"Barack Obama and his advisers have spent much of the last three years devising policies to deal with the economy’s big, long-term problems, like inequality, health care, the budget deficit. In the process, they came up with an agenda that’s serious, detailed and mostly cogent.
Yet none of it will be their first priority.
Instead, the initial thrust of their economic policy will be on keeping the economy from falling into a recession that’s nastier than most of us have ever experienced.
This year’s election coincided with an important moment in the financial crisis. The credit markets have stabilized in the last few weeks and even improved a bit. But the rest of the economy is deteriorating fairly rapidly. It’s now in danger of falling into a vicious spiral, in which spending cuts by consumers and businesses lead to further layoffs and then more spending cuts.Mr. Obama and his advisers acknowledge that their focus has to shift, but the change is still likely to be challenging, and a bit disappointing. “Unfortunately, the next president’s No. 1 priority is going to be preventing the biggest financial crisis in possibly the last century from turning into the next Great Depression,” says Austan Goolsbee, an Obama adviser. “That has to be No. 1. Nobody ever wanted that to be the priority. But that’s clearly where we are.”
Justin Fox has a good take on it:
"Let's be clear about this: Barack Obama isn't going to raise your taxes in 2009. He already said back in September, before the severity of the current economic downturn was apparent, that he would probably hold off on rescinding the Bush tax cuts on high-income households because of the fragility of the economy. In October, his campaign said it was backing off plans to impose a windfall profits tax on oil companies--at least until oil prices start heading up again.
The reasoning here is pretty simple. When the economy is shrinking, you don't raise taxes or do anything else (such as cutting spending) aimed at shrinking the federal deficit. Instead, you do whatever it takes to get the economy growing again."
Read the rest. Here's my comment:
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Thursday, November 6, 2008 at 2:02 pm
"Mr. Obama and his advisers acknowledge that their focus has to shift, but the change is still likely to be challenging, and a bit disappointing. “Unfortunately, the next president's No. 1 priority is going to be preventing the biggest financial crisis in possibly the last century from turning into the next Great Depression,” says Austan Goolsbee, an Obama adviser. “That has to be No. 1. Nobody ever wanted that to be the priority. But that's clearly where we are.”
I agree. I notice that Paul Krugman, Ezra Klein, Jeffrey Sachs, John Judis, etc., have been pushing a big spending line, but I believe that they will be disappointed, if I'm reading them correctly. I believe that I'm likely to be happier with President Obama than they will be.
As for the rest of your analysis, I agree with it. I hope that doesn't bother you.