Saturday, April 27, 2013

Communicating Complex Economic Realities

As Liberal Media come to terms with political setbacks to President and Democrats in the sequester fight, one wonders whether it is a sign of things to come. May be it was all baked way back in President's first term and his fateful political decisions then. What is obvious is as your Politics stops working for you, downward movement gains and pretty soon 'lame duck presidency' starts in the very first year! White House will find itself in a weaker position as Congress continues to waive one after the other sequester cuts in isolation. Mother of all those waivers will be if GOP proposes to wipe out Defense Cuts without any restoration in other spending and then runs 2014 election on a plank that President Obama is undermining 'national defense' when he refuses to accept those defense outlay increases in isolation. Of course, President can call 'bluff of GOP' not by pointing Republican hypocrisy on deficit and debt (who cares for deficit?); but asking GOP to 'raise revenue' to fund rollback of Sequester for Defense Spending. 

The reason President would want to avoid further political defeats in these fiscal and domestic battles is otherwise GOP will hold this country hostage for coming Debt Ceiling Increase fight and essentially snowball these presidential defeats into an impotent presidency unable to undertake any 'change for Americans'.


"The real debate right now is with a Republican Party that won’t permit any more stimulus, won’t permit any more deficit reduction if it includes tax revenues, and won’t even permit the federal government to make it easier for people to refinance their homes.

-- Ezra Klein at Wonkblog, Washington Post 

What President needs to undertake is expose Republicans for their role in holding back American Economy. (Reinhart and Rogoff are villeins here - they never bothered to criticize GOP for the way Paul Ryan and the gang misused 'faulty theories' of R&R; essentially being an active party to man made crisis of American Economy.) Is President Obama exposing GOP though? 

The core political problem for Obama White House is, how do you run against Republicans to win back House (there are only 25 or so such opportunities, that is another of unfortunate millstones of American Politics - gerrymandering) while keep organizing dinner parties for Republicans and undertake charm offensive on Tea Party? 

If President confines himself to an orthodox political play book, indeed he is boxed here. But if he undertakes explaining and communicating 'complex economic realities' to Americans; he may find a path. Economic truths which he badly needs to communicate to Americans are:
- Primary reason of deficit is recession, lack of growth (it is not that as if President is 'swiping America's Credit Card on building palaces and other boondoggles); as growth continues, America can stabilize its deficit even though the progress is muddled here.
- For economic growth, 'not taxing rich' is not the only solution America needs to adopt all the time.
- Investing in future is what is needed for economic growth and borrowed money is justified for those investments so long as those borrowings are spent productively. Austerity is not a solution here, it does not work.
- Finally the real problem for America is moving borrowings from 'spending on past' (Medicare and Social Security) to 'spending on future' (education, infrastructure and innovation) and White House budget for 2014 is the first step in that direction. 

Absent any such ground breaking communication with Americans, Obama Presidency risks the danger of chasing Republicans in vain with nothing to show. 


Even though few experts argue that it is no problem that President Obama does not have any working relationship with Congress; the reality is here is a President who has failed to understand - ultimately what matters is 'getting things done through Congress' as far as domestic policy goes. It was all right at the height of 2008 victory to expect that President Obama could 'go over' Congress to reach Americans and then pressurize their representatives to get bills passed in Congress. But that can happen in Pelosi House only without President Obama being LBJ. The Big Data can only take you so far - winning in 2012. But legislation in Congress? Governance? Well, this President's past catches up with him quickly - he has been barely 2 years in Senate before occupying the White House. No History of working with Congressional folks over years nor any willingness to overcome this gap. Folks, Maureen Dowd was right; no matter how much hand-wringing you do here. If you reap political fruits of 'being Washington outsider'; you need to have a foresight in knowing that you would pay a price for such 'rootless in Washington' and you need to plan in advance in mitigating the concomitant risk.

Given all this, the path for President Obama is to undertake this outreach further; deploy all the technology his team has amassed in harnessing YouTube, Twitter and Facebook in reaching to Americans and tell them economic reality which is otherwise overshadowed by histrionics of Tea Party.

He doesn't do that and we may even see some dramatic implosion of Obama Second Term.

Update - Paul Krugman has done his job here. President, what about you? Are you up to the task? Have you been frank with Americans about 'what is going on'? 

Nah, I do not expect anything from Congress. That is way above its 'pay grade'. 

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