David Dayen:

What we have here is actually a poverty of imagination. There are plenty of things that the executive branch can do – power they’ve had since they came into office – to boost jobs. They have $80-$100 billion in unused TARP funds that could be put to productive use, including at least $40 billion dedicated for housing. They could use Fannie and Freddie much more aggressively than this renting idea, creating a kind of modern-day HOLC to buy up homes. They could use authorized programs like TALF to give aid to states or fund infrastructure projects. They could use monetary policy to force bank reserves into the lending sphere; at the very least they could fill the slots on the Federal Reserve Board of Governors, at least one of which has been vacant since the beginning of the Obama Presidency. They could get any of the $30 billion small business lending fund out into the economy. They could use Treasury to legitimately punish China for manipulating their currency. Put these all together, along with ones I haven’t thought of, and you have a “second stimulus” of equal or greater value than the first. And you don’t have to consult John Boehner at all.

Well either the administration just hasn’t thought of these things or has thought of them, but decided associated political costs are too high, or the administration just doesn’t want to actually do things that create jobs outside of getting Congress to pass tax cuts. Time will tell which bears the most evidence, but as Dayen points out, these are not recently available ideas for job creation.

Originally posted at AMERICAblog

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Yesterday I noted that while I strongly support and believe in the need for Democrats, particularly the White House, to shift their focus to job creation, the early signs from the Hill suggested that how Democrats were thinking and talking about this suggested that the pivot was likely to fail. A significant part of my fear stems from the recently completed deficit hysteria, which will make any sort of jobs creation program (either by government spending or tax cuts) a certain target for more deficit hysteria. Atrios captured this perfectly, describing the pivot to jobs as effectively saying, “We solved the deficit problem, now let’s add to the deficit.”

There’s another layer to the challenges created by the deficit deal – namely, prior to any other measures, what impact will it have on the economy and on job creation. As Paul Krugman keeps pointing out, Economics 101 suggests a massive cut in government spending will have an anti-stimulative effect on the economy. But via Digby, we see that Treasury Secretary Tim Geithner is not operating from the same textbook as Krugman and the rest of us:

Well, let’s start with what this deal does. The most important thing is it creates more room for the private sector to grow because although it locks in some very substantial long term savings, the near term cuts are very modest. So that– that was the really critical thing in making sure that this economy continue to grow and recover.

This comes directly in contradiction with JP Morgan’s economic team’s analysis of the economic impact of the deficit deal.

Impending fiscal drag for 2012 remains intact. The deal does nothing to extend the various stimulus measure which will expire next year: we continue to believe federal fiscal policy will subtract around 1.5%-points from GDP growth in 2012. Its possible the fiscal commission could do something to extend some measure such as the one-year 2% payroll tax holiday, though we think unlikely, as it would need to be paid for, which would be tough. If anything, the debt deal may add modestly to the fiscal drag we have penciled in for next year.

While I’m not one to reflexively prioritize the opinions of the titans of Wall Street over government officials, JP Morgan’s analysis is in line with Krugman and other followers of Econ 101 are saying.

Unfortunately Geithner’s spin about the magically positive impact of the deal doesn’t end at growing the economy, but extends to job creation as well.

GEORGE STEPHANOPOULOS: So this won’t cost us jobs?

TIM GEITHNER: No, it will not. Now … if we put this behind us then we can turn back to the important challenge of trying to find ways to make sure that we do everything we can to get more people back to work, strengthen our growth. And we’ll have more ability to do that now with people more confident and we can start to get our arms around the long-term problems.

But this just doesn’t align with what non-partisan experts are saying. The Economic Policy Institute predicts the deficit deal will cost the US 1.8 million jobs in 2012 alone.

Oh and just to be clear that the naive optimism that Republicans will behave like true gentlemen when Democrats pivot to job creation extends beyond anonymous Senate sources, Geithner is on the record making this prediction.

Well, because I think it’s going to be very hard for Republicans to — to prevent that from happening. I think it’s very hard for them to stand up and say that they’re going to try to block the extension of that tax cut that’s worth about $1,000 a year for the average American family. Untenable for them to block that.

As I pointed out yesterday, conservatives don’t care about the deficit, they care about tax cuts for rich people. As such, tax cuts could conceivably be exempted from deficit hysteria and not be offset with comparable cuts elsewhere. But I won’t assume that that is the case until conservatives actually say that they won’t exact their pound of flesh from federal social spending to continue the payroll tax cuts.

And before any Democrats start preaching about the unmitigated blessings of tax cuts as a vehicle for job creation, let’s remember that the Bush tax cuts lead to nothing more than an average of 11,000 jobs per month over the course of Bush’s presidency.

We desperately need to get people back to work in America. But it’s going to be impossible for this to happen when Democrats in the administration and on the Hill are dishonest about where we are and the consequences of their deficit hysteria. Things aren’t getting better on their own and yesterday the President signed a law that will almost certainly be significant drag on the economy. The response to this should be to do a real stimulus that focuses on job creation and infrastructure construction and keeping Americans in their homes, but Democrats now espouse a mindset that says government spending is functionally bad for the economy. The embrace of austerity and the refusal to make job creation a priority earlier mean that working and middle class Americans will continue to suffer, while no price is asked of wealthy elites and with the balance of power as it is, likely never will be asked of them.

Mike Allen reports on a meeting pulled together by Home Depot CEO Ken Langone and 50 Wall Street and hedge fund millionaires and billionaires with union-busting reactionary Chris Christie in which they encouraged Christie to run for President.

Several of them said: I’m Republican but I voted for President Obama, because I couldn’t live with Sarah Palin. Many said they were severely disappointed in the president. The biggest complaint was what several called “class warfare.” They said they didn’t understand what they had done to deserve that: If you want to have a conversation about taxation, have a conversation. But a president shouldn’t attack his constituents – he’s not the president of some people, he’s president of all the people. Someone mentioned Huey Long populism.

I will never cease to be amazed at how thin-skinned and historically ignorant Wall Street billionaires are. Huey Long called for caps on annual income, total wealth, and inheritance. Obama has extended the Bush tax cuts for millionaires, but he called Wall Street executives “fat cats” once. So obviously they’re the same.

Barack Obama is many things, but a populist is not one of them. The only class warfare he is willing to wage is one against the working and middle classes of America – as exemplified by his desire to cut Social Security, Medicare and Medicaid to balance the deficit. His administration was comfortable with a 6:1 ratio of spending cuts to revenue increases in order to get a deal to raise the debt ceiling. These are cuts which effectively transfer wealth from the middle class to the wealthiest elites in America.

Seriously, the obtuseness, ignorance and absurdity demonstrated by Wall Street elites is a monument to their solipsism. The terrifying thing is that these people are the ones people like Barack Obama and Bill Daley actually listen to when considering policy questions about how best to steer this country.

This piece by Frank Rich in New York Magazine got a lot of traction over the weekend, and deservedly so as it’s incredibly well-written, powerful, and all-encompassing. It’s a fairly long read that resists easy distillation, so I recommend reading the whole thing. Not surprisingly, the most interesting parts to me relate directly to the failures of the Obama administration to pursue accountability for the people who are responsible for the financial collapse and still-unfolding destruction of the housing market. Rich writes:

What haunts the Obama administration is what still haunts the country: the stunning lack of accountability for the greed and misdeeds that brought America to its gravest financial crisis since the Great Depression. There has been no legal, moral, or financial reckoning for the most powerful wrongdoers. Nor have there been meaningful reforms that might prevent a repeat catastrophe. Time may heal most wounds, but not these. Chronic unemployment remains a constant, painful reminder of the havoc inflicted on the bust’s innocent victims. As the ghost of Hamlet’s father might have it, America will be stalked by its foul and unresolved crimes until they “are burnt and purged away.”

Rich goes on to look at the twin failures of the President to push for accountability with his penchant for hiring Ivy Leaguers with a background in Wall Street. While I don’t buy the notion that association with elite academic institutions is bad, the optics Rich identifies are certainly a problem, especially as it means that Obama left an opening for the right to embrace anti-elite, anti-immigration, anti-Obama populism.

Obama had taken office at a true populist moment that demanded more than this. People were gagging over their looted 401(k)s and underwater homes, the AIG bonuses, and the bailouts. Howard Dean rage has never been Obama’s style—hope-and-change was an elegant oratorical substitute—and had he given full voice to the public mood, he would have been pilloried as an “angry black man.” But Obama didn’t have to play Huey Long. He could have pursued a sober but determined execution of justice and an explicit, major jobs initiative—of which there have been exactly none, the too-small stimulus included, to the present day.

By failing to address that populist anger, Obama gave his enemies the opening to co-opt it and turn it against him. Which the tea party did, dishonestly but brilliantly, misrepresenting Obama’s health-care-reform crusade as yet another attempt by the elites to screw the taxpayer. (The Democrats haplessly reinforced the charge with marathon behind-the-scenes negotiations with insurance and pharmaceutical-­industry operatives.) Once the health-care law was signed, the president still slighted the unemployment crisis. A once-hoped-for WPA-style public-works program, unloved by Geithner, had been downsized in the original stimulus, and now a tardy, halfhearted stab at a $50 billion transportation-infrastructure jobs bill produced a dandy Obama speech but nothing else.

I think this is exactly right and remains true today, even with a number of missed opportunities in the last few years. Obama could have well stepped into office as the sober, smart adult who was going to put his foot down, hold people accountable for breaking the economy, and fix it with massive jobs creation initiatives.  And no, following the Tea Party’s lead on austerity and spending cuts on the backs of public workers, retirees, young people, and the sick is not the sort of turn towards “popular” anger that should be pursued at this point in time (well, or any other).

Rich struggles with the extent to which Obama should be held personally accountable for the policy choices Tim Geithner has advocated for, saying at one point:

Geithner has pushed deficit reduction as a priority since before the inauguration, the Washington Post recently reported in an article greeted as a smoking gun by liberal bloggers. But Obama is the chief executive. It’s his fault, no one else’s, that he seems diffident about the unemployed.

Rich shifts away from this position later in the piece, as he tries to provide a justification for insufficient action on joblessness, refusal to prosecute Wall Street criminals, pursuit of Wall Street campaign donations and (until a few days ago) a lack of viciousness in fighting the Republicans in the debt ceiling/deficit debates. Rich writes:

There’s not much Obama can do to alter the economy by 2012, given the debt-ceiling fight, the long campaign, and nihilistic Capitol Hill antagonists opposed to any government spending that might create jobs and, by extension, help Obama keep his own. But the central question before the nation couldn’t be clearer: Who pays? The taxpayers bailed out the elite; now it’s the elite’s turn to return the favor. Massive cuts to the safety net combined with scant sacrifice from those at the top is wrong ethically and politically. It is, in the truest sense, un-American. Obama knows this, and he hit a welcome note last week when he urged some higher corporate taxes for hedge funds and the like. But his forays in this direction are tentative and sporadic. You have to wonder why he isn’t seizing the moment to articulate and fight for the big picture instead of playing a lose-lose game of rope-a-dope with the Republicans on their budgetary turf.

…

“A nation cannot prosper long when it favors only the prosperous,” Obama declared at his inauguration. What he said on that bright January morning is no less true or stirring now. For all his failings since, he is the only one who can make this case. There’s nothing but his own passivity to stop him from doing so—and from shaking up the administration team that, well beyond the halfway-out-the-door Geithner and his Treasury Department, has showered too many favors on the prosperous. This will mean turning on his own cadre of the liberal elite.

I think this is a case of Rich not really wanting to accept the consequences of the arguments he’s put forward. It’s undoubtedly scary to think that the reason the President has not pursued a course separate from the one advocated by people like Tim Geithner, Larry Summers and Jeff Immelt is it’s because it’s the course that he agrees with politically and ideologically.  It’s not a matter of passivity, it’s a matter of not wanting to do the things Rich wants him to do. Time and again we’ve seen the President be an incredibly effective advocate for the things he wants to accomplish. From a strictly legislative standpoint, there really isn’t a time when he’s sought after something in a committed way and not gotten it, whether it’s restructuring the auto industry, passing health care reform, or funding the wars in Afghanistan and Iraq.

More importantly, for the President to turn “on his own cadre of the liberal elite,” he would have to agree with Rich’s assessment that this group of advisers have lead him to a place that he is unhappy with politically, economically and ideologically. While I would say that’s a move he should make, I don’t think the evidence is there to say that the President has taken away the same conclusions about what has and has not worked and what should be done differently as Rich, let alone me. All of that said, I do think Rich is right in his final assessment of the consequences for more of the same choices pushed by the same advisers:

The alternative is a failure of historic proportions. Those who gamed the economy to near devastation—so much so that the nation turned to an untried young leader in desperation and in hope—would once again inherit the Earth. Unless and until there’s a purging of the crimes that brought our president to his unlikely Inauguration Day, much more in America than the second term of his administration will be at stake.

But yet again, the issue is, “Does the President agree with liberals like Frank Rich?”  In a sense, Obama needs to get back to his liberal roots to change course. I’m not sure that it is a reasonable expectation for this to happen.

Since the start of the Obama administration there have been frequent citations by folks on the left of the famous FDR story of  wherein he told reform advocates, “I agree with you, I want to do it, now make me do it.” The implication was that this, too, was what President Obama thought of the left. But Obama has never said this and there has been little willingness within the administration to accept pressure from outside to move him to the left. That makes it harder for outside groups to organize around things like job creation or holding Wall Street banksters accountable for criminal behavior.

For President Obama to turn around in the direction that Rich is advising, he’d have to first have his own “now make me do it” moment with the left. There would need to be a call for people to help in a way that hasn’t really happened to this point. But it’d be an important first step and one that would show me that Obama and his administration were ready to get serious about accountability, joblessness, and fighting back against poisonous Republican populism.