In an interview with The Wall Street Journal's Gerald F. Seib, former White House Chief of Staff, Treasury Secretary and Secretary of State James Baker offered some interesting insights about the First Hundred Days of the Obama Administration.
Of course, Baker (right) was one of the more pragmatic centrists in the administrations of Ronald Reagan and George H.W. Bush. He isn't much of an ideologue and it shows in the interview. He heaped praise on Obama on some foreign policy issues. But on the matter of Obama's domestic agenda, Baker voiced strong concerns.
"I think the spending is just out of hand," Baker told the WSJ. A highlight of the interview:
You can say that we ran up some deficits in the Reagan years, and that's true—we did. But we generated so much economic growth by cutting marginal tax rates that those deficits were ultimately wiped out. So I have a problem with all of the spending…a problem, frankly, with a lot of spending in the bailout [and stimulus] efforts…
Baker went on to express concerns about a "lack of transparency" in the spending process, as well as fears of runaway inflation.
Despite his pragmatism, or maybe because of it, Baker is still a conservative at heart. And his criticisms of President Barack Obama's economic policies during the First Hundred Days are shared by many of his fellow Republicans.
These are challenging times. The recent swine flu scare -- which triggered fears of a worldwide pandemic -- was undoubtedly exacerbated by the ailing global economy. Americans aren't the only ones suffering. All around the world, economic conditions are getting worse and worse with each passing day.
During prosperous times -- in the Clinton Nineties, perhaps in the early years of this decade, too -- there was a pervasive belief across America that prosperity was permanent. Nobody -- except perhaps a handful of doomsayers and maverick economists -- anticipated a downturn of the magnitude that we have witnessed in recent months. During the good times, Keynesian economists who advocated government spending were almost as much pariahs as Marxists.
The situation is a lot different now. Not surprisingly, the economy was President Obama's Number One priority during his First Hundred Days in the White House. Newspapers and news websites were filled with headlines about economic stimulus package. The words "billions" and "trillions" appeared frequently.
A lot of people are in a state of denial about the economic meltdown. Yale economist Dr. Robert Shiller, author of Animal Spirits: How Human Psychology Drives the Economy, echoed the views of countless pundits when he said, "Why are we in this economic crisis? It is because we perceive we are in an economic crisis.... What's important is that the president avoid anything that causes long-term damage to our confidence." (Source)
In other words, the economic crisis is a state of mind. There is no need to worry. No need to panic. The key to recovery is a positive, can-do kind of attitude.
How does one even begin to challenge such an absurd notion?
The reality is that positive attitude or not, the economy is in the most serious trouble it has experienced since the Great Depression. And telling Americans to keep their sunny side up ain't gonna fix it. It is important to be optimists of the will and take action to challenge the crisis. But just improving our attitudes alone isn't going to repair the fractured economy. It will take a lot more than that.
What about the comparisons between Barack Obama's First Hundred Days and Franklin D. Roosevelt's First Hundred Days? Are they valid?
Well, you could say -- in fairness -- that both men acted boldly in perilous economic times. But beyond that, the comparisons are tenuous. Obama's massive economic stimulus packages -- including his massive $787 billion behemoth (when you're talking $787 billion, sorry, but the word "package" is too trivial) that he shepherded through Congress earlier this year -- are aimed largely at restoring the shattered big business and banking sectors, which is what Roosevelt intended to do with the New Deal.
Progressives and lefties are now celebrating the New Deal as lofty and worthy of emulation. Shortly after the 2008 election, The Nation magazine published a special issue titled "Imagining a New New Deal." Not surprisingly, it turned out, for the most part, to be a sentimental trip down memory lane, celebrting FDR's New Deal as a great watershed in American history. Most articles in the magazine clearly supported a restoration of Rooseveltian Liberalism.
Sometimes, liberals need to do a reality check before they get in too celebratory of a mood. Let's not forget that New Deal agencies paid farmers to destroy crops and livestock while people were starving. The New Deal enacted "fair business" codes that favored large corporations at the expense of countless small business that went under in the Great Depression. The agencies often upheld policies that helped concentrate land, resources and wealth in the hands of fewer people. And New Deal "alphabet soup" organizations were not immune from the dominant ugly racism of the day. While some aspects of the New Deal are worth celebrating, it was also fraught with failures.
But the New Deal did represent a dramatically different way of governing the nation than what existed under Roosevelt's predecessor, Herbert Hoover. And the same could be said of President Obama's agenda. The man isn't just governing like a Keynesian. He's governing like a Keynesian on steroids.
That hasn't stopped the economy from hemorrhaging, though. Since the election of Obama on November 4, the economy has lost 650,000 jobs and that number is rising. Chrysler is about to go bankrupt. General Motors is teetering on the brink. But the picture is not entirely negative. The Dow Jones Industrial Average has shot back up to 8,000, the same level it was at the time of Obama's inauguration.
The chief architects of Obama's economic policies -- powerful figures such as Timothy Geithner, Christina Romer and Lawrence Summers -- are hardly flaming liberals, although they are supportive of Obama's Keynesian policies. But Obama's economic team consists primarily of middle-of-the-road economists eager to see the restoration of Clinton-era prosperity, with minimal alterations of the very structures that led to the current economic crisis.
Obama continues to enjoy high public approval ratings in most opinion polls. (Source) Most ordinary Americans do not share the fears of a shrinking number of isolated right-wing fanatics like Glenn Beck, Rush Limbaugh, Ann Coulter and Bill O'Reilly that Obama is a "socialist." Canada's National Post featured a column today by Peter Foster that perpetuates the myth. Foster writes, "Mr. Obama has denied being a socialist, but given his reflexive belief in big government both to solve social problems and guide the economy, that is hardly an inappropriate term. Nor does the financial crisis make that orientation more 'pragmatic.'"
There's more proof -- as if anyone needed it -- that conservative pundits have no idea what in the hell socialism is.
It is still too early to tell whether Obama's economic policies will be able to revive the ailing economy. But they have restored some confidence lost under the Bush presidency. For now, the federal government seems somewhat less dominated by huge corporations than it was before the Obama presidency. Ordinary Americans might not feel like the government is helping them directly in this time of crisis. But it is helping to salvage key financial institutions that employ large numbers of men and women across the country.
Perhaps the most encouraging thing that can be said is that we might be seeing the end of the era of reckless deregulation that began during the Reagan presidency and accelerated under the Bushes and Clinton. People are beginning to wake up and realize that an economy cannot be deregulated and unfettered when times are sunny and then be the recipient of mammoth Keynesian bailouts when things go to pot. This is not a decent way to run an economy. And the nation cannot afford it much longer.
At the risk of sounding repetitive, when it comes to the economy -- like foreign policy -- President Obama's First Hundred Days are going to be calm and smooth compared to the rocky shoals that likely await downriver.