Disasterious Results of Obama Team Making Economic Policy

The New York Times reported that President Obama's political team has been making economic policy.

WASHINGTON — As the economy worsens, President Obama and his senior aides are considering whether to adopt a more combative approach on economic issues, seeking to highlight substantive differences with Republicans in Congress and on the campaign trail rather than continuing to pursue elusive compromises, advisers to the president say.

Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. These include free trade agreements and improved patent protections for inventors.

But others, including Gene Sperling, Mr. Obama’s chief economic adviser, say public anger over the debt ceiling debate has weakened Republicans and created an opening for bigger ideas like tax incentives for businesses that hire more workers, according to Congressional Democrats who share that view. Democrats are also pushing the White House to help homeowners facing foreclosure.

David Plouffe's and Daley's ideas translate into things that Republicans support like cutting entitlements. Cutting entitlements isn't going to increase jobs. In fact, it will hurt the most needy Americans during an economic downturn. Plouffe an Daley advocate passing Republican proposals with a non-confrontational approach. The White House went to the Right of Republicans by proposing $2.7 trillion in spending cuts. Obama even offering cuts in Social Security. The Republicans balked. What Sperling is proposing is put pressure on Republicans to pass tax cuts to businesses that hire new employees. The Obama political team won't listen to Sperling because he is an economic policy guy.

The Obama political team's handling of the debt ceiling resulted in Medicare cuts and Standard & Poors downgrading the United States' credit rating to AA. The political team thought the debt ceiling agreement would be a political win for Obama. They were wrong.

The ratings, which aggregate Gallup polling done from January through June, came out just as Gallup was releasing its latest tracking poll showing Obama’s approval nationwide at 39%, the lowest in his presidency. If Obama’s national approval remains stuck at that level -- or even in the low 40s – then state-by-state assessments probably won’t matter much. Historically, presidents don’t win re-election with that sort of approval rating.

Obama is in serious political trouble. I have said before that Obama is not a policy wonk. Obama governs the economy with the same lack of seriousness as President George W. Bush. I wonder if when Obama was signing the Bush tax cut entension was Plouffe telling him to "stay on message."

Quote of the Day

“While others stick their fingers in the wind to see what the election results from last night mean for their support of the Ryan Plan, I remain steadfast in my support. In fact, my only complaint with the Path to Prosperity Plan is that it does not go far enough, fast enough, to address Washington’s unsustainable spending."

Adam Hasner, on the Paul Ryan plan.

I hope the DSCC remembers this quote. As Digby pointed out, Ryan's plan to make Medicare a voucher program is extremely unpopular with seniors. The Congression Budget Office letter to Ryan gives good reason for people not to support the plan.

To summarize, a typical beneficiary would spend more for health care under the proposal than under CBO’s long-term scenarios for several reasons. First, private plans would cost more than traditional Medicare because of the net effect of differences in payment rates for providers, administrative costs, and utilization of health care services, as described above. Second, the government’s contribution would grow more slowly than health care costs, leaving more for beneficiaries to pay.

If you are a senior or have a pre-existing condition, good luck trying to get private health insurance without insurance companies being required to cover you. Which is what the CBO tells Ryan.

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Obama Wants to Lower Corporate Tax Rates

Back in January, Bloomberg reported President Barack Obama made a speech about lowering the corporate tax rate. The New York Times reports Treasury Sec. Tim Geithner is working on lowering the corporate tax rate from 35 percent to 26 percent.

Gene Sterling, director of the National Economic Council goes in full sellout mode.

"The question is, Is the business community going to support this because it's a win for the economy over all?" said Gene Sperling, director of Mr. Obama's National Economic Council. "Or, is it going to get held up because each business will decide whether they're a temporary winner or loser compared to the status quo?"

It is harder to see everyday how Obama is the lesser evil than the Republicans.

Gene Sperling Back At National Economic Council

Joy-Ann Reid and Benjamin Kirby should be forewarned before going into cardiac arrest. I am going to offer President Barack Obama praise.

Obama's selection of Gene Sperling as director of the National Economic Council maybe the best appointment he has made. The NEC was created by President Bill Clinton's executive order. Much like President Richard Nixon Office of Management and Budget to be an in-house think tank and deal with the intricacies of the massive federal budget. Clinton created the NEC to be an economic think tank. Economic policy heavyweights Robert Rubin and Laura Tyson. Sterling was Tyson's replacement under Clinton.

To shows what happens when a President doesn't take the NEC seriously, George W. Bush appointed Lawrence Lindsey. Former Treasury Sec. Paul O'Neill documented Lindsey's incompetence in Ron Suskind's book. "The Price of Loyalty." Lindsey actually believes in the debunked theory of supply side economics.

Obama correctly cites Sterling's previous experience and success as NEC director. Sterling is also rather progressive. There are not enough progressive voices in the Obama administration. Sterling will have credibility holding a cabinet level position.