Mike Konczal has a good post looking at Ezra Klein’s recent apologia for President Obama’s stewardship of the economy. Konczal goes back to the President’s 2010 State of the Union speech:
It’s clear from the speech: President Obama announced the freeze and veto threat, and didn’t sound alarm bells, because he believed that the potential risks associated with not signaling to the bond market that deficit reduction was coming outweighed the reality of high unemployment and trying to expand the deficit immediately. 20+ million people not finding full-time work with certainty is bad, but just the possibility of the confidence fairy getting angry is far worse.This stands in for policy more generally, and it leads directly to all the failures of Grand Bargains and two-deficits cartwheels when it came to plans for dealing with the unemployment crisis. It splits the party between those who have to argue for bond vigilantes and those who have to argue against. The deficit hawkery negates the most powerful market indicator we have for what the government should do – the interest rate. This approach puts boundaries on the range of acceptable ideas on what can be done for the economy – and places getting stimulus out the door through discretionary spending, outside of Congress, out of bounds. And meanwhile current interest rates have never been lower – they are negative in real terms for 10 years out. This was exactly the wrong call to make in early 2010. [Emphasis added]
I think Konczal is exactly right in his critique of the 2010 State of the Union, and the policy decisions which followed from it.
But it’s not just that the President was wrong as we look back almost two years later. It’s that he was clearly wrong at the time. Plenty of people have been accurately describing the depth of the economic challenges facing us. Hell, Duncan Black has probably posted a couple hundred times over the last three years about the high unemployment, the lack of action, and the groundless fear of the bond vigilantes. The President and many of his advisers simply are not listening.