Oct. 2 (Bloomberg View) — Will future historians give President Barack Obama high marks on the economy?
A fascinating Bloomberg News piece by Thomas Black and Matt Robinson makes the case that there’s a huge disconnect between the hostility to Obama among business executives and the data on the economy’s performance during his presidency.
“History will eventually show that Obama inherited the Great Recession and resuscitated the economy,” the historian Douglas Brinkley is quoted as saying. “He’s going to be seen as much more centrist and even friendly to business.”
The case for Obama is fairly straightforward. He inherited an economy in a deep recession, and the administration and the Democratic Congress acted quickly. That recession ended relatively rapidly, and it hasn’t returned. Over time, unemployment has eased, manufacturing has picked up and corporate America appears to be unusually healthy. There has been no inflation.
In this telling, Obama deserves credit on several counts. The stimulus and other rapid action ended the nosedive and brought the economy back from the brink. Banking reform, passed in 2010, set the stage for healthier growth. The federal budget deficit ballooned in the short term as a result of spending to fight the recession, but is narrowing on schedule now. Meanwhile, he successfully pushed health care reform, a major long-term structural reform that deficit hawks had been begging for. Yes, the Federal Reserve deserves plenty of credit for keeping the recovery on track — but that, too, redounds to Obama’s credit given his string of successful appointments to the Fed.
The case against Obama? Yes, a recovery started, but it isn’t the kind of post-recession boom we had in the 1980s and 1990s. Conservative and liberal populists argue that although corporations are doing great, the working class has lagged. And Obama’s policies, such as the auto bailout, have favored business, they say. The headline unemployment rate has dropped to a relatively healthy level, but that number disguises underlying weaknesses such as diminishing workforce participation.
Before deciding who makes the better case, we should remember that Obama still has more than two years in office. And some economic effects are measured after a presidency. Bill Clinton’s record would look stronger if there hadn’t been a mild recession in 2001, even though it technically began after he left office.
I’d also be careful when assessing the president’s responsibility for economic performance. That’s a double question — about the economy and the government as a whole, and about the president’s position within that government.
Those caveats in mind, I’ll stick with what I’ve argued in the past: Obama has been a generic Democratic president. His strengths and weaknesses have closely mirrored those almost any plausible Democratic president would have displayed. That’s not to say he has no characteristics of his own; another Democrat might not have been able to get the Affordable Care Act passed,* and another Democrat might have been more aggressive about rapidly filling vacancies at the Fed (though probably with similar nominees). But for the most part, grading the Obama administration on economics means grading mainstream Democratic conventional wisdom. The idea that Obama is some sort of Kenyan socialist outlier just doesn’t have any evidence behind it.
There’s another way of looking at it. Obama’s economic record seems great when compared to the caricature that Republicans push (hyperbole such as “You can’t tell me anything that he has not tried to nationalize”) . Grading the actual president on what he’s actually done is a lot more complicated. For now, he’s certainly not failing, but otherwise he gets an incomplete.
*As Jonathan Chait argues. My basic response is that at each step along the way toward ACA passage, Obama made the correct and logical choices, but it’s fair to point out that not all politicians have always found their way to correct and logical choices.
AFP Photo/Brendan Smialowski
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