Drawing the Wrong Lessons

Nov 3, 2010Robert Kuttner

downarrow-money-150Fiscal austerity now will guarantee a Democratic loss in 2012.

With the Republican takeover of the House, a lot of the usual suspects are already declaring that Obama needs to be more of a centrist. That's neither smart nor possible -- the Republicans are out to destroy his presidency no matter how accommodating he tries to be. What the economy needs is jobs and economic recovery. The voters punished Obama for failing either to deliver recovery or to fight harder for it.

But there is an even worse course than accommodation: austerity. The president has painted himself into a fiscal corner by appointing a commission whose members are due to report December 1. Though a fixed degree of deficit-reduction by a particular date is a perverse idea, the commission seems determined to pursue that course. There are only four relative progressives on the commission, out of eighteen members, and they are under pressure to leave Obama with plenty of room to make a deal that would trade tax increases for cuts in entitlements and other spending.

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The only thing that might save Obama from this fate is Republican aversion to any sort of tax increases. Even so, if Obama is preaching belt-tightening and the Republicans are calling for tax cuts, the Republicans win. Austerity is bad economics in a deep slump, and bad politics as well. The White House even discouraged Democrats from pledging not to cut Social Security, in order to keep his options open. For details on why austerity is bad politics and worse economics, see the website of the new growth coalition, OurFiscalFuture.org. The Prospect also recently published a special report on growth versus austerity, which makes the case for a recovery program and rebuts the austerity arguments.

The lesson of the election is that voters expected bolder leadership of Obama, and don't much care for a prolonged slump. To promote the recovery of the economy -- and his presidency -- the President needs to be for jobs and economic growth, and dare Republicans to stand in the way.

Robert Kuttner’s new book is “A Presidency in Peril.” He is co-editor of The American Prospect and a senior fellow at Demos.

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