Question: at what point does this no longer become an economy Obama can easily blame on Bush?
The cumulative market reaction to the "stimulus," TARP II, a federal foreclosure "fix," etc. hasn't exactly been comforting. When do opinion leaders, the general public, and, most importantly, likely voters in 2010, start to raise red flags about the effectiveness of actions taken by an Obama Administration?
Related topic, when are ruling Democrats in the Evergreen State no longer granted the "Bush did it" pass for the sorry state of our own budget, economy, etc.?
UPDATE: last sentence of 2nd paragraph edited for clarity.
Posted by Eric Earling at February 19, 2009 02:20 PM | Email ThisApparently, conservatives get even more shrill and mindless when they're the "loyal" opposition.
Posted by: demo_kid on February 19, 2009 02:16 PM- Perhaps a president who promised to redistribute wealth?
- Promised to cap CEO pay to further weaken hurting companies?
- How about rushing through another $1.3 trillion in spending that will do very little to stimulate the economy?
- Did appointing a tax cheat to fix this mess add to the problems?
- Maybe hints of nationalization of banks, or the auto industry?
- Or perhaps the economy has to let failing companies, banks and homeowners who overextended themselves fail?
- Maybe today's drop is because the president has decided to reward people who bought homes they couldn't afford?
No, it's Bush's fault. bush destroyed the credit industry with Fannie and Freddie. Bush didn't push hard enough against obstructionist Democrats to reform the Community Reinvestment Act.
Yeah, right.
Posted by: Reality on February 19, 2009 02:23 PMAnd, I don't want to hear any nonsense about conservatives being anything less than loyal. As I recall, when Bush was still President, dissent was defined by the left as the highest, purest form of patriotism.
Funny how things change when it's one of your own being criticized.
Posted by: Kato on February 19, 2009 02:24 PMI'd say you've got about 7 and half years before you can blame the Dems for anything. Remember that the Democrats are the party of no personal responsibility, so they will not accept blame for anything that goes wrong. It will be Bush's (or Reagan's) fault for decades to come.
You Reps are gonna be on the outs for at least 8 years, and probably more like 10 to 12 before you get any traction in government. Just bide your time. Eventually you can actually pin the blame for whatever on the Dems and get yourselves elected.
Posted by: Politically Incorrect on February 19, 2009 02:27 PMIn the minds of "progressives," blaming Bush rather than Obama will be an article of faith till the day they die. (See Hoover and the ignorant leftists' claims about the Great Depression.)
It can't get easier than that.
For sane people of at least average intelligence and knowledge of events, Obama will not "easily" blame Bush if Obama's policies apparently worsen and extend the current recession.
Just as Bush "inherited" a recession and burst stock market "bubble" from Clinton, Obama has "inherited" a recession and burst bubble. It's something called the passage of time -- the president always "inherits" the situation as it exists when the predecessor's term ends.
Of course, no Democrats ever admitted that "the failed policies of the last eight years" turned the "inherited" recession into a growing economy. Instead, they falsely claim that Bush turned a budget surplus into a deficit -- something that sane, intelligent, and knowledgeable people know occurred because of the recession and because the stock market bubble which had provided the surplus burst before Bush was elected.
Bottom line: there will always be ignorant/dishonest people who will always blame Bush and not Obama no matter what happens from here on out.
Posted by: Micajah on February 19, 2009 02:40 PM- Steve Chapman
Obama and Democrats expect us to believe that any and all government spending is "stimulus". It's not. The crushing amount of this debt is going to have a very negative effect in a few short years. And raising taxes on "the rich" isn't going to pay for it all.
Posted by: Palouse on February 19, 2009 02:45 PMIt's the inexperienced "one"'s Ineffectiveness of actions that should have the red flags going up. This guy,rightly or wrongly, thinks that he has a blank check courtesy of the taxpayers to pay for his "social justice" agenda under the guise of "Stimulus" and whatever the next "crisis" he can self-create and sell the Obamaton public. Most recessions on average last only 18 months and we were in about month 14 of the current one before this trillion dollar generational fraud was passed last week.
I was originally thinking of pouring more money into the market to cut my losses already incurred under Bush the last year or so, but the current Mr. Magoo in office now has the market so shaky that I think I'll just buy my toys before inflation hits all time highs not seen since the failed years of Jimmy Carter.
I think that conservatives believe that Obama is far more magical than rational people do.
Posted by: demo_kid on February 19, 2009 04:02 PMCome on- we are all about self reliance.
The rich did't get rich by blaming politicians for their lot in life.
Posted by: Andy on February 19, 2009 04:17 PMBesides the economy, there are bad foreign policy signs in the air. No foreign terrorist is the least bit afraid of Obama or the USA.
Obama got outmaneuvered in Krgycistan (or whatever) by Puttypoot. The Syrians got him by the ....
He has despots giving him advice. He has staffers going to conference that Bush boycotted and when there they get treated like poop.
I know this may sound off-topic, but it really is on-topic.
Let's all sing along that TV show- Welcome Back, Carter. We need Gabe Kaplan and the gang singing this one for us.
Posted by: swatter on February 19, 2009 04:21 PMYou're smart enough to know that looking at a few days or even a month of stock market prices doesn't tell you much about the efficacy of an administration's economic policies. It's a fool's game -- but since you want to play let's note that on the day Bush took office, the S&P 500 stood at 1342.90. On his last day in office, it was 850.12, so the net effect of eight years of Bush's economic stewardship was a net lost of over 37% of market value.
Obama's been in office a month and started with an economy that was already in the tank. It's too early to tell whether his policies will mitigate this. The market's recent moves are probably due to the fact that bad corporate reports are still coming in and nobody is offering much in the way of encouraging guidance for at least 6 months. Obama didn't cause that.
Overall, I think he's doing mostly the right things to try to stabilize the economy, but who knows? I'm curious, what do you think he should be doing?
Posted by: scottd on February 19, 2009 04:43 PMYou'll notice I title the post "Provocation..." It was meant to provoke thought. I never said the structure of the economy should be blamed on Obama. It shouldn't be that way for any President. Indeed, I firmly believe Presidents (and probably Governors) are held to account too much for economic events, trends, and cycles which are in many respects out of their control.
That said, the rest of the American public tends not to share my view on that last point, especially when it comes to pressing economic woes. Thus, I'm simply curious when the non-hyperpartisan voter who turned against the party in power during the financial meltdown, says, "you know," I'm not all that happy with the results Obama is getting here.
I'll not blame the long-term stock market on Obama or his policies. That wouldn't be prudent at this juncture. But markets do have short-term reactions to perceived confidence in government policies affecting the economy - especially during times of trouble. And needless to say, the short-term response has not only not been good, but market analysts are saying they're not happy with what has been coming out of DC.
All that, as I said, originally, is merely something to think about. We can have a more reasonable discussion if you don't assume I'm making statements I haven't actually made, and reached conclusions I haven't actually expressed.
Posted by: Eric Earling on February 19, 2009 05:32 PMRelated topic, when are ruling Democrats in the Evergreen State no longer granted the "Bush did it" pass for the sorry state of our own budget, economy, etc.?Oh, I'd say about sometime last year. Posted by: The Tim on February 19, 2009 05:49 PM
Um....how about resigning?
Posted by: diamondshards on February 19, 2009 06:17 PMI guess I feel the opposite. While I don't think governments control everything, I think they have a large influence over economic direction over many years, and I think they should be held accountable for their results. For the short-term, not so much.
In the first 8 days of Obama's term, the S&P rose about 8.5%. I suppose that was our steely-eyed market analysts expressing optimism over the prospect of Obama finally getting a chance to implement the policies he had discussed for many months. Then, the market dropped about 6% -- was it something he said? After that, up another 5.5% and then down again. To date, the S&P has lost a little over 3% since Obama took office. Personally, I think the volatility and downward bias have more to do with the crappy business environment and uncertainty over the future. Much of the movement is just noise.
Regarding long-term accountability, if the stock market and employment are lower at the end of Obama's term than they were at the beginning, I would readily concede that his term as been a failure and I would think that he deserves to face the consequences. Of course, I think he's going to succeed.
Anyway, you still haven't answered my question from my first post. What do you think Obama should be doing?
Posted by: scottd on February 19, 2009 06:22 PMWe're getting into a complicated issue here with behavior of markets compared to Presidencies. I believe Presidents (& Congress) can take actions that improve or harm economic conditions, but themselves are not solely responsible for economic booms and busts.
Example, Reagan's tax policies did much to boost economic growth...but got a big assist from the Fed wringing inflation out of the economy in the early 80's (as painful as that was). Clinton's focus on the deficit and his triangulation with a GOP Congress provided a degree of stability to the markets, though he deserves neither credit for the totality of the boom of the 90's nor the blame for tech crash of 2000. Economic cycles do not conform to Presidential administrations and are generally speaking not directly related to them.
That said, markets do react in the short-term at times based on psychological reactions to government action or inaction. Example: the market tanked when the first - and improperly named - "bailout" failed in the House last fall. Likewise, the markets have not been assured in the short-term by recent Obama Administration actions. That's more psychological, perhaps, than pure economics, but the former factor does play a role in equity market behavior, especially when views in the short term. Similarly, serious talk of a capital gains tax cut or similar such investment incentive tends to send markets up in the short-term. And the market's reaction to the capital gains tax cut provided by Clinton and a GOP Congress is notable.
All to say, equity markets are about the long-term view and I am hesitant to pin ebbs and flows in stock values to Presidential Administrations in general, though certainly government action can accelerate or slow market behavior (but not create economic cycles in and of themselves).
If you want to say President Bush created the housing crisis, including the ridiculous spread of excess credit via Fannie & Freddie then be my guest. It would be the same as me pinning the tech crash on Bill Clinton. It might feel good, but it isn't rational.
Meanwhile, I go back to the original point of my post. I'm not saying voters behave rationally in blaming Presidents for economic conditions, but, they do. Thus, just as voters turned sour on Republicans because they were perceived to be in power (we could debate the whole issue of the number of voters who didn't know the GOP no longer held Congress), voters will eventually sour on Obama if his Administration is not perceived to be effective with the economy. Again, such voter assessment may or may not be fair. But it will happen.
I'm just curious when that might happen. I honestly don't know the answer to that. And of course, the economy could improve and Obama could claim a ton of credit, deserved or not.
As to what Obama should do, that's a whole different topic, which I don't have time to explore at great length right now.
Posted by: Eric Earling on February 19, 2009 07:41 PMThis is why we're better off electing competent, proven leaders rather than glib,non-specific policy position, cult of personality types to run your country. Afterall, this isn't High School anymore.
Posted by: Rick D. on February 19, 2009 08:26 PMThanks again for your thoughtful response. You're right, judging how Presidents affect the performance of our economy (and the markets) is complicated. That's why I wouldn't venture to point to any single event or policy as providing guidance on how we should judge a particular administration or Congress.
However, I think it's fair to look at net outcomes over 8 years. In Clinton's case, the S&P 500 grew over 200%. In Bush's case, it fell 37% -- quite an indictment when you consider that the natural trend is for the index to grow 8-9% per year or about double over 8 years. Does Clinton deserve all of the credit? No -- nor does Bush deserve all of the blame, but it's a pretty stunning difference.
To paraphrase Ronald Reagan, at the end of each administration you have to ask yourself, are you better off than when it started? For Clinton and Bush, I think the answers are pretty clear. For Obama, time will tell, but my guess is that things are going to look a lot better 4 and 8 years from now.
When will voters start judging Obama based on economic results? I don't know either, but my guess is that most of us are going to cut him some slack for a while. It really doesn't matter what we think over the next few months. What matters is what we think in late 2010 and 2012. At that point, I think it will be fair to judge Obama and the Democrats on results, just as we've judged Bush and the Republicans on theirs.
Posted by: scottd on February 19, 2009 08:31 PMHow about focusing on regulatory reform and enforcement, and laying off this effort to bury us in debt? How about doing what the Congressional Budget Office said he should do... which is mostly... nothing?
http://dearprezobama.blogspot.com/2009/02/dear-president-obama-since-cbo-says.html
Posted by: Hinton on February 19, 2009 08:49 PMJapan's 80's and 90's; the Wiemar Republic; 3rd world dictatorships all around us for decades; the (I believe great) African Continent's sad inability to get its OWN act together FOR ITS OWN PEOPLE...
"...heeee-sto-ry...heee-sto-ry..we don't need no stinkin' badges...!"
Posted by: jimmie-howya-doin on February 19, 2009 09:02 PMThat must have been the logic in the congress when they passed a trillion dollar spending bill without reading it and that of the president who signed it into law (also without reading it- Vacationing in Chicago remember?) a few days later. I'll have to try that in my personal life and see where it lands me.
Posted by: Rick D. on February 19, 2009 09:10 PMI get your point, but keep in mind Clinton entered office with the economy on a natural rebound then left before a natural downturn kicked in (including missing the accounting scandals that technically occurred during his Presidency, but for which he is not really responsible).
Meanwhile, Bush entered office just as a downturn was beginning - then of course you had 9/11, accounting scandals, and the like. Then he exited office with the housing bubble burst - largely outside of his control. His actual policies, especially on taxes, promoted economic growth in many respects. His fortune with economic cycles, not so much.
Those sort of variations make me very, very hesitant to compare Presidencies the way you're doing, even before you get to the issues I raised during the earlier course of our exchange.
Posted by: Eric Earling on February 19, 2009 09:22 PMThanks for the link -- I followed it and downloaded a copy of the CBO's report. There's no place in that report where the CBO recommends "doing nothing". In fact, on p 31 of the report it says "Many economists believe that a stimulative fiscal policy ... is desirable under current economic conditions." Later on that page it says "The uncertainty of the economic outlook suggests another possible justification for a stimulative fiscal policy. The problems in financial markets could be worse than CBO's forecast anticipates..." It then goes on to analyze desirable characteristics of a stimulus package.
Jimmy:
You might want to do some reading on Japan's "lost decade". (BTW, that was mostly in the 90s -- the 80s were great for the Japanese economy.) Most economists agree that the reason for Japan's prolonged downturn was the failure of the government to act quickly and decisively. The government failed to provide substantial stimulus and failed to quickly move to seize failing banks and write down non-performing loans and other overvalued assets. I would think we'd want to avoid those mistakes by taking more decisive action as soon as possible.
Eric:
I think I get your point, too, and we're just going to have to disagree. Sure, Presidents have some good luck and some bad luck during their terms. Like Gilda Radner used to say: "It's always somethin'!". But eight years is a long time and if one can't be held accountable for results over that period, then when can we have accountability?
I guess I sort of go with the Navy's theory of accountability. When a ship runs aground, it's generally the captain's responsibility, regardless of who was at the wheel or whether the captain was even on the bridge. I think we both agree that's how voters tend to look at Presidents -- the main difference is you think that's not rational (or fair), but I think it is.
Thanks for the discussion.
Realistically Eight Years.
Posted by: Bamboo Harvester on February 20, 2009 12:58 AM