Is the recession Obama's Katrina?
Hurricane Katrina embarrassed the Bush administration by exposing its inability to safeguard Americans from oncoming disaster. Today's economic storm is raising similar questions about the current administration's ability to cope. The criticisms are coming not from Republicans but from Mr. Obama's allies.Skip to next paragraph
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The president's "economic policy is falling behind the curve, and there’s a real, growing danger that it will never catch up," Paul Krugman, a liberal columnist of The New York Times, wrote in a Monday critique of the stimulus package.
Sometime Obama adviser Warren Buffett also weighed in: "Job 1 is to win the war, the economic war. Job 2 is to win the economic war - and Job 3," he told CNBC in an interview that aired Monday. "And you can't expect people to unite behind you if you're trying to jam a whole bunch of things down their throats."
Buffett crystallized the mounting criticism that Obama is risking failure by not focusing single-mindedly on fixing the financial system.
The image is stark. Timothy Geithner is battling what is probably the biggest economic slump since the Great Depression with a Treasury Department that is so understaffed that another Obama adviser, former Fed Chairman Paul Volcker, called it "shameful."
It's a classic case of economic imperatives bumping into political ambition. Wanting to reform health care, energy, and now education policy while still cutting the deficit, Obama has to find ways to conserve political and monetary capital to push his programs through. So he's trying to bail out the banks without asking Congress (and voters) for more money.
(Why would he risk that? Click here.)
There's something else. When the president looks at these times, he sees complexity.
“Look, I wish I had the luxury of just dealing with a modest recession or just dealing with health care or just dealing with energy or just dealing with Iraq or just dealing with Afghanistan,” he told The New York Times in an interview published Saturday. “I don’t have that luxury, and I don’t think the American people do, either.”
His constructive critics look at these times and see a simple imperative: Fix the banks.
Beyond the conventional
To be fair, Obama faces a global economic crisis unlike any other. Conventional solutions have not worked so far. His own stimulus package is only beginning to take hold. And it also may be that the worst is already behind us.
But if the markets are any barometer, the storm is still raging. In 15 months under President Bush, the stock market fell 49 percent from its 2007 peak. In six weeks, under Obama, it has fallen another 16 percent.
So, as Obama himself might say, let me be clear.
When faced with a flood of unknown size, you save the victims and pump like crazy. You can redesign the levees later.
Or, as Bill Clinton might put it: It's the banks, stupid.