Washington Post: DC Doesn't Get the Economy

Friday, 05 Aug 2011 12:39 PM

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Washington just doesn’t get the economy. Congress can’t control it and doesn’t understand it and President Barack Obama has no strategy for growth and jobs, two Op-Eds in The Washington Post conclude.

Columnist Ezra Klein writes that Washington “likes to talk about the economy in terms of things it can control. Spending and deficits. Stimulus. Policy uncertainty.

“But the Dow Jones industrial average isn’t diving because spending has risen, deficits have grown or stimulus policy has changed. It’s diving because of forces Washington can’t control, and in many cases, doesn’t understand very well.”

Klein paints a grim portrait of a global mess that is hindering recovery including earthquakes, a tsunami, tanking stocks and the European debt crisis. Even China, which many had hoped would lead the world out of the economic mess, is “admitting that the economy has overheated and it needs to begin tapping the brakes.”

“As bad as the daily data were two years ago, it was easier to tell a story of recovery. The full scope and stickiness of the financial crisis wasn’t yet visible, and the disappointments of the aftermath hadn’t yet sunk in,” he concludes.

“Today there’s more stability, but we seem to have stabilized into an era of high unemployment, low growth and endless risk. Rather than recovering from the crisis, it is almost as if we have settled into it. And no one quite knows how we’re going to escape.”

Columnist Jennifer Rubin sees much of the same ills, but puts them on Obama’s doorstep.

“When I asked economist Douglas Holtz-Eakin of the American Action Forum about his assessment of our economic woes, he pointed to investors moving back to Treasurys (and out of the stock market) with the U.S. debt ceiling crisis resolved, the European debt crisis growing and the realization that ‘Obama has no strategy for growth and jobs.’ He says, ‘Bottom line — the absence of good news leads to a cumulative lack of confidence.’”

Rubin writes that Obama’s “entirely false assessment of the economy had real policy implications.”

“Recall that Treasury Secretary Tim Geithner a year ago told us that the economy could ‘withstand’ tax hikes. And so he doggedly urged tax increases, rather than cuts. And as we saw in Obama’s Rose Garden speech this week, his anemic program of items like an infrastructure bank and patent reform shows no sign that he connects his uber-regulatory schemes, Obamacare and the threat of ever-higher taxes to the faltering economy. His Keynesian spending spree didn’t work; he has nothing else.”

“This is an unpleasant reminder of just how perilous is our economy and how serious is the shortage of economic leadership and pro-growth policies in this administration,” she concluded.

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