Obama’s Economy
Published in Aftenposten
(Norway) on 26th February 2009
by Editorial (link to original)
U.S. President Barack Obama’s speech to the congress was highly anticipated.
During the first weeks of his presidency the economy has worsened more than even the most pessimistic had estimated. The need for clear answers has increased.
The will and resolve of the president was good. The actual content of the speech was thin.
Obama’s main message was that no measures would have any impact until credit starts to flow again. Even the large spending bill with extra earmarks and tax breaks cannot bring life into the economy if business and consumers are unable to obtain credit.
Obama actually went so far as to warn that if America cannot clear up the credit crisis, the country could be facing a lost decade like Japan in the 1990s. This is rhetoric that up until a few weeks ago only came from the darkest of pessimists.
And so the president diverted attention, probably without wanting to, to the significance of the fact that Treasury Secretary Tim Geithner still has not introduced a well worked out rescue plan for the finance sector.
At no point did Obama claim that the measures taken up until now are satisfactory.
Obama left a feeling that one of the largest obstacles America is facing is of the political sort. His administration wants to strengthen the banks. But it is reluctant to both give presents to stockholders, and to nationalize the banks for even a short period of time. Obama warned congress that more federal money would be necessary but underlined that he did not want to give the government a bigger role in the American economy.
Many economists are worried that the fear of radical measures could make America, in spite of Obama’s warnings, fall into the Japanese trap, with a long period of low growth – and low tax income.
And that will make his goal of reducing the enormous budget deficit significantly during his first four years ever more difficult. Yesterday he also narrowed his maneuvering space by promising all American families with an income of less than $250,000, most families, that their taxes would not go up by a cent.
Obama’s speech was a show of powerful rhetoric. But he did not in any way remove the impression that he has not fully grasped the dilemmas and difficulties America faces.
During the first weeks of his presidency the economy has worsened more than even the most pessimistic had estimated. The need for clear answers has increased.
The will and resolve of the president was good. The actual content of the speech was thin.
Obama’s main message was that no measures would have any impact until credit starts to flow again. Even the large spending bill with extra earmarks and tax breaks cannot bring life into the economy if business and consumers are unable to obtain credit.
Obama actually went so far as to warn that if America cannot clear up the credit crisis, the country could be facing a lost decade like Japan in the 1990s. This is rhetoric that up until a few weeks ago only came from the darkest of pessimists.
And so the president diverted attention, probably without wanting to, to the significance of the fact that Treasury Secretary Tim Geithner still has not introduced a well worked out rescue plan for the finance sector.
At no point did Obama claim that the measures taken up until now are satisfactory.
Obama left a feeling that one of the largest obstacles America is facing is of the political sort. His administration wants to strengthen the banks. But it is reluctant to both give presents to stockholders, and to nationalize the banks for even a short period of time. Obama warned congress that more federal money would be necessary but underlined that he did not want to give the government a bigger role in the American economy.
Many economists are worried that the fear of radical measures could make America, in spite of Obama’s warnings, fall into the Japanese trap, with a long period of low growth – and low tax income.
And that will make his goal of reducing the enormous budget deficit significantly during his first four years ever more difficult. Yesterday he also narrowed his maneuvering space by promising all American families with an income of less than $250,000, most families, that their taxes would not go up by a cent.
Obama’s speech was a show of powerful rhetoric. But he did not in any way remove the impression that he has not fully grasped the dilemmas and difficulties America faces.