Obama’s political failure

FT Washington commentator Edward Luce has published a must-read column in today’s newspaper. Here is a short excerpt. Read the full op-ed at the link (free registration required).

Rarely has the gap between the public’s perception and that of economists been greater. A plurality of Americans say the [fiscal] stimulus was a bad idea, according to the Pew Research Centre. Almost all economists say it was essential. Some believe it was too small. Others that it was too large. Some say it should have been skewed towards more direct spending, others towards larger tax cuts. But virtually no accredited scholar doubts a measure that saved 9m jobs, added between 2 and 3 percentage points to US gross domestic product and paid for itself in higher tax revenues. On economic grounds it is as close to an open and shut case as you get.

On political grounds, the largest fiscal stimulus in history is close to being toxic. ….

Mr Obama’s political failing began in his first 100 days with his mis-selling of the stimulus. It helped give rise to the Tea Party that put an end to a sensible debate on what fiscal policy can do for US growth. In the president’s defence, it is hard to argue that “things could be so much worse!” – even if that was true of the stimulus. It is far easier to say: “See how rapidly things are getting better!”

The first was the case Mr Obama needed to make. He botched it. …. The US president assumed a good policy would make the case for itself. Republicans filled the vacuum with their own.

Edward Luce, “RIP Obama’s stimulus: funeral for a policy success“, Financial Times, 24 February 2014.

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