The Nobel Prize-winning economist, once one of the president’s most notable critics, on why Obama is a historic success
But now the shoe is on
the other foot: Obama faces trash talk left, right and center –
literally – and doesn't deserve it. Despite bitter opposition, despite
having come close to self-inflicted disaster, Obama has emerged as one
of the most consequential and, yes, successful presidents in American
history. His health reform is imperfect but still a huge step forward –
and it's working better than anyone expected. Financial reform fell far
short of what should have happened, but it's much more effective than
you'd think. Economic management has been half-crippled by Republican
obstruction, but has nonetheless been much better than in other advanced
countries. And environmental policy is starting to look like it could
be a major legacy.
I'll go through those achievements
shortly. First, however, let's take a moment to talk about the current
wave of Obama-bashing. All Obama-bashing can be divided into three
types. One, a constant of his time in office, is the onslaught from the
right, which has never stopped portraying him as an Islamic atheist
Marxist Kenyan. Nothing has changed on that front, and nothing will.
Photo: Sean Gallup/Getty
There's
a different story on the left, where you now find a significant number
of critics decrying Obama as, to quote Cornel West, someone who ''posed
as a progressive and turned out to be counterfeit.'' They're outraged
that Wall Street hasn't been punished, that income inequality remains so
high, that ''neoliberal'' economic policies are still in place. All of
this seems to rest on the belief that if only Obama had put his
eloquence behind a radical economic agenda, he could somehow have gotten
that agenda past all the political barriers that have con- strained
even his much more modest efforts. It's hard to take such claims
seriously.
Finally, there's the constant belittling of
Obama from mainstream pundits and talking heads. Turn on cable news
(although I wouldn't advise it) and you'll hear endless talk about a
rudderless, stalled administration, maybe even about a failed
presidency. Such talk is often buttressed by polls showing that Obama
does, indeed, have an approval rating that is very low by historical
standards.
But this bashing is misguided even in its own terms – and in any case, it's focused on the wrong thing.
Yes,
Obama has a low approval rating compared with earlier presidents. But
there are a number of reasons to believe that presidential approval
doesn't mean the same thing that it used to: There is much more
party-sorting (in which Republicans never, ever have a good word for a
Democratic president, and vice versa), the public is negative on
politicians in general, and so on. Obviously the midterm election hasn't
happened yet, but in a year when Republicans have a huge structural
advantage – Democrats are defending a disproportionate number of Senate
seats in deep-red states – most analyses suggest that control of the
Senate is in doubt, with Democrats doing considerably better than they
were supposed to. This isn't what you'd expect to see if a failing
president were dragging his party down.
More important,
however, polls – or even elections – are not the measure of a
president. High office shouldn't be about putting points on the
electoral scoreboard, it should be about changing the country for the
better. Has Obama done that? Do his achievements look likely to endure?
The answer to both questions is yes.
HEALTH CARE
When Obama signed the Affordable Care Act, an excited Joe Biden whispered audibly, ''This is a big fucking deal!'' He was right.
The
enactment and implementation of the Affordable Care Act, a.k.a.
Obamacare, has been a perils-of-Pauline experience. When an upset in the
special election to replace Ted Kennedy cost Democrats their 60-vote
Senate majority, health reform had to be rescued with fancy legislative
footwork. Then it survived a Supreme Court challenge only thanks to a
surprise display of conscience by John Roberts, who nonetheless opened a
loophole that has allowed Republican-controlled states to deny coverage
to millions of Americans. Then technical difficulties with the
HealthCare.gov website seemed to threaten disaster. But here we are,
most of the way through the first full year of reform's implementation,
and it's working better than even the optimists expected.
We
won't have the full data on 2014 until next year's census report, but
multiple independent surveys show a sharp drop in the number of
Americans without health insurance, probably around 10 million, a number
certain to grow greatly over the next two years as more people realize
that the program is available and penalties for failure to sign up
increase.
It's true that the Affordable Care Act will
still leave millions of people in America uninsured. For one thing, it
was never intended to cover undocumented immigrants, who are counted in
standard measures of the uninsured. Furthermore, millions of low-income
Americans will slip into the loophole Roberts created: They were
supposed to be covered by a federally funded expansion of Medicaid, but
some states are blocking that expansion out of sheer spite. Finally,
unlike Social Security and Medicare, for which almost everyone is
automatically eligible, Obamacare requires beneficiaries to prove their
eligibility for Medicaid or choose and then pay for a subsidized private
plan. Inevitably, some people will fall through the cracks.
Still,
Obamacare means a huge improvement in the quality of life for tens of
millions of Americans – not just better care, but greater financial
security. And even those who were already insured have gained both
security and freedom, because they now have a guarantee of coverage if
they lose or change jobs.
What about the costs? Here,
too, the news is better than anyone expected. In 2014, premiums on the
insurance policies offered through the Obamacare exchanges were well
below those originally projected by the Congressional Budget Office, and
the available data indicates a mix of modest increases and actual
reductions for 2015 – which is very good in a sector where premiums
normally increase five percent or more each year. More broadly, overall
health spending has slowed substantially, with the cost-control features
of the ACA probably deserving some of the credit.
In
other words, health reform is looking like a major policy success story.
It's a program that is coming in ahead of schedule – and below budget –
costing less, and doing more to reduce overall health costs than even
its supporters predicted.
And some on the left were
outraged, arguing that the program would do more to raise profits in the
medical-industrial complex than it would to protect American families.
You
can still argue that single-payer would have covered more people at
lower cost – in fact, I would. But that option wasn't on the table; only
a system that appeased insurers and reassured the public that not too
much would change was politically feasible. And it's working reasonably
well: Competition among insurers who can no longer deny insurance to
those who need it most is turning out to be pretty effective. This isn't
the health care system you would have designed from scratch, or if you
could ignore special-interest politics, but it's doing the job.
And
this big improvement in American society is almost surely here to stay.
The conservative health care nightmare – the one that led Republicans
to go all-out against Bill Clinton's health plans in 1993 and Obamacare
more recently – is that once health care for everyone, or almost
everyone, has been put in place, it will be very hard to undo, because
too many voters would have a stake in the system. That's exactly what is
happening. Republicans are still going through the motions of attacking
Obamacare, but the passion is gone. They're even offering mealymouthed
assurances that people won't lose their new benefits. By the time Obama
leaves office, there will be tens of millions of Americans who have
benefited directly from health reform – and that will make it almost
impossible to reverse. Health reform has made America a different,
better place.
FINANCIAL REFORM
Let's
be clear: The financial crisis should have been followed by a drastic
crackdown on Wall Street abuses, and it wasn't. No important figures
have gone to jail; bad banks and other financial institutions, from
Citigroup to Goldman, were bailed out with few strings attached; and
there has been nothing like the wholesale restructuring and reining in
of finance that took place in the 1930s. Obama bears a considerable part
of the blame for this disappointing response. It was his Treasury
secretary and his attorney general who chose to treat finance with kid
gloves.
It's easy, however, to take this disappointment
too far. You often hear Dodd- Frank, the financial-reform bill that
Obama signed into law in 2010, dismissed as toothless and meaningless.
It isn't. It may not prevent the next financial crisis, but there's a
good chance that it will at least make future crises less severe and
easier to deal with.
Dodd-Frank is a complicated piece of legislation, but let me single out three really important sections.
First,
the law gives a special council the ability to designate ''systemically
important financial institutions'' (SIFIs) – that is, institutions that
could create a crisis if they were to fail – and place such
institutions under extra scrutiny and regulation of things like the
amount of capital they are required to maintain to cover possible
losses. During the 2012 presidential campaign, Mitt Romney claimed that
by announcing that some firms were SIFIs, the government was
effectively guaranteeing that they would be bailed out, which he called
''the biggest kiss that's been given to New York banks I've ever seen.''
But
it's easy to prove that this is nonsense: Just look at how institutions
behave when they're designated as SIFIs. Are they pleased, because
they're now guaranteed? Not a chance. Instead, they're furious over the
extra regulation, and in some cases fight bitterly to avoid being placed
on the list. Right now, for example, MetLife is making an all-out
effort to be kept off the SIFI list; this effort demonstrates that we're
talking about real regulation here, and that financial interests don't
like it.
Another key provision in Dodd-Frank is
''orderly liquidation authority,'' which gives the government the legal
right to seize complex financial institutions in a crisis. This is a
bigger deal than you might think. We have a well-established procedure
for seizing ordinary banks that get in trouble and putting them into
receivership; in fact, it happens all the time. But what do you do when
something like Citigroup is on the edge, and its failure might have
devastating consequences? Back in 2009, Joseph Stiglitz and yours truly,
among others, wanted to temporarily nationalize one or two major
financial players, for the same reasons the FDIC takes over failing
banks, to keep the institutions running but avoid bailing out
stockholders and management.
A third piece of
Dodd-Frank is the Consumer Financial Protection Bureau. That's Elizabeth
Warren's brainchild, an agency dedicated to protecting Americans
against the predatory lending that has pushed so many into financial
distress, and played an important role in the crisis. Warren's idea was
that such a stand-alone agency would more effectively protect the public
than agencies that were supposed to protect consumers, but saw their
main job as propping up banks. And by all accounts the new agency is in
fact doing much more to crack down on predatory practices than anything
we used to see.
There's much more in the financial
reform, there's enough evidence even now to say that there's a reason
Wall Street – which used to give an approximately equal share of money
to both parties but now overwhelmingly supports Republicans – tried so
hard to kill financial reform, and is still trying to emasculate
Dodd-Frank. This may not be the full overhaul of finance we should have
had, and it's not as major as health reform. But it's a lot better than
nothing.
THE ECONOMY
Barack
Obama might not have been elected president without the 2008 financial
crisis; he certainly wouldn't have had the House majority and the brief
filibuster-proof Senate majority that made health reform possible. So
it's very disappointing that six years into his presidency, the U.S.
economy is still a long way from being fully recovered.
Make
no mistake about it – the devastation wrought by the financial crisis
was terrible. Even in advanced countries, the median post-crisis
decline in per- capita real GDP is seven percent. Recovery has been
slow: It took almost six years for the United States to regain
pre-crisis average income. But that was actually a bit faster than the
historical average.
Or compare our performance with
that of the European Union. Unemployment in America rose to a horrifying
10 percent in 2009, but it has come down sharply in the past few years.
It's true that some of the apparent improvement probably reflects
discouraged workers dropping out, but there has been substantial real
progress. Meanwhile, Europe has had barely any job recovery at all, and
unemployment is still in double digits. Compared with our counterparts
across the Atlantic, we haven't done too badly.
Did
Obama's policies contribute to this less-awful performance? Yes, without
question. You'd never know it listening to the talking heads, but
there's overwhelming consensus among economists that the Obama stimulus
plan helped mitigate the worst of the slump. For
example, when a panel of economic experts was asked whether the U.S.
unemployment rate was lower at the end of 2010 than it would have been
without the stimulus, 82 percent said yes, only two percent said no.
Still,
couldn't the U.S. economy have done a lot better? Of course. The
original stimulus should have been both bigger and longer. And after Republicans won the House in 2010, U.S. policy took a sharp turn in the wrong direction. Not
only did the stimulus fade out, but sequestration led to further steep
cuts in federal spending, exactly the wrong thing to do in a
still-depressed economy.
We can argue about
how much Obama could have altered this literally depressing turn of
events. He could have pushed for a larger, more extended stimulus,
perhaps with provisions for extra aid that would have kicked in if
unemployment stayed high. (This isn't 20-20 hindsight, because a number
of economists, myself included, pleaded for more aggressive measures
from the beginning.) He arguably let Republicans blackmail him over the
debt ceiling in 2011, leading to the sequester. But this is all kind of
iffy.
The bottom line on Obama's economic policy should
be that what he did helped the economy, and that while enormous
economic and human damage has taken place on his watch, the United
States coped with the financial crisis better than most countries facing
comparable crises have managed. He should have done more and better,
but the narrative that portrays his policies as a simple failure is all
wrong.
While America remains an incredibly unequal
society, and we haven't seen anything like the New Deal's efforts to
narrow income gaps, Obama has done more to limit inequality than he gets credit for.
The rich are paying higher taxes, thanks to the partial expiration of
the Bush tax cuts and the special taxes on high incomes that help pay
for Obamacare; the Congressional Budget Office estimates the average tax
rate of the top one percent at 33.6 percent in 2013, up from 28.1
percent in 2008. Meanwhile, the financial aid in Obamacare – expanded
Medicaid, subsidies to help lower-income households pay insurance
premiums – goes disproportionately to less-well-off Americans. When
conservatives accuse Obama of redistributing income, they're not
completely wrong – and liberals should give him credit.
THE ENVIRONMENT
In
2009, it looked, briefly, as if we might be about to get real on the
issue of climate change. A fairly comprehensive bill establishing a
cap-and-trade system to limit greenhouse-gas emissions actually passed
the House, and visions of global action danced like sugarplums in
environmentalists' heads. But the legislation stalled in the Senate, and Republican victory in the 2010 midterms put an end to that fantasy.
Ever since, the only way forward has been through executive action
based on existing legislation, which is a poor substitute for the new
laws we need.
But as with financial reform, acknowledging the inadequacy of what has been done doesn't mean that nothing has been achieved. Saying
that Obama has been the best environmental president in a long time is
actually faint praise, since George W. Bush was terrible and Bill
Clinton didn't get much done. Still, it's true, and there's reason to
hope for a lot more over the next two years.
Photo: Doug Mills/The New York Times
First
of all, there has been much more progress on the use of renewable
energy than most people realize. The share of U.S. energy provided by
wind and solar has grown dramatically since Obama took office. True,
it's still only a small fraction of the total, and some of the growth in
renewables reflects technological progress, especially in solar panels,
that would have happened whoever was in office. But federal policies,
including loan guarantees and tax credits, have played an important
role.
Nor is it just about renewables; Obama has also
taken big steps on energy conservation, especially via fuel-efficiency
standards, that have flown, somewhat mysteriously, under the radar. And
it's not just cars. In 2011, the administration announced the first-ever
fuel-efficiency standards for medium and heavy vehicles, and in
February it announced that these standards would get even tougher for
models sold after 2018. As a way to curb green house-gas emissions,
these actions, taken together, are comparable in importance to proposed
action on power plants.
Which brings us to the latest initiative. Because
there's no chance of getting climate-change legislation through
Congress for the foreseeable future, Obama has turned to the EPA's
existing power to regulate pollution – power that the Supreme Court has
affirmed extends to emissions of carbon dioxide and other greenhouse
gases. And this past summer, the EPA announced proposed rules
that would require a large reduction over time in such emissions from
power plants. You might say that such plants are only a piece of the
problem, but they're a large piece – CO2 from
coal-burning power plants is in fact a big part of the problem, so if
the EPA goes through with anything like the proposed rule, it will be a
major step. Again, not nearly enough, and we'll have to do a lot more
soon, or face civilization-threatening disaster. But what Obama has done is far from trivial.
NATIONAL SECURITY
So
far, i've been talking about Obama's positive achievements, which have
been much bigger than his critics understand. I do, however, need to
address one area that has left some early Obama supporters bitterly
disappointed: his record on national security policy. Let's face it –
many of his original enthusiasts favored him so strongly over Hillary
Clinton because she supported the Iraq War and he didn't. They hoped he
would hold the people who took us to war on false pretenses accountable,
that he would transform American foreign policy, and that he would
drastically curb the reach of the national security state.
None
of that happened. Obama's team, as far as we can tell, never even
considered going after the deceptions that took us to Baghdad, perhaps
because they believed that this would play very badly at a time of
financial crisis. On overall foreign policy, Obama has been
essentially a normal post-Vietnam president, reluctant to commit U.S.
ground troops and eager to extract them from ongoing commitments, but
quite willing to bomb people considered threatening to U.S. interests.
And he has defended the prerogatives of the NSA and the surveillance
state in general.
Could and should he have
been different? The truth is that I have no special expertise here; as
an ordinary concerned citizen, I worry about the precedent of allowing
what amount to war crimes to go not just unpunished but uninvestigated,
even while appreciating that a modern version of the 1970s Church
committee hearings on CIA abuses might well have been a political
disaster, and undermined the policy achievements I've tried to
highlight. What I would say is that even if Obama is just an
ordinary president on national security issues, that's a huge
improvement over what came before and what we would have had if John
McCain or Mitt Romney had won. It's hard to get excited about a policy of not going to war gratuitously, but it's a big deal compared with the alternative.
SOCIAL CHANGE
In
2004, social issues, along with national security, were cudgels the
right used to bludgeon liberals – I like to say that Bush won
re-election by posing as America's defender against gay married
terrorists. Ten years later, and the scene is transformed: Democrats
have turned these social issues – especially women's rights – against
Republicans; gay marriage has been widely legalized with approval or at
least indifference from the wider public. We have, in a remarkably short
stretch of time, become a notably more tolerant, open-minded nation.
As
you can see, there's a theme running through each of the areas of
domestic policy I've covered. In each case, Obama delivered less than
his supporters wanted, less than the country arguably deserved, but more
than his current detractors acknowledge. The extent of his partial
success ranges from the pretty good to the not-so-bad to the ugly.
Health reform looks pretty good, especially in historical perspective –
remember, even Social Security, in its original FDR version, only
covered around half the workforce. Financial reform is, I'd argue, not
so bad – it's not the second coming of Glass-Steagall, but there's a lot
more protection against runaway finance than anyone except angry Wall
Streeters seems to realize. Economic policy wasn't enough to avoid a
very ugly period of high unemployment, but Obama did at least mitigate
the worst.
And as far as climate policy goes, there's reason for hope, but we'll have to see.
Am
I damning with faint praise? Not at all. This is what a successful
presidency looks like. No president gets to do everything his supporters
expected him to. FDR left behind a reformed nation, but one in which
the wealthy retained a lot of power and privilege. On the other side,
for all his anti-government rhetoric, Reagan left the core institutions
of the New Deal and the Great Society in place. I don't care about the
fact that Obama hasn't lived up to the golden dreams of 2008, and I care
even less about his approval rating. I do care that he has, when all is
said and done, achieved a lot. That is, as Joe Biden didn't quite say, a
big deal.
I co-opted this from an interview of Krugman by Rolling Stones Magazine, and shortened it somewhat without changing meaning.
No comments:
Post a Comment