In his otherwise excellent speech in Cleveland on Wednesday, the president showed that, when it comes to the plight of the middle class, he still doesn't get it.
"Not everything we've done over the last two years has worked as quickly as we had hoped," he said, "and I am keenly aware that not all our policies have been popular."
But the problem isn't that his economic policies have been slow to succeed or unpopular -- it's that they have been inadequate given the magnitude of the crisis.
And, in his sit-down with George Stephanopoulos, he admitted to making unspecified "mistakes," but insisted, "if you are asking have we made the decisions that are the right decisions to move this country forward after a very devastating recession, then the answer is absolutely."
Can he really believe that, with unemployment at 9.6 percent, underemployment at 16.7 percent, millions of homes foreclosed, millions more heading to foreclosure, and the middle class under assault?
In any case, this appears to be the administration's story, and they are sticking to it -- come hell or a double-dip recession.
The president's comments were a continuation of the tack taken by Robert Gibbs who, when asked if the stimulus bill had been too small, offered this jaw-dropper: "I think it makes sense to step back just for a second. ... Nobody had, in January of 2009, a sufficient grasp of... what we were facing."
In other words: who could have known? So much for changing the way Washington works. The Who Could Have Known mindset is at the very heart of the failure of our political system to address our mounting problems. I devote a whole section to it in Third World America. It's been the official response of choice to virtually every fiasco of the last decade: Iraq, Katrina, the housing crash, the foreclosure crisis, the BP spill, etc, etc.
As I write in the book:
When you look at the elements that were crucial to the creation of each of these debacles of the past decade, it's amazing how much they all have in common. And not just in how they began but in how they ended: with those responsible being amazed at what happened, because... who could have known? Well, I'm amazed at the amazement, because each of these disasters was entirely predictable. And, indeed, every one of them was predicted. But those who rang the alarm bells were aggressively ignored, and we let those responsible get away with the 'Who Could Have Known?' excuse.
I list many other examples: Condoleezza Rice's claim that nobody "could have predicted" that someone "would try to use an airplane as a missile"; Paul Wolfowitz's claim that he found it "hard to imagine" that the occupation of Iraq would, as General Eric Shinseki predicted, require "several hundred thousand" troops on the ground; Robert Rubin's claim, when asked if he made mistakes at Citigroup, that "in hindsight, there are a lot of things we'd do differently. But in the context of the facts as I knew them and my role, I'm inclined to think probably not"; or Alan Greenspan's claim, regarding the financial crisis he helped create, that "if all those extraordinarily capable people were unable to foresee the development of this critical problem... we have to ask ourselves: Why is that? And the answer is that we're not smart enough as people. We just cannot see events that far in advance."
And now add to this dubious list Robert Gibbs: "Nobody had, in January of 2009, a sufficient grasp of... what we were facing."
This, of course, is utter nonsense. There were plenty of people with a sufficient grasp of what we were facing. Among them: Paul Krugman, who successfully hid his sufficient grasp in the pages of the New York Times (how crafty!). As he wrote on his blog in response to Gibbs, "the truth is that some of us were practically screaming back in January 2009 that the administration was proposing too small a program."
Then there's Martin Wolf, who hid his sufficient grasp in the pages of the Financial Times. His response to Gibbs:
I (among others) then argued that policy needed to be hugely aggressive. Alas, it was not. I noted on February 4, 2009, at the beginning of the new presidency: "Instead of an overwhelming fiscal stimulus, what is emerging is too small, too wasteful and too ill-focused.... Doing too little is now far riskier than doing too much."
As for myself, in February 2009, I wrote a blog entitled "If You Jump Halfway Across a Chasm You Fall Into the Abyss".
And there were many others. In fact, one of them, Council of Economic Advisers chair Christina Romer, was actually inside the White House. Here's a snapshot of how her entreaties were received, courtesy of Ryan Lizza in the New Yorker:
At the December meeting, it was Romer's job to explain just how bad the economy was likely to get. "David Axelrod said we have to have a 'holy-shit moment,'" she began. "Well, Mr. President, this is your 'holy-shit moment.' It's worse than we thought."
The most important question facing Obama that day was how large the stimulus should be...Romer had run simulations of the effects of stimulus packages of varying sizes: six hundred billion dollars, eight hundred billion dollars, and $1.2 trillion....Romer's analysis, deeply informed by her work on the Depression, suggested that the package should probably be more than $1.2 trillion. The memo to Obama, however, detailed only two packages: a five-hundred-and-fifty-billion-dollar stimulus and an eight-hundred-and-ninety-billion-dollar stimulus. Summers did not include Romer's $1.2-trillion projection...At the meeting, according to one participant, "there was no serious discussion to going above a trillion dollars."
So plenty of people had a sufficient grasp. We can only conclude, then, that Obama and his economic team chose not to know. It's not that they couldn't imagine what would happen if they didn't do enough, it's that they simply chose not to imagine. Parents know that if you have a really sick child, you don't calculate your response based on the best case scenario -- you assume the worst could happen and work back from there.
Contrast the administration's response to the middle class crisis with the handling of the banking crisis. In that case, our elected officials -- both Republicans and Democrats -- had a more than sufficient grasp of the worst that could happen. In the space of one weekend, we were told that if the government didn't act -- using taxpayer money -- the worst would happen. Our leaders were somehow able to imagine the doomsday scenario of the collapse of the entire financial system. And so they took action. Not with a series of half-measures, but with a bold and unprecedented rescue plan. They didn't go around asking for consensus. They demanded it. They demanded lawmakers stop playing partisan politics and do what was needed to save the banks. We were told the world would fall apart if they didn't. And they got their rescue plan. We won't ever know if the world would actually have collapsed, but it was a possibility, so we took action.
Does anybody recall ever seeing this same kind of urgency directed toward the daily calamities afflicting America's middle class? It's not that the middle class might collapse -- it is collapsing. And yet, as Harold Pollack puts it in The New Republic: "There is a palpable lack of urgency in the face of this crisis. The problem here is one of priorities -- or lack of priorities. The House and Senate act with surprising skill and speed when concentrated and powerful constituencies really need something done." And so does the administration.
Worse, the administration's half-measures have undermined its chances of making the case for truly bold proposals commensurate with the crisis. As Martin Wolf writes, Obama's halting response "has allowed opponents to claim that policy has been ineffective when it has merely been inadequate." As a result "the administration has lost credibility with the public and the chances of a renewed fiscal expansion have disappeared."
And we are left with bromides like: "...to heal our economy we need more than a healthy stock market. We need bustling main streets and a growing, thriving middle class...that means doing everything we can to accelerate job creation." That was from Obama's weekly radio address. But, in fact, the administration is nowhere close to doing "everything" it can for struggling Americans.
So, enough with the Who Could Have Known excuses. Enough with the half-measures. Enough with the lack of imagination. Enough with the lack of urgency. It's time to look facts in the face. It's time for all the known knows to be embraced.
[Looking back at how Singapore dealt with the crisis, the amount of resources thrown at the problem was confidence boosting. And there were also reserves if more ammo was needed. So on the plus side, Singapore (or the govt) did well to throw sufficient resources at the problem to ensure that the problem was solved. However the "who could have known" excuse is also used here for the flooding at Orchard road. But that I feel was truly a "Who could have known moment".
The subsequent floods since then bears looking into, but a change in climate may well be the explanation.]