Obama v. Krugman
Obama's Cooper Union speech presages an FDR-like approach to our faltering economy. Why can't Paul Krugman see that?
Barack Obama's speech on the financial crisis was a remarkable breakthrough.
First, he connected all the dots -- between the complete dismantling of financial regulation, the declining economic opportunity and security for ordinary people, the current financial meltdown, and the political influence of Wall Street as the driver of these changes. Astounding! I wish I had written the speech. It is this kind of leadership and truth-telling that is the predicate for the shift in public opinion required to produce legislative change. A radical, appropriately nuanced, and deeply public-minded description of what has occurred, the speech was
The speech also showed real understanding and subtlety in grasping how financial "innovation" had outrun regulation, as well as a historical sense of the abuses of the 1920s repeating themselves. Obama is one of the few mainstream leaders -- Barney Frank is another -- calling for capital requirements to be extended to every category of financial institution that creates credit. This is exactly what's needed to prevent the next meltdown, but if it were put to a vote now, it would be rejected by legislators from both parties because they are still in thrall to market fundamentalism and Wall Street. That's where presidential leadership comes in.
So the speech was courageous, in that it goes well beyond the current Democratic party consensus, and one can only wonder about the reaction of some of Obama's own financial backers. He also took on a couple of other sacred cows, such as electricity and telecom deregulation, proven failures to everyone but industry defenders and their allies in the economics profession.
We should not focus too much attention on the oblique dig at the
The one slightly disappointing part of the Obama speech was his call for $30 billion more in "stimulus." It's not nearly enough. He -- and we -- should stop even using the word "stimulus." To dig out of this mess, at a time when we already have large deficits, the federal government will need to fund a multi-year, public investment-led recovery program well into the hundreds of billions. It will need to be funded by restoring taxes on rich people. But this is a topic for another day.
A real puzzle here is the repeated assertion by columnist Paul Krugman, in the face of mounting evidence to the contrary, that
Unlike some of my friends, I have not fallen in love with Obama. I have been at this too long, and you risk getting your heart broken. I actually shared Krugman's critique of Obama's health insurance individual mandate and his proposal to tax the upper middle class to pay for a much exaggerated Social Security shortfall that is more like a rounding error. I simply conclude, based on what I've seen, that Obama is capable of real learning and real transformation, both of himself and of public opinion. Nothing I've seen suggests that's true of Hillary Clinton.
But Krugman, ordinarily an ornament of fair-minded progressive economics commentary, writes almost as if he has become part of the