hear a lot of the criticism," said Steve Doocy. Media Matters has footage of Charles Krauthammer calling fox "the one, only voice of opposition in the media. And it makes us a lot like Caracas where all the media, except one, are state run, with the exception that in Hugo Chavez-land, you go after that one station with machetes. I haven't seen any machetes around here, so I think we are at least safe for now."

Megan K. Scott writes for the Associated Press that some black women "say the new code word for Prince Charming has become so commonplace that they have been asked 'Have you found your Barack?' or told others 'I'm looking for my Barack.'"

The Amazing Shrinking Regulatory Overhaul

By Dan Froomkin
1:03 PM ET, 06/18/2009

I wrote yesterday that it looked to me like President Obama had undershot rather than overshot in his proposals for changes in the nation's financial regulatory system.

David Cho and Zachary A. Goldfarb writes in The Washington Post:

The plan President Obama unveiled yesterday to overhaul the government's oversight of the financial system was not the wholesale remaking of Washington that the administration had initially envisioned.

As the proposal came under intense pressure this spring, its chief architects held firm to a few reforms they deemed the most fundamental to averting another financial crisis while giving ground on nearly everything else.

Time and again, lawmakers, regulators and industry lobbyists pressed their concerns behind closed doors at the White House and the Treasury Department, according to participants.

Joe Nocera writes in the New York Times that:

in terms of the scope and breadth of the Obama plan — and more important, in terms of its overall effect on Wall Street's modus operandi — it's not even close to what [Franklin Delano] Roosevelt accomplished during the Great Depression.

Rather, the Obama plan is little more than an attempt to stick some new regulatory fingers into a very leaky financial dam rather than rebuild the dam itself. Without question, the latter would be more difficult, more contentious and probably more expensive. But it would also have more lasting value....

If Mr. Obama hopes to create a regulatory environment that stands for another six decades, he is going to have to do what Roosevelt did once upon a time. He is going to have make some bankers mad.

Timid as it may have been, however, it still managed to ruffle feathers all over.

Walter Hamilton and Jim Puzzanghera write in the Los Angeles Times:

At its core, President Obama's overhaul of regulations for the financial industry seeks a fundamental change: Make the federal bureaucracy work for consumers, not just Wall Street. And Wall Street, not surprisingly, doesn't like it.

Stephen Labaton writes in the New York Times:

No sooner had President Obama proposed a new regulatory road map for the country's financial system on Wednesday than senior lawmakers expressed reservations about one of the plan's central elements — to broadly expand the reach of the Federal Reserve to regulate financial risk across the entire system.

And Binyamin Appelbaum writes in The Washington Post:

Legislators, regulators and advocates all welcomed the idea of change, but industry groups already are arguing that elements of the plan will hurt consumers or the broader economy, not to mention financial firms.

Opposition is piling up with particular speed against the idea of a new agency with broad powers to protect borrowers and other customers of financial firms, setting up a high-stakes contest between the industry and the White House for the loyalty of a few moderate senators who increasingly hold the balance of power.

Bush Mum on Obama as 'Socialist'

By Dan Froomkin
11:51 AM ET, 06/18/2009

Breaking his earlier pledge, former president George W. Bush criticized several of his successor's policy choices yesterday -- and didn't distance himself from the extremist critique that Obama is pursuing a socialist agenda.

Joseph Curl writes in the Washington Times that Bush spoke yesterday to a gathering of business executives in Erie. Pa.

Taking questions after his remarks, Bush was asked if he finds Obama's policies "socialist."

"I hear a lot of those words, but it depends on --" Bush said, before cutting himself off.

Curl reports that Bush "later offered a more diplomatic assessment: 'We'll see.'" More from Curl's story:

Former President George W. Bush fired a salvo at President Obama on Wednesday, asserting his administration's interrogation policies were within the law, declaring the private sector not government will fix the economy and rejecting the nationalization of health care...

Repeatedly in his hourlong speech and question-and-answer session, Mr. Bush said he would not directly criticize the new president, who has moved to take over financial institutions and several large corporations. Several times, however, he took direct aim at Obama policies as he defended his own during eight years in office....

"There are a lot of ways to remedy the situation without nationalizing health care," Mr. Bush said. "I worry about encouraging the government to replace the private sector when it comes to providing insurance for health care."

On the issue of detainees, he reprised one of his former political adviser Karl Rove's most outrageous straw-man arguments:

"I told you I'm not going to criticize my successor," he said. "I'll just tell you that there are people at Gitmo that will kill American people at a drop of a hat and I don't believe that persuasion isn't going to work. Therapy isn't going to cause terrorists to change their mind."

In his first speech as a former president in March, Bush said Obama "deserves my silence....There's plenty of critics in the arena... I think it's time for the ex-president to tap dance off the stage and let the current president have a go at solving the world's problems. If he wants my help and I agree with him, I'll give it."

Up until now, Bush's abstention contrasted sharply with the extraordinarily loquaciousness of his former vice president, Dick Cheney, who has emerged as the leading critic of the Obama administration.

Interestingly, Cheney last month came even closer to calling Obama's policies socialist than Bush did. "Well, I agree with the criticism without using the labels," he said in one interview.

And in other Bush news, Nick Turse writes for TomDispatch.com that despite the grim economy,

one group is doing remarkably well. I'm talking about former members of the Bush administration who are taking up prestigious academic posts, inking lucrative book deals, signing up with speakers bureaus, joining big-time law firms and top public relations agencies, and grabbing spots on corporate boards of directors. While their high-priced wars, ruinous economic policies, and shredding of economic safety nets have proved disastrous for so many, for them the economic outlook remains bright and jobs are seemingly plentiful. In fact, many of them have performed the eye-opening feat of securing two or more potentially lucrative revenue streams at once during these tough financial times.

Late Night Humor

By Dan Froomkin
9:29 AM ET, 06/18/2009

Stephen Colbert finds it in himself to give Obama some favorable news coverage -- for his televised fly-killing.

The Colbert ReportMon - Thurs 11:30pm / 10:30c
Stephen's Positive Obama Coverage

But then he interviews the grieving family.

The Colbert ReportMon - Thurs 11:30pm / 10:30c
Murder in the White House - Fly Widow Interview

Incidentally, the Associated Press reports that People for the Ethical Treatment of Animals "is sending President Barack Obama a Katcha Bug Humane Bug Catcher, a device that allows users to trap a house fly and then release it outside."

Cartoon Watch

By Dan Froomkin
9:27 AM ET, 06/18/2009

Nick Anderson on when deficits matter, Jimmy Margulies, Joel Pett, Scott Stantis and Stuart Carlson on the health-care overhaul, Mike Keefe on Obama's gay equivocation, Mike Lester on Obama's Iranian equivocation, Nate Beeler on Obama's red tape, and MStreeter on what Obama wants to swat next.

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