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A Report Card on Obamanomics, Approaching One Hundred Days
The Administration is coming up to that magical 100-day mark, at which point measures are taken of how a new president is doing. As a university professor I'm accustomed to giving grades. So here's my report card on Obamanomics so far:
The 10-year budget gets an A. It's an extraordinary vision of what America can and should become, including universal health insurance and environmental protections against climate change. And the budget takes a little bit more from the rich and gives a little bit more back to the poor and lower middle class, which seems appropriate given that the income gap is wider than it's been since the 1920s. I'd give the budget an A plus except for its far-too-rosy economic projections.
The stimulus package gets a B. Good as far as it goes but doesn't go nearly far enough. $787 billion over two years sounds like a lot of stimulus. But the economy is operating at about a trillion and a half dollars below its capacity this year alone. And considering that the states are cutting services and increasing taxes to the tune of $350 billion over this year and next, the stimulus is even smaller.
The last grade is for the bank bailouts. I give them an F. I'm a big fan of this administration, but I've got to be honest. The bailouts are failing. So far American taxpayers have shoveled out almost $600 billion. Yet the banks are lending less money than they did five months ago. Bank executives are still taking home princely sums, their toxic assets and non-performing loans are growing, and the banks are still cooking their books. And now the Treasury is talking about converting taxpayer dollars into bank equity, which exposes taxpayers to even greater losses.
So that's the report card. An A on the budget, B on the stimulus, and F on the bailout. On the whole (given how I weigh grades) that gives Obamanomics a C-plus. Not bad given the magnitude of the problems Obama inherited. But by the same token, not nearly good enough.
The stimulus package gets a B. Good as far as it goes but doesn't go nearly far enough. $787 billion over two years sounds like a lot of stimulus. But the economy is operating at about a trillion and a half dollars below its capacity this year alone. And considering that the states are cutting services and increasing taxes to the tune of $350 billion over this year and next, the stimulus is even smaller.
The last grade is for the bank bailouts. I give them an F. I'm a big fan of this administration, but I've got to be honest. The bailouts are failing. So far American taxpayers have shoveled out almost $600 billion. Yet the banks are lending less money than they did five months ago. Bank executives are still taking home princely sums, their toxic assets and non-performing loans are growing, and the banks are still cooking their books. And now the Treasury is talking about converting taxpayer dollars into bank equity, which exposes taxpayers to even greater losses.
So that's the report card. An A on the budget, B on the stimulus, and F on the bailout. On the whole (given how I weigh grades) that gives Obamanomics a C-plus. Not bad given the magnitude of the problems Obama inherited. But by the same token, not nearly good enough.
The 10-year budget gets an A. It's an extraordinary vision of what America can and should become, including universal health insurance and environmental protections against climate change. And the budget takes a little bit more from the rich and gives a little bit more back to the poor and lower middle class, which seems appropriate given that the income gap is wider than it's been since the 1920s. I'd give the budget an A plus except for its far-too-rosy economic projections.
The stimulus package gets a B. Good as far as it goes but doesn't go nearly far enough. $787 billion over two years sounds like a lot of stimulus. But the economy is operating at about a trillion and a half dollars below its capacity this year alone. And considering that the states are cutting services and increasing taxes to the tune of $350 billion over this year and next, the stimulus is even smaller.
The last grade is for the bank bailouts. I give them an F. I'm a big fan of this administration, but I've got to be honest. The bailouts are failing. So far American taxpayers have shoveled out almost $600 billion. Yet the banks are lending less money than they did five months ago. Bank executives are still taking home princely sums, their toxic assets and non-performing loans are growing, and the banks are still cooking their books. And now the Treasury is talking about converting taxpayer dollars into bank equity, which exposes taxpayers to even greater losses.
So that's the report card. An A on the budget, B on the stimulus, and F on the bailout. On the whole (given how I weigh grades) that gives Obamanomics a C-plus. Not bad given the magnitude of the problems Obama inherited. But by the same token, not nearly good enough.
The last grade is for the bank bailouts. I give them an F. I'm a big fan of this administration, but I've got to be honest. The bailouts are failing. So far American taxpayers have shoveled out almost $600 billion. Yet the banks are lending less money than they did five months ago. Bank executives are still taking home princely sums, their toxic assets and non-performing loans are growing, and the banks are still cooking their books. And now the Treasury is talking about converting taxpayer dollars into bank equity, which exposes taxpayers to even greater losses.
So that's the report card. An A on the budget, B on the stimulus, and F on the bailout. On the whole (given how I weigh grades) that gives Obamanomics a C-plus. Not bad given the magnitude of the problems Obama inherited. But by the same token, not nearly good enough.
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I agree on the A for the budget, B for the stimulus and F for the bailout (aka the heist).
I would add that the President has also earned and A on beginning the process of restoring US relations with the rest of the world though he could well blow that A with his low grades in other areas. The President gets an F on protecting the civil liberties of the people, another F on restoring the Constitution and the rule of law, another F on Torture (though that grade could change if he decides not to protect those who committed war crimes), an F on domestic spying an F on rolling back authoritarian use of the State Secrets doctrine to protect wrongdoing, and an F on implementing "Change we can believe in".
As a result of his F in Change we can believe in, the President also gets an A on protecting and preserving the status quo.
April 21, 2009 4:45 PM | Reply | Permalink
I think it's a little premature to give him F's on all the civil-liberties-related policies. I'd give him an incomplete and more like a C for the work he's done already. He did reverse the Bush administration's torture policy and also shed light on it by releasing memos. He's just seemed reluctant to go further and prosecute. But Obama is a bit of a political chessmaster and he seems adept at disguising his moves. So I don't think we can be sure where he's headed yet. The apparent reluctance to prosecute may be a political ruse. At the same time he's saying he doesn't want to prosecute he's releasing information that may be evidence of a crime. This could be a ploy to make prosecution inevitable while also removing the likely barrier to effective prosecution that would arise if prosecution were seen as a politically motivated attack by the president.
April 22, 2009 7:59 AM | Reply | Permalink
Sounds like some extra-credit work might restore that GPA.
April 21, 2009 5:22 PM | Reply | Permalink
And summer school, definitely summer school.
April 21, 2009 5:46 PM | Reply | Permalink
B, C, D in that order
The D is actually an 'incomplete' and largely due to PPIP stinking so bad. If Treasury follows Barofsky on it, the grade could go up 1 level. If Treasury follows 'eds' on it, maybe another level. :-)
And of course the B for budget is a bit up in the air, but as an interim grade it represent my fiscal conservative side which rejects the bullshit line about cutting the budget in half as utter crap, and would argue for an even higher standard -- that is, the Bush years don't count as a standard of anything worth naming. Cut deficits to under $300B before 2012 and more cuts soon after, then Obama will get budget praise from me.
April 21, 2009 5:49 PM | Reply | Permalink
The buck stops at Obama, not "The Administration."
I would measure his economic product thus far against two things: the nature and magnitude of the problem; his promise to really change things.
What he should have been doing has been obvious enough to far more than enough "ordinary people" and economists.
What he has actually been doing either falls pathetically short of the mark or is simply, and unequivocally, a betrayal.
I've had it with excuses and justifications, both from him and his inadequately critical supporters. This is not the time to defend the indefensible.
I give Obama one, considered, heartfelt grade: FU Barack.
April 21, 2009 6:46 PM | Reply | Permalink
Boy, tough crowd.
Now what?
April 21, 2009 8:21 PM | Reply | Permalink
I beleieve we call this "purity trolling."
Maybe we should have elected you president instead.
April 21, 2009 11:09 PM | Reply | Permalink
Hey, you gave the news shows their talking points!
I've been waiting to see how they will summarize the first 100.
I agree with the Obamanomics grades.
There were/are so many areas needing fixing it must be hard to know where to begin. I would give him an A for science so far and overturning some of the worst Bush rules concerning science, medicine and the environment: the 11th hour "medical conscience" rule, the ban on stem cell research, the weakened endangered species rules, the "Mexico City" rule, and of course torture which spans many different categories.
He's also on the right track with mountain-top mining. Hopefully, that door will soon be shut forever.
So I can take some small joy in the good stuff and still shake my head at the audacity and lack of acuity surrounding the bailouts.
April 21, 2009 8:54 PM | Reply | Permalink
I would give a D on the stimulus. Not only is it not enough but also does not set up any agencies to spear head it's application.
F on the the bail out with a large red marker. Most assuredly a do over.
C
April 21, 2009 9:03 PM | Reply | Permalink
Restoring the Constitution to its rightful place of honor? Check.
Repairing the nation's international image? Check.
Addressing the criminally neglected financial crisis? Check.
Dealing with the worst recession in many decades? Check.
Honest, intelligent, insightful and inclusive? Check.
Anything else you want from a president?
April 21, 2009 9:25 PM | Reply | Permalink
Mr. Reich where you would criticize on rosy budgetary out-years, I would zero in on the "little bit more from the rich and little bit more back to the poor" part.
By any angle, we know we're looking at scary deficits going forward. As a Hillary worker I was critical of Barack in '08, for not squarely dealing with the deficit issue (nor did she, nor did McCain). Will we erase it ever now, with a mere return to Bill's top bracket? Didn't the top 10% of America come away far more flush than that, from the Trickle Down era 1981-2008?
Isn't it time to honestly say, we are so fiscally screwed that the top bracket has to be 50%, at least for the period of Barack's 10-year plan. I don't know where you trigger that tier - 500k, 1 million - but come on. We need a serious give back here from those whom can most absorb it.
(This does not preclude, targeted capital gains cuts. That's fine, but if your wealth isn't going into new operations, cough up - for America now)
Budget: B-
If we actually get universal health insurance: A
April 22, 2009 12:04 AM | Reply | Permalink
I agree so far.
Continuing , for myself.
Bailout: an interim C ,based on class participation. Can't grade the exams because the blue books haven't been collected yet. My guess is that the final grade will be a B. It will work sufficiently well so that we'll be talking about something else by November 2010.
Defense Budget: C minus. Less unacceptable than W's of course but what's needed is something like Clement Attlee's 1946 treatment of the Empire.
Foreign policy. A .
Moral Leadership. B. Based on the release of the torture memos. Now he needs to appoint a fact fnding commission to establish whether or not it worked. We'll never agree on its morality, that assessment will be based on our personal values. But we can determine whether Cheney is right that it prevented another 9/11. If he is, many of us will have a moral dilemna. If not we can relegate that to the too hard to handle pile. We need to know which it is.
April 22, 2009 5:18 AM | Reply | Permalink
Foreign Policy: Barack & Hillary are diffusing tensions with various adversaries so quickly IMO, it's killing the Wingnut crowd.
I would welcome hearings (even if I can only read about them as closed proceedings), that attempt any proving out of info extracted from torture. Gee Dick, when you were waterboarding 2 gihad lunatics uhm, 300 TIMES - was that getting you a word or 2 each time?
Or, was it just about being sadistic in our name.
April 22, 2009 1:26 PM | Reply | Permalink
Yup
April 23, 2009 7:55 AM | Reply | Permalink
Worring about balancing the budget when we're still hovering on the brink of a depression is Hoovernomics. Ratio of debt to GNP is what's critical, not the absolute dollar figure of the debt. If GNP is contracting, the effect of the deficit gets worse even if we don't add another dollar to it and attempts to shink the deficit under those conditions, GNP will shrink even faster--especially if we get into a deflation trap.
April 22, 2009 10:44 AM | Reply | Permalink
Smeared routinely as a "liberal", a very first for me here being equated with Hoover... ;^)
I agree with seeing the deficit as a % of GDP. Still, we'd like to 86 it ideally. It's passing debt on otherwise. What about the aspect that for those with crazy-high wealth now after 3 decades of GOP Trickle-Down (whilst the nation decayed), it's giveback time?
April 22, 2009 1:42 PM | Reply | Permalink
MikeW67: "This does not preclude, targeted capital gains cuts."
Capital gains cuts? It's outrageous that capital gains are taxed at less than wages. There's no good reason whatever: income is income and should be taxed at the same rate, no matter where it comes from. Except for a thimbleful of cases (IPOs and secondary offerings), money that's invested in the stock market has *nothing whatever to do* with growing jobs and growing businesses.
April 22, 2009 9:44 AM | Reply | Permalink
Kind of agree from a strictly theoretical standpoint, but I shudder to think what would happen if IPO's and secondary offerings were the only kind of investment the government subsidized. I think you're arguing that no investment activity should be subsidized, so there's probably no disagreement between us. But your comment just made me think about how focusing the investment decision distortion effect of the capital gains break down that narrowly could result in some spectacularly stupid allocations of capital.
April 22, 2009 10:51 AM | Reply | Permalink
As a Bill worker in the 90's... ;^)
I bought into his targeted cap gains concept. IPO = new capital into a growing business = cut it. Open up a Domino's = new venture = cut it. Trade your secondary shares on the NYSE = no new operations = you ain't getting no tax cut...
(Perhaps Mr. Reich will touch the topic at some point. He knows the chapter & verse of it undoubtedly.)
April 22, 2009 2:00 PM | Reply | Permalink
Politique d’abord!
Assuming those A-B-F marks are justified by mammonological criteria, the whole package might be acceptable as a compromise -- if it were not for the fact that President Summers and Secretary Geithner and First Quartermaster-General Bernanke von Ludendorff and the whole tribe of Goldman-Saxons don't represent anything or anybody politically. To make extraordinary unilateral concessions to them is a dead end.
The correlation of farces would be entirely different if the militant extremist GOP and its dupes gave even a faint sign of supposin’ that the cause of Goldman Sachs is the cause of united reaction. But in fact Hooverville and Wingnut City are quite as willin’ to make rude remarks about the whizkids as anybody else.
Happy days.
April 22, 2009 12:30 PM | Reply | Permalink
The report card should read "F".
The media may control the message with spin, but sooner rather than later, reality will catch up with all. General Motors announces they will either cut a deal with their bondholders or go through bankruptcy court. They said they will do a debt for equity swap? What equity? They also announced that the June 1st debt payment of about $1 billion will not be made, didn't they just get $5 billion from the TARP? The bottom line is this is a broken business model and must be restructured as does the entire banking system.
With everything that has been coming out of Washington and Wall Street of late, it looks to me like desperation. Think back, GM said just a month ago that they didn't need the scheduled TARP payment, this was part of the news that got the equity rally started in the first place. The farcical bank earnings have come, been laughed at, and now gone (I wonder if any CEO's will sign off on the 10k's?). Treasury has floated 3-4 different banking system trial balloons, and now they tell us that retail sales and housing have bottomed. The "stress test" has been supposedly finished (I don't think even the banks know for sure what they exactly have) in a 4 week span, and we are expected to believe the results?
My point is this, SPIN SPIN SPIN. No one in the media ever even questions what is obviously horse C*** served on toast with garnish. It is not like 6 months or a year passes before we find out that what we are told is not true, it is only 2 weeks or a month and yet no one remembers anything! As mentioned before, I really think there is huge stress behind the scenes, the "spin cycle" has gone into overdrive as more and more "improbabilities" are tossed out for public consumption.
The one thing that cannot be spun is the borrowing needs of the Treasury. They need about $40 billion per week or $7 billion per day, this appetite will starve the rest of the world and cannot be supplied. No one in the media has done the math, no one has even put this through the "common sense" test. Ten year Treasury rates are now very close to 3%, I believe a print of 3.25% will be enough to create a panic. The current "equilibrium" is so tenuous, so fragile, that even a small blip upward in rates will push many over the "variable rate" edge and even more over the "mental edge".
The late Stan Salvigsen predicted asset bubbles that would be popped by interest rate spikes, followed by the final bubble in U.S. Treasuries. We are there now, the next interest rate spike will "pop" the greatest and ultimate "variable rate borrower", namely the Treasury. Remember 10-15 years ago when Lloyd Bentsen had the wonderful idea of shortening the borrowing profile of the Treasury? Well, here we are, rising rates will blow out an already deadbeat borrower by making even the interest payments impossible to meet, much less the principal. Can you say banana republic?
P.S. talk about a short spin cycle! CNBC announced early this morning that west coast real estate WENT UP in value 3.6% last month, and THIS just in, foreclosures INCREASED 80% in California last month. No logic here, eh? I guess this is what they meant by "new math", 2+2 =whatever you want it to.
April 22, 2009 6:11 PM | Reply | Permalink
Your analysis is exactly right. We all got frightened into giving the money to the people who destroyed the financial system with their greed and high risk behavior. If we had taken the time to analyze what had happened, we would have given the money directly to the homeowners that were under water and refinanced all of the mortgages that were weighing down the system. Foreclosures would have stopped, prices would have stabilized and new banks would have opened up. Instead the bankers who caused the problem are back in business and the foreclosures continue. How does that happen in a democracy?
April 23, 2009 12:40 PM | Reply | Permalink