No sooner had the news networks declared Obama the victor in the 2008 presidential election than the second part of the campaign began. Part II is the campaign to define the meaning of the election results. Trapped (happily) in the crowd in Grant Park without a remote control, I was forced to watch and listen to Bill Bennett, former Reagan Cabinet member and oft-decorated cultural warrior, as he repeatedly argued that (1) the U.S. is a center-right nation, (2) the 63+ million Obama voters were casting a vote for center-right governance, and (3) the first order of business for President-Elect Obama had to be to move to the right and reach out to Republicans, to demonstrate that he wanted to include them and to govern in a manner amenable to them.
Bennett may have been the first to make such an argument, but he certainly wasn't the last. Nor has the argument been made solely by Reagan Republicans (though they have made the argument en masse). A similar argument has been made by numerous DLC Democrats, warning that the Democrats have gotten into trouble in the past by overreaching with liberal policies for which the American public has no appetite (see Carter, Clinton pre-triangulation). The answer, they argue, is to govern in the middle and reach for small, often symbolic victories.
This position also has received support from a wide range of pundits and mainstream journalists, further buttressed by an argument that began appearing during the pre-election portion of the campaign. One notable example was the repeated effort by Bob Schieffer, during the final debate, to get both candidates to list those campaign promises they would have to break because of rising deficits. Schieffer was by no means the first, and certainly not the last, to press the assumption that, while we might be able to manage a trillion dollar deficit, we certainly cannot allow it to get any higher and, in fact, need to do whatever we can to avert reaching that figure. It is, the reasoning goes, simply unrealistic to believe that the federal deficit can go any higher than that already projected in the Bush budget plus the added costs of the bailouts of financial institutions. Given that assumption, there is no money available for anything that Obama has listed among his priorities, unless they can be accomplished without significant expense. So, some have argued that the middle class tax cut will need to wait; others have argued, somewhat paradoxically, that increases in taxes on the wealthy and on corporations (in reality, the termination of the Bush tax cuts) must be postponed because of the recession; and the nearly unanimous 'conventional wisdom' seems to be that there is no way that Obama can do anything significant on health care in the near future.
So, whether it is justified by a claim about the ideological identity of the American public or by the necessities of holding the line on deficit spending (presented as a non-ideological, realist position), many of the forces of conventional wisdom are aligning to argue against the Obama Administration doing anything that would represent significant changes in domestic policy.
On the other side are those who argue that the election results mark a significant change in public opinion, a rejection of the verities of Reaganomics, culture wars, and the Bush Doctrine. This camp argues that 2008 was a change election, much as the 1932 and 1980 elections were. This point of view even has some surprising (to me, at least) advocates, like Chris Matthews. Matthews has been arguing with guests espousing the first interpretation of the election, asserting that Obama is in a position to do what FDR and Reagan before him had done: they won the election and then proceeded to move national policy and popular opinion further in the direction of their campaign by moving quickly to pass an ambitious legislative agenda. (Matthews also is fond of noting that George W. Bush did something similar, even after requiring a 5-4 vote of the Supreme Court to be elected.) This camp argues that voters will become disillusioned if Obama seems to be pursuing policies that make only small changes, that they will feel that this is not the change they were promised and will then punish Obama and the Democrats at their next opportunity.
Just as the 'go slow, think small' party makes a key assumption about the economy and deficits, so too does the 'act quickly, big change' party.
Paul Krugman, Nobel Laureate economist and liberal gadfly, is one of those making the case for the need to engage in an ambitious program of government spending as a means of ameliorating the deep recession into which we appear to be sliding. In a column written before the
latest bad news, a record drop in consumer spending, worse even than that after 9/11, Krugman argues that many of the usual remedies for fighting a recession are not available for fighting this one. Most notable among these is cutting the federal funds rate -- it has been as low as 0.3% in recent days, so there's nothing left to cut. What is the answer, then, if we are to stave off a depression?
To pull us out of this downward spiral, the federal government will have to provide economic stimulus in the form of higher spending and greater aid to those in distress — and the stimulus plan won’t come soon enough or be strong enough unless politicians and economic officials are able to transcend several conventional prejudices.
One of these prejudices is the fear of red ink. In normal times, it’s good to worry about the budget deficit — and fiscal responsibility is a virtue we’ll need to relearn as soon as this crisis is past. When depression economics prevails, however, this virtue becomes a vice. F.D.R.’s premature attempt to balance the budget in 1937 almost destroyed the New Deal.
Another prejudice is the belief that policy should move cautiously. In normal times, this makes sense: you shouldn’t make big changes in policy until it’s clear they’re needed. Under current conditions, however, caution is risky, because big changes for the worse are already happening, and any delay in acting raises the chance of a deeper economic disaster. The policy response should be as well-crafted as possible, but time is of the essence.
Finally, in normal times modesty and prudence in policy goals are good things. Under current conditions, however, it’s much better to err on the side of doing too much than on the side of doing too little. The risk, if the stimulus plan turns out to be more than needed, is that the economy might overheat, leading to inflation — but the Federal Reserve can always head off that threat by raising interest rates. On the other hand, if the stimulus plan is too small there’s nothing the Fed can do to make up for the shortfall. So when depression economics prevails, prudence is folly.
This second campaign will be nearly as consequential as the first one. We can only watch and wait to see which side of the argument Barack Obama comes down on, and how successful he is in persuading the public that his side is the right one.
[Note: As time permits, I'll update this post with links to representative arguments.]