Here we are, three weeks to the debt limit precipice and all the talk is about Obama and Boehner getting on the same wavelength on a big $4 trillion deal that includes tax reform, social security fixes, and cuts to Medicare. I favor addressing all of these items, but I must say that I’m confused and disappointed in the form of presidential leadership demonstrated during this entire episode. Perhaps, three weeks from now, I’ll be eating my words and Obama will be chalking up a major triumph that is good for the country (and his electoral prospects). But from where I sit now, I don’t see how this happens or understand why events have transpired the way they have.
The challenges facing Obama as he entered office were perhaps greater than any in 50 years, with America engaged in two wars and an economic crisis in full bloom. Revenues plummeted with the recession and massive spending was required to prop up the banks, save the auto companies, and pump some demand into a deflated economy. He had to address these challenges with an opposition party that chose to confront him at every turn rather than work in partnership in the national interest.
Given these circumstances, even inspired, courageous leadership might not have succeeded. But we have not seen this type of leadership, especially over the past year.
In my view, Obama’s greatest failing has been his inability to develop and communicate a consistent narrative about the economy capable of inspiring the American people and gaining their confidence in his leadership. He began his term arguing that strong government intervention in the economy was necessary. But he quickly moved to health care reform, which was a festering problem and a long-term drag on the economy, but turned out to be a distraction from the immediate concerns of the American public. As the deficit exploded, he campaigned (weakly) on repealing the Bush tax cuts for the well off, but then, right after the election, extended these very same tax cuts, arguing that they were necessary to stimulate the economy and continue the recovery.
His own deficit commission then laid out a reasonable, centrist approach to dealing with the budget deficit – but he kept his distance from this plan. After submitting a budget to Congress in February, he quickly admitted that it did not adequately address the deficit problem.
He gave one major speech on the topic in March that contained few details on how he believed the crisis should be addressed. Since then, he has done little to explain to the American people the nature of the problem, how he believed it should be addressed, and how whatever solution we come up with needed to supplement an economic strategy designed to boost our anemic economic recovery and produce jobs.
As the recovery has sputtered to almost a halt this spring, the message coming from the White House is even more muddled. Obama has argued for a balanced approach to deficit reduction that includes tax increases (which is inconsistent with his claim in December that tax cuts were needed to stimulate the economy), argued for not cutting domestic programs (hearkening back to his 2009 strategy of increasing demand), and argued for extending the payroll tax holiday (which is consistent with the claim from December that tax cuts stimulate the economy but inconsistent with the demand for tax increases in a deficit reduction package).
The entire spring, the vice president led talks that focused mainly on a $2 trillion package gained mostly from domestic and defense spending cuts. Then, with less than a month remaining, Obama changed the dynamic, asserting that the whole topic of entitlement and tax reform needed to be on the table, and claiming that getting a deal on these austerity measures would be good for the economy (even though the latest data showed that cuts in government spending were causing the greatest level of job losses (with 39,000 public sector jobs lost in June).
This call for a massive, all-encompassing deal is in essence a return to the Bowles Simpson deficit reduction package -- yet seven months have passed since that report was issued and the President has done virtually nothing to explain its merits to the American people, lay out the sacrifices that would be required, and show how adopting this plan would help us grow the economy. How anyone can be surprised when this vacuum was filled by the typical “no tax cuts” and “lay off of Medicare” rhetoric resorted to by party leaders, interest groups, and the other usual suspects is beyond me.
The president is navigating in highly unchartered waters with trillion dollar deficits, historic levels of unemployment, and a dysfunctional political system – so I have every sympathy with the predicament he is in. But ultimately, as Richard Neustadt articulated 50 years ago, “presidential power is the power to persuade.” To exercise this power, you first have to decide what your program is and then use the power of the presidency to bring the people and their representatives along with you. Obama has done neither to this point.