The President’s Meeting with Liberal Economists

The President held an undisclosed meeting with liberal economists before a press conference where he blamed the “sanctimonious” left for their purity in the tax debate. The meeting included Paul Krugman, Joseph Stiglitz, Jeffrey Sachs, Alan Blinder and Robert Reich. It sounds pretty fascinating.

In what two participants describe as a somewhat-argumentative one-hour discussion, Obama tried to convince the group that his compromise would deliver more bang for the buck to the economy and to people most in need of help than any other politically feasible option.

Alongside Obama were Austan Goolsbee, the chairman of his Council of Economic Advisors, and Jared Bernstein, Vice President Joe Biden’s chief economist. Bernstein is considered a left-of-center economist, as is Goolsbee to some extent.

The two participants, both of whom would recount the conversation only on condition of anonymity, said that the conversation came to no resolution.

“He didn’t really respond,” said one of the participants. “He said it was hard to change the narrative after 30 years” of small-government rhetoric and policies dating back to Ronald Reagan. “He seemed to be looking for a way to reassure the base. Or maybe it was just to reassure himself.”

Another participant said the meeting was mostly good-natured and polite, but that the president complained about how hard it was to get anything through Congress.

Krugman did not respond to a request to discuss the meeting, but he did write an op-ed today that at least came close to a response. The op-ed, much like the snippet above, talked about the enduring quality of free market fundamentalism, and that the reason these zombie ideas stay in the discourse is that people like the President try to accommodate them instead of refuting them.

People tend to forget that Ronald Reagan often gave ground on policy substance — most notably, he ended up enacting multiple tax increases. But he never wavered on ideas, never backed down from the position that his ideology was right and his opponents were wrong.

President Obama, by contrast, has consistently tried to reach across the aisle by lending cover to right-wing myths. He has praised Reagan for restoring American dynamism (when was the last time you heard a Republican praising F.D.R.?), adopted G.O.P. rhetoric about the need for the government to tighten its belt even in the face of recession, offered symbolic freezes on spending and federal wages.

None of this stopped the right from denouncing him as a socialist. But it helped empower bad ideas, in ways that can do quite immediate harm. Right now Mr. Obama is hailing the tax-cut deal as a boost to the economy — but Republicans are already talking about spending cuts that would offset any positive effects from the deal. And how effectively can he oppose these demands, when he himself has embraced the rhetoric of belt-tightening?

I suspect that the meeting featured some version of this argument. Similarly, Alan Blinder’s excellent op-ed about America’s wage decline seems like a counter-point to this meeting as well. And since Obama’s lash out at the left immediately followed the meeting, it looks like all the participants took their closing remarks to other venues.

I’m not believing that Obama did much to wrestle with these critiques. The meeting seemed more designed to persuade the economists about the rightness of the Administration’s decisions rather than engage with their arguments. Typically, this is the time that he brings those on the left into the fold, not before a decision is made, but after.

Despite paying attention to the left flank, I think the tax cut deal had its desired effect. While support for the President in the key states of Ohio and Florida went down among liberals it rose among moderates, and given the larger number of self-described moderates it rose overall. With the probable belief that liberals will come home at some point, the President’s political team is going to be excited by these numbers.

But there’s going to be a much bigger moment for a discussion like this. In a couple months, the House will vote to cut discretionary non-defense spending to 2008 levels, a reduction of 20% or close to $100 billion dollars. That would almost entirely cancel out any new spending from the tax cut deal. Will another meeting with Krugman and Stiglitz and the like be set up, to tell them that “we had to reassure the markets” and save the nation from a government shutdown? I think that’ll go over just as well as this tax cut deal among the left. And when the economy suffers as a result, support from elsewhere will wither as well.

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