President of Everything

Eugene Robinson
Tuesday, February 17, 2009
The Washington Post
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/16/AR2009021601102.html?wpisrc=newsletter&wpisrc=newsletter&wpisrc=newsletter

This is a presidency on steroids. Barack Obama's executive actions alone would be enough for any new administration's first month: decreeing an end to torture and the Guantanamo prison, extending health insurance to more children, reversing Bush-era policies on family planning. That the White House also managed to push through Congress a spending bill of unprecedented size and scope -- designed both to provide an economic stimulus and reorder the nation's priorities -- is little short of astonishing. Now it's time for the administration to get to work. For his next act, Obama must set the parameters of a new presidential role that he did not seek but cannot avoid: managing the big chunks of the private-sector economy that are now more accurately described as semi-private at best.

This week, executives from General Motors and Chrysler are reporting on their progress in transforming themselves into lean, mean carmaking machines, capable of leading American industry into a new golden age. They will also explain that they need some more money, and fast, if they are not to crash and burn. GM, which got a $9.4 billion cash infusion from the government just two months ago, wants the remaining $4 billion that the Bush administration approved; Chrysler, which got $4 billion in December, urgently needs $3 billion more.

Maybe it's just baby boomer nostalgia for the car culture of my youth, but I think it's a good idea for the United States to have a domestic automobile industry. Is there a man or woman alive who believes these will be automakers' last requests for bailout money from Washington? GM, at least, has done a decent job of capturing market share overseas, so maybe that's a framework for the company to reinvent itself. Chrysler is so diminished that I wonder whether there's any alternative to getting what's left of the company ready for sale.

Obama has abandoned plans to appoint a "car czar" to oversee government aid to the auto companies, giving the job instead to a high-level task force. So far, the president has declined to look a central question in the eye: Can GM and Chrysler thrive under present management? If the Big Three are not to shrink to the Big One -- Ford is managing to survive on its own -- Obama and Congress are going to have to oversee GM and Chrysler almost like a board of directors. Go ahead and laugh, but explain to me how even Washington could do a worse job with these two companies than Detroit is doing.

The auto industry problem is cheap and simple compared with what Obama faces in the financial sector. Thanks to an amendment that Sen. Christopher Dodd (D-Conn.) inserted into the stimulus bill, Washington now has control over bonuses and severance packages at financial companies that have taken funds from the Bush administration's $700 billion Troubled Assets Relief Program (TARP): No more eight-figure bonuses for Wall Street "geniuses" whose cleverness helped drive their companies, and a good deal of the economy, into the ground.

Dodd added a measure that makes it easier for firms that chafe at Washington-imposed restrictions -- on executive compensation, for example -- to pull out of TARP. The details are complicated, but what's important is that banks and other financial institutions that are relatively healthy may well begin to leave the program. The impression would be that the firms remaining in the program are relatively sick -- and people tend to be uncomfortable keeping their money in banks that can be described as relatively sick.

Treasury Secretary Timothy Geithner has fought against transparency in the bailout program that would let everyone see which banks have pneumonia and which merely have a cold. My belief is that the pneumonia-vs.-cold distinction was bound to become evident, with or without the Dodd amendment. In any event, if one of our big banks were seen to be in danger of failing -- becoming, in effect, a dead bank walking -- the Obama administration would have few choices other than to nationalize it.

Then there's the housing problem, which may be the most difficult of all. Foreclosures and plummeting home values are at the heart of the economic crisis. Either millions of Americans are going to lose their homes or millions of mortgage contracts are somehow going to be modified. That's not an attractive choice.

All Barack Obama wanted was to be president. He may have to become an auto executive, a banker, a mortgage broker and who knows what else before this crisis is done.

eugenerobinson@washpost.com
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FEBRUARY 11, 2009
Obama's Press List
Membership shall have its privileges.

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About half-way through President Obama's press conference Monday night, he had an unscripted question of his own. "All, Chuck Todd," the President said, referring to NBC's White House correspondent. "Where's Chuck?" He had the same strange question about Fox News's Major Garrett: "Where's Major?"

The problem wasn't the lighting in the East Room. The President was running down a list of reporters preselected to ask questions. The White House had decided in advance who would be allowed to question the President and who was left out.

Presidents are free to conduct press conferences however they like, but the decision to preselect questioners is an odd one, especially for a White House famously pledged to openness. We doubt that President Bush, who was notorious for being parsimonious with follow-ups, would have gotten away with prescreening his interlocutors. Mr. Obama can more than handle his own, so our guess is that this is an attempt to discipline reporters who aren't White House favorites.

Few accounts of Monday night's event even mentioned the curious fact that the White House had picked its speakers in advance. We hope that omission wasn't out of fear of being left off the list the next time.

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FEBRUARY 13, 2009, 11:43 P.M. ET
1,073 Pages
A stimulus bill that's anything but transparent.

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In his closing remarks on the stimulus bill yesterday, House Appropriations Chairman David Obey called it "the largest change in domestic policy since the 1930s." We'd say more like the 1960s, which is bad enough, but his point about the bill's magnitude is right. The 1,073-page monstrosity includes the biggest spending increase since World War II, but more important is the fine print expanding the role of the federal government across the breadth of American business, health care, energy and welfare policy.

Given those stakes, you might think Congress would get more than a few hours to debate it. But, no, yesterday's roll call votes came less than 24 hours after House-Senate conferees had agreed to their deal. Democrats rushed the bill to the floor before Members could even read it, much less have time to broadcast the details so the public could offer its verdict.

So much for Democratic promises of a new era of transparency. Only this Tuesday the House unanimously approved a resolution promising 48-hour public notice before holding a roll call. Even better, the bill could have been posted on the Internet, as candidate Barack Obama suggested during the campaign. Let voters see what they're getting for all this money. Not a chance.

This high-handed endgame follows the pattern of this bill from the start, with Republicans all but ignored until Democrats let three GOP Senators nibble around the edges to prevent a filibuster. With their huge majorities, Mr. Obey and Democrats got their epic victory. But far from a new, transparent way of governing, this bill represents the kind of old-fashioned partisan politics that Tom DeLay would have admired.

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FEBRUARY 13, 2009, 11:43 P.M. ET
Obama's Rhetoric Is the Real 'Catastrophe'
In 1932, automobile production shriveled by 90%.

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By BRADLEY R. SCHILLER

President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. First, he did so to win votes in the November election. He has done so again recently to sway congressional votes for his stimulus package.
[Commentary] AP

In his remarks, every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today's economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.

This fearmongering may be good politics, but it is bad history and bad economics. It is bad history because our current economic woes don't come close to those of the 1930s. At worst, a comparison to the 1981-82 recession might be appropriate. Consider the job losses that Mr. Obama always cites. In the last year, the U.S. economy shed 3.4 million jobs. That's a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost -- fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.

Job losses in the Great Depression were of an entirely different magnitude. In 1930, the economy shed 4.8% of the labor force. In 1931, 6.5%. And then in 1932, another 7.1%. Jobs were being lost at double or triple the rate of 2008-09 or 1981-82.

This was reflected in unemployment rates. The latest survey pegs U.S. unemployment at 7.6%. That's more than three percentage points below the 1982 peak (10.8%) and not even a third of the peak in 1932 (25.2%). You simply can't equate 7.6% unemployment with the Great Depression.

Other economic statistics also dispel any analogy between today's economic woes and the Great Depression. Real gross domestic product (GDP) rose in 2008, despite a bad fourth quarter. The Congressional Budget Office projects a GDP decline of 2% in 2009. That's comparable to 1982, when GDP contracted by 1.9%. It is nothing like 1930, when GDP fell by 9%, or 1931, when GDP contracted by another 8%, or 1932, when it fell yet another 13%.

Auto production last year declined by roughly 25%. That looks good compared to 1932, when production shriveled by 90%. The failure of a couple of dozen banks in 2008 just doesn't compare to over 10,000 bank failures in 1933, or even the 3,000-plus bank (Savings & Loan) failures in 1987-88. Stockholders can take some solace from the fact that the recent stock market debacle doesn't come close to the 90% devaluation of the early 1930s.

Mr. Obama's analogies to the Great Depression are not only historically inaccurate, they're also dangerous. Repeated warnings from the White House about a coming economic apocalypse aren't likely to raise consumer and investor expectations for the future. In fact, they have contributed to the continuing decline in consumer confidence that is restraining a spending pickup. Beyond that, fearmongering can trigger a political stampede to embrace a "recovery" package that delivers a lot less than it promises. A more cool-headed assessment of the economy's woes might produce better policies.

Mr. Schiller, an economics professor at the University of Nevada, Reno, is the author of "The Economy Today" (McGraw-Hill, 2007).