Saturday, April 25, 2009

The Obama Economy: 100 Days of Hope

There are times, lately, I will stop whatever I'm doing for a moment - walking, reading, shopping - and think to myself, "thank God, Obama's President."

I'm not a religious man, and I'm certainly not given to random exclamations of spiritual thanks. And I may be a registered Democrat but I never felt similarly about, say Bill Clinton. And Obama wasn't even my first choice in the primaries. Still, there are times when I am just overwhelmed with a feeling of just how lucky we are this man is our President - and what kind of calamity might have been in store had he lost the election just a few short months ago.

I'm not talking about being an Obama-phile who thinks he's God's gift to the world, or even was ever particularly in love with his platform. And though it'd be nice if he solved our energy problem and addressed global warming and insured 50 million more Americans with health insurance and modified DOMA and restored America's standing the world, I don't even really care all that much about all of that. I thank God Obama is our President because of the state of our economy.

I know, there is certainly a very vocal and highly organized minority of Republicans who feel just the opposite - who worry that Obama is mortgaging our future, building a nanny state, growing a large and useless government bureaucracy - sending us, God forbid, into the hell fires of a European style socialism. I will get to this line of rhetoric in a minute. For the moment, I just want to stand back from all the details and just appreciate how lucky we are, and how, in his first 100 days, Obama has shown he is worthy of our faith in him.

First - and this, I think, is the point that the Obama naysayers never seem to address - we have to recognize just how close to the economic abyss we came (and yes, possibly still are). It seems that part of the problem is that there is no one left alive today who really lived through the Depression; who really experienced a true economic collapse. I certainly didn't, but my grandparents did, and before they died, I had discussed it in detail with them, and listened to their stories. They were - like myself today and most of us - middle class Americans, running a business and raising a family, when the banking crisis hit. Like many caught in the headwinds, they lost their savings, and their business went under. They had to give up the good life: no more evenings out, no more buying new clothes, no more meat on the table six days a week. But they weren't alone - every night, in every town in America, hundreds of formerly middle class Americans found themselves lining up for handouts of food and clothing. My grandparents made what ends meet they could by taking in washing, doing small chores, scraping together pennies here and nickels there. They re-mended old clothes and made a small fistful of meat last a weak. These are stories of survival that are, from our present day of consumer fulfilment, hard to truly understand. And this went on for years - years of raising a family on little, on denying every pleasure, of giving up pride in order to accept the charity of others, and of hoping only for a little bit more meat for dinner.

Now fast forward to 2008. Those who begrudge a stimulus that costs about 1/3 of the total projected costs of Bush's war jamboree, or who think this is just a normal turn of the "business cycle", need to understand just how close to collapse our entire economic system was (and still might be). And what a collapse might mean. First, we are not talking simply about a few banks going out of business (as happened this week, and has for every week since September), the depositors being made whole by the government and taking their money to deposit elsewhere. We're not even talking about depositors losing their savings. We're talking about an international banking system that is far more complicated - and far more interconnected - than anything our grandparents could have imagined in 1931. The failure of Lehman Brothers showed just how interconnected these banks are. Then came AIG. Had AID failed, we know now that a dozen other major banks - Citibank, Bank of America, Chase, and many more - would have also failed, suddenly finding their backing vaporized. And if a dozen major banks had suddenly failed, hundreds more would have immediately followed - and not just banks: car companies, other large employers, entire cities and even states would suddenly be bankrupt. A failure more massive than anything the government could insure...and perhaps leading to a run on U.S. Treasuries themselves and calling into question the financial solvency of the government: which could have led to the kind of complete nightmare scenario of collapse in which massive world-wide food shortages, power outages, starvation, and roving gangs of criminals lead to a real-world Mad-Max scenario.

But even if the Federal government had survived, we would have been seeing massive loss of value - homes plunging in value 75% overnight, retirement savings of millions wiped out, entire cities with no means to pay police and firefighters, a huge rise in crime and millions of workers on the streets immediately. We very well could have seen a financial crisis that would have made the Depression look like a Sunday picnic.

Now, I don't say this just to scare you, but I do lay out this scenario has a highly likely one, and one that our leaders were looking at on the day AIG was about to go under, so that you can understand the depth of the calamity we are talking about. They did what any sane person - Democrat or Republican, Libertarian or Rotarian - who had the means to do so would have done: they acted as quickly as they could to prevent it from happening.

Now, we can argue till the cows come home about whether the money to AIG should have been monitored more carefully or whether the stimulus should have had 5% more tax cuts or 10% more spending. What mattered is that something was done, and the disaster scenario was avoided. The question then was: was it avoided temporarily, did we merely buy ourselves some time? Or did we luck the hell out and possibly save our way of life that all of us - even those who claim otherwise - so dearly cherish?

This was the question the country had on its mind as Obama took the oath of office on January 20th. It was obvious that Bush and company - though they had done, as I said, what any sane person would have done in that situation - weren't up to the task of backing us up from the precipice they'd driven us to over eight disastrous years. They had no plan, and they knew they didn't need one. It was good bye and good luck. And the question on everyone's mind was: Is Obama up to it?

Now, 100 days into his Presidency, it feels like we can say, with all humility and some potential hedging: yes. Obama is up to it. And thank God. Because if he wasn't, I just don't know if I'd be up to a lifetime of living in a real-life Jericho; and personally, I think those apocalyptic right-wingers who are so eager to see everything wrecked for their game boy fantasies of pseudo-militaristic survival of the fittest, would be the first to perish in the long cold winter of our disaster.

But why do I think he is up to it? Let's look at what he and his team have been able to do, in just these few 100 days.

Within weeks, he was able to push through an economic stimulus package that all economists said would be necessary - a necessary MINIMUM - to cushion the coming economic blow. That was all settled and done in just WEEKS, when Clinton couldn't even get his stimulus package passed in his first 100 days.

Within a few more weeks, after yes, a rather fitful and uncertain start, his economic team was able to go to bat a second time with a plan that calmed the jitters of the banks, convinced some rather intrepid investors to pour money into those very "toxic" assets that were causing the failures, and that even the Wall Street Journal called "a good start." They came up with a series of tests for banks that will determine how we walk our way bank from the precipice. Though what happens next is still uncertain, the recent moves have earned the trust of the markets as well as banks and have been critical to abating the crisis mentality griping Wall Street.

But even more importantly, Obama has been able to reassure the public with his speeches and address to Congress (if not inspire members to cross the aisle for their votes.)

But he also wised up after he learned that if the Republican political strategy was going to be to stand in his way and try blame him for any failures, he was better off leaving them behind. So when it came time to pass his budget plan, he did just that: he played hardball in response and abandoned the pretense that Republicans were necessary to get his budget passed. And he learned he would need to do the same thing when it came to delivering the health care reforms that Americans had voted for.

Republicans, on the other hand, made a strategic decision when Obama took office to fight him on every angle in his attempts to address the economic crisis. It may be their only political play: hope that the economy, in four years, is suffering more than it is today, and make Obama own the problem. Yet it is a shame that Republicans have decided to double-down on Hoover economics and political posturing at the same time that former President Bush, who arguably presided over both the decimation of government (re: Katrina) and the borrowing-fueled bubble that led to the current crisis, was - and possibly still is - the one Republican who took some responsibility to address the crisis realistically, and has also been the one Republican leader who has shown both courtesy and respect of Obama's position leading the country (if this attitude leads to a rehabilitation of Bush's image in the history books, perhaps one can say, better late than never). Yet is was clear that after eight trying years, Bush was not the man to lead us out of a crisis of such proportions, when the Bush government didn't even the capacity to save a single American city from a well-predicted hurricane. But he seems to have not bought in to the raging anti-Obama mania that the rest of the party has convinced itself of, and has been the one figure on the right, ironically enough, who has reached with genuine sincerity across the aisle.

Now, I have respect for John McCain, and I believe he might have realized he needed to get creative to solve this crisis. But his campaign showed that he was clearly hostage to the bunker mentality that the far-right created at the worst moments of the Bush administration, and that his closest advisers - who were refusing the recognize the crisis even as it was happening - were not up to taking the steps necessarily to restore both public confidence and economic fundamentals.

It's odd that even when Obama takes a position seemingly further to the right than his Republican predecessor - figuring out a way for Chrysler to go through an orderly bankruptcy, say, rather than simply throwing more money at it as Bush did - he still gets labeled as "leftist" for it. They have to come up with something so in this case, arranging a bankruptcy is derided as enabling "government interference." If this is interference, then give me more! I'd much rather have that than the negligent, criminal incompetence the Right seems to be peddling.

So I wonder why, now, so much intransigence from the new Republican party leaders. Yes, partly, it may be intransigence due to not wanting to admit that their policies were the problem, not the solution. But I don't think that's really it. After some reflection it occurs to me that it has most to do with the dynamics of being out of power: it is much easier for Republicans to sit back and lobby irresponsible accusations and bromides about the economy when they aren't responsible for leading the country out of this mess. I just don't know how great a play this is for them politically, given that the American public largely supports Obama's efforts, and that inevitably, chances are the economy WILL turn around. But for the moment, it seems to be working against them, as their economic policies enjoy their lowest popularity in years and their party suffers in the polls.

Now, it's true, I wish that Obama's budget was more serious about starting to tackle the entitlement crisis that we will most surely be facing in five years, was a little more ahead of the most liberal members of Congress. But these are quibbles - and though certainly they indicate a temperament farther left than we had from the past eight years, not the moves of a rabid socialist. Let's not let ourselves get distracted by the vaporous anxieties and accusations of the tea parties: the one and ONLY thing that Obama has done so far regarding taxes is lower them (Bush's cuts from Clinton's top rates were always temporary, intended only as a RECESSION BUSTING move, remember? - and already set to expire long ago, and well should have; Obama's letting them finaly expire as they should have in 2003 returns rates to a point lower than they were under Clinton.) And yes, ballooning budgets and the potential for rising interest rates are a worry. But with the economy actually in the midst of the first signs of deflation in over fifty years, spending more right now is precisely the right move...and we can worry about inflation when we actually have an economy to inflate.

And in fact, there are signs that with Obama's management, the crisis has reached a bottom and the economy is already stabilizing. The stock market has also stopped its slide - in fact, it's up around 3% since Obama's inauguration, a trend that to many economists indicates that we have reached the bottom far earlier than many expected in Bush's last days in office. Yes, we're not out of the woods. Foreclosures are up, banks are still stressed, local governments are cutting back, many are out of work, and there are still tent cities all over America. And clearly Obama doesn't want expectations of a recovery to build to quickly; Summers said on Monday that the economy will continue to decline for the foreseeable future (i.e., this year). And though the job outlook remains dire for the rest of 2008, we may yet get out of this recession with an unemployment figures no higher than 10 or 12% - far better than the 30% unemployment of the Great Depression, or the nearly universal catastrophe that awaited us in the deepest days of this economic crisis.

But even more than turning around the markets, Obama has turned around America's sense of hope. After 100 days in office, this weekend's ABC poll shows that Obama enjoys a 69% popularity - the same level as Ronald Reagan after his first 100 days, and a remarkable 86% say he is meeting or exceeding their expectations. And even more importantly, the percent of people who think the country is on the right track has risen from 19% during Bush's last days in office to a remarkable 50% today (the highest rating in six years), and Americans rate Obama's handling of the economy as his top achievement since taking office.

What the Great Depression - and what this crisis - had robbed us of more than anything, was the great hope of America: hope that hard work can bring prosperity, that our future is in our hands, not in the hands of princes or barons of industry, that if we dream big enough and are bright enough, each of us has the possibility to not only survive, but to truly be rewarded with the "American Dream." That dream died last fall as we all watched our worst nightmares about to come true, as we watched our savings evaporate, our businesses falter, our homes plunge in value - as we understood the same fears our grandparents once felt - and we all hunkered down for the great winter, as we all prepared for mere survival.

Now, more than anything, Americans have hope again - not just hope, but faith. Faith that this economy will recover, faith that our government is competent, that they are able to do something to restore the American Dream. Americans once again have faith that their plans, their lives, their hopes and aspirations could happen after all, after we just get through this rough patch. It's Obama's faith - not just his economic policies but his youthfulness, his wonkishness, his energy, his belief in government as a force of good, as an expression of the will of the people. And it's not just faith for faith sake. Our economy RUNS on this faith: we give loans, we borrow money, we spend on investments, we build businesses all because we have FAITH, faith that America will be here tomorrow, and making these investments will pay off. Obama's given that faith back to us. He's not perfect, and maybe he'll spend too much money, and maybe he won't, and maybe he'll make enemies, and maybe he won't get to do all his lofty plans, and he'll certainly make mistakes. But an America without faith in itself is a sad place, indeed.

After a mere 100 days, America is on the road to having that faith in the American Dream again. That's pretty remarkable. And we have Obama to thank.

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