Barack Obama told Jake Tapper on Monday that “I believe all the choices we’ve made have been the right ones” on economic policy. One of the architects of Obamanomics disagreed just a few days later. Austan Goolsbee, one of Obama’s key economic advisers, admitted on Thursday’s Morning Joe that the gimmicky, short-term stimulus approach was a failure:
Former Obama administration economic adviser Austan Goolsbee said Thursday that if given a second chance he would not have backed the Cash for Clunkers program or the home buyer tax credit passed in 2009 to stave off further economic distress.
“Because we didn’t know if [economic recovery was] going to be short or long,” the Obama administration tried measures to address both scenarios, Goolsbee explained on MSNBC’s “Morning Joe.”
“If you look at Cash for Clunkers or the first home buyer tax credit, they were geared to trying to shift [recovery] from 2010 into 2009. Given it’s taken this long [to recover], I don’t think you would do that short-run stuff,” Goolsbee added.
Goolsbee, the former chairman of President Barack Obama’s Council of Economic Advisers, said the administration misjudged how quickly the country could recover from the economic damage of the 2008 economic collapse.
Not only did they misjudge the difficulty of recovery, the same short-term, gimmicky approach made it even more difficult to do so. Thanks to the devastating impact of the collapse on key economic institutions, investors and capital managers needed to see stability and clear long-term policies to have confidence in investment in the US. Instead of stabilizing the economy, the Obama administration started borrowing heavily to move up already-scheduled infrastructure projects and then offered a series of short-term gimmicks as economic policy. They are still proposing the same kind of short-term gimmicky relief through a year — no, two! — of a payroll tax cut, while pushing for escalating tax rates that they try to soften by telling people they’re still a year away.
At the same time, Obama and his Democratic Congress focused almost entirely on rapidly expanding the regulatory state in health care, finance, and environmental law — all of which impact investment, expansion, and hiring. On top of that, they wrote the new regulations so ambiguously that no one can price out the risk of investment and expansion beyond a single year any more. Under these conditions, no one would take a significant risk with their capital in the American economy.
Goolsbee’s admission completely destroys the notion that Obama made all the right decisions on the economy, but he’s still missing one key point. The economic “recovery” hasn’t been this bad because the recession was so deep; it’s been this bad because the policies he and Obama have pursued and are continuing to pursue will produce no other result.
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