For eight decades, Democrats have successfully blamed Republican Herbert Hoover for the decade-long Great Depression. That, even though Franklin Roosevelt's New Deal failed to restore prosperity or dramatically lower unemployment, and his tax increases in 1937 snuffed out a nascent recovery.
Now today's Obamacrats are apparently going to try and Hooverize President Bush in an effort to shield themselves from the potential political fallout of a prolonged recession. It will take years to fix the American economy, Obama says, and years of trillion-dollar budget deficits to do it. And everyday it seems that Team Obama tries to lower economic expectations, such as bearishly predicting that unemployment would hit double-digits.
The not-so-subtle message in the middle of all these pessimistic prognostications: When ya'll go to vote in 2010 and 2012 and a) unemployment is still as high as it's been in decades, b) income growth is sluggish at best, c) the budget deficit is running at a trillion bucks a year, and d) stock prices remain stubbornly low -- hey, don't blame us, you can't rebuild Rome in a day or even in a first term. Remember, Bush really left us a mess.
The incoming administration has apparently learned the lesson of Bush's big mistake when arguing for the Iraq War, that when embarking on a decision that will define your presidency, it's better to underpromise and overdeliver. Of course, Obama has every reason to honestly believe the economy is going to stay on the mat for a good long time. According to the just-released minutes from the Federal Reserve's December meeting, the central bank now thinks the economy will "decline for 2009 as a whole" and that the jobless rate is "likely to rise significantly into 2010." And in its new forecast, the Congressional Budget Office said the U.S. economy is now in a recession that "will probably be the longest and the deepest since World War II." What's more, the CBO says, the economy will shrink 2.2. percent this year and grow a wimpy 1.5 percent next year as unemployment exceeds 9 percent. Finally, respected Harvard University economist Kenneth Rogoff just released a paper demonstrating that the aftermaths of financial crises are usually marked by "deep and lasting effects on asset prices, output and employment. Unemployment rises and housing price declines extend out for five and six years, respectively." So the consenus is gloomy.
But can a repetitive "Blame Bush" mantra allow Democrats to hold their huge Congressional majorities in 2010 and get Obama reelected in 2012 if they economy is as bad they think it will be? The latest iteration of Obama's stimulus -- I mean "economic recovery" -- package indicates that Team Obama has its doubts about voter patience and the economy. The larger-than-expected tax cuts, even if they are really just disguised government spending, are an effort to rejigger the plan to provide more economic oomph this year. Indeed, as the CBO said when Obama adviser Peter Orszag ran the joint, using infrastructure spending to juice the economy is "totally impractical." There just aren't enough "shovel-ready projects" to make effective use of the hundreds of billions Obama wants to throw at the recession.
And Obama has good reason to doubt the patience of voters. Recall that bad economies propelled Ronald Regan and Bill Clinton to the White House -- and both gentlemen saw their respective parties suffer badly in the very next midterm election because of voter economic anxiety. To quote Oscar Rogers, the impatient "financial consultant" on Saturday Night Live, American voters want Washington to "Fix it!" and fix it fast.
And, really, how can Obama avoid taking responsibility when he will be so actively meddling in the economy? It will be his decision to forego deep and permanent new tax cuts, his decision to not extend the Bush tax cuts, his decision on how to spend the remaining $350 billion in TARP money, his decision to quasi-nationalize healthcare, his decision to push a cap-and-trade carbon emission program and his decision to spend hundreds of billions on a "green" industrial policy. It might even be his decision to try and reunionize the American laborforce. Obama will "own" the battered economy, perhaps almost literally, given Uncle Sam's bailout binge.
So what standard should voters hold Obama to? How about this one: The 1981-82 recession last lasted 16 months and was followed by an explosive recovery thanks largely to the Reagan tax cuts (even though they were slowly implemented). The current downturn, according to the National Bureau of Economic Research, started in December 2007. Mr. Obama better hurry.