In short, Obama wagered that the deluge of money coming from the Federal Reserve would do the heavy lifting as far as stabilizing the financial sector and keeping the already apparent recession from turning into a real disaster. Voters would, thus, continue to support his policies to assert more government control over healthcare, heavily regulate energy through a costly cap-and-trade program and further intervene into the financial industry.I am currently reading a book on Ronald Reagan and his leadership style.
The gamble appears to have failed miserably, both economically and politically. The terrible tale of the tape: a) the current downturn is arguably the worse since the Great Depression; b) household wealth has fallen by $14 trillion during the past two years, including the first quarter of 2009; c) while the economy may not shrink as much this quarter as it did in the previous three months (-5.7 percent) or the final quarter of 2008 (-6.3 percent), unemployment is soaring; d) Obama himself said the jobless rate will hit 10 percent this year; d) even worse, the Federal Reserve sees it approaching 11 percent next year. (Recall, that the original White House economic analysis of the Obama economic plan never saw unemployment exceeding 8 percent if Obamanomics was passed by Congress.)
But as much as the media elite chastised Reaganomics (cut taxes, increase defense spending and balance the budget), I will admit that from the outside Reaganomics would seem to not be rational. But I would argue that Reagan didn't follow through with the effort to truly balance the budget buy cutting government and thus you had the deficits he faces. ($200 billion a year or so).
Fast forward twenty nine years and where are we? We now have a somewhat mishmoshed "plan" that no one in the Administration can really articulate. One could argue that Obama is trying to "prime the pump" (a good supply side economic concept), but President Obama cannot describe how he is going to pay back the massive amounts of spending he has undertaken and a majority of Americans are not keen on the massive deficits we are looking at. Oh the days of a $200 billion deficit seem quaint now.
I think there are a lot of Americans who were willing to give the President the benefit of the doubt, but he is now about six months into the job and he can no longer argue that this is a Bush Administration problem. He owns the economic policy now and I don't see a coherent policy at all.