Monday, April 27, 2009

Obama 's First 100 Days: UK Telegraph Travels to Indiana

The writer sees what is wrong with Obama's economic policy here. Not having bought the hype, I am willing ot give Obama time.  I keep thinking the 100 day thing is an intellectual crutch borrowed from the days of FDR.  The mess today is a whole lot worse than in 1932.  Reasoning by analogy can never go far with success

Barack Obama's audacity of hype crumbles

"Gary, Indiana is like an eagle poised to fly," mayor Rudy Clay tells me, "All we need is the air of the fiscal stimulus beneath our wings and we'll soar once again and make America proud."

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The mayor has applied for $400 million out of Barack Obama's $787 billion fiscal stimulus plan. Top of his wish list are automatic weapons and Kevlar vests for the police, and some more police to tote them: last year, in this, the crime capital of the Midwest, he had to lay off police officers due to shortage of funds.

The city symbolises the scale of the economic challenge facing Obama as he approaches 100 days in office. If the president is to deliver something more than the "audacity of hype", homes will have to be built in Gary, health care delivered, and a way found for its inhabitants to live on something more than benefits and debt. But much of America is in revolt against what needs to happen for this to be achieved. And Obama's own momentum on the economic front looks weak.

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If there is a pattern emerging here it is not incompetence but, say Obama's critics, "capture". Both Bernanke and Geithner stood at the heart of the Bush policy elite during the days of dither and denial that followed the collapse of Lehman Brothers. Obama, lacking credible economic heavyweights in his own circle, was obliged to reach into the ranks of Clinton-era Democrats. The irony of Larry Summers' appointment as chief economic adviser was not lost on historians of the credit crunch: Summers had hailed the 1999 law that deregulated Wall Street as "a major step toward the 21st century".

Obama is surrounded by decision-makers who had "drunk the Kool Aid" during the subprime bubble and were profoundly committed to the neoliberal ideology of self-regulation that has now fallen apart. Only the fiscal stimulus truly bears Obama's chosen brand values of audacity and untaintedness. But this, too, is proving heavily problematic.

In January, two Left-leaning members of Obama's transition team laid out radical objectives for the stimulus plan. It would "create or save" between three and four million jobs by the end of 2010 and boost GDP by 3.7 per cent. It would be delivered not primarily through tax cuts but by public spending. And, though construction and energy would account for a quarter of the job creation, more than a million extra health, education and social care jobs would be created, together with 800,000 public sector jobs saved at state level.

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As Obama's 100th day approaches, the dangers looming on the economic front are clear: neither on monetary, fiscal nor banking policy is there a tangibly successful programme in place. Meanwhile, the economic pain is getting worse, encouraging his opponents to chip away at his credibility.


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