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But What About the Recovery?

At TNR, Simon Johnson of MIT describes a fundamental disconnect, some would say a bait-and-switch, inherent in the president’s speech:

Are we in danger of losing a decade or not? If we are, then pulling the economy out of its slump should be the top priority and explaining the full strategy for recovery could easily occupy an hour in a major speech. We need to know more, for example, about how the administration wants monetary policy to be handled (as the Fed will listen), and what its global economy strategy will be (because this is a worldwide problem).

If we start to lose a decade–think about zero employment growth for a moment–and don’t have an exit strategy, then no amount of energy, health, and education planning will make a difference.

Well, that’s the heart of the political calculation here. Either the Obama team isn’t sure how to get us out of the slump or figures it will all work out anyway (as these things usually do). Or perhaps they figure that Tim Geithner’s genius will kick in to solve the underlying financial crisis. But the bottom line is the president doesn’t want to spend his time talking about reviving the economy. He spent 90% of his time talking about what he wants to do after or in spite of the recession.

Because, let’s face it: healthcare and education are important topics and key issues, but they have precious little to do with solving our current economic recession. Healthcare coverage may become more problematic in a recession, but it’s not the root cause of our problem. Nor are education or energy policy, for that matter. That’s the “good stuff” Obama wants to skip to by creating huge new programs, expanding the role of government, enhancing dependence on public healthcare, etc.

But we do have to recover first, right? Oh, that. Well, that might involve restoring confidence in the private sector and spurring investment and private job creation. A more focused (“targeted,” I think Larry Summers called it) stimulus might have helped. Some pro-business and pro-investor tax cuts may have aided the process. But now we’re back to hoping Geithner gets his act together and the markets don’t continue their tail-spin. So you can see why Obama would rather talk about other things.


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