The Cost of Compromise
As a student at a liberal school in a predominately liberal area of the country, I can’t help but notice that the hope for progress and change that prompted hundreds of my fellow classmates to rush onto the quad the night Obama was elected has faded. Obama rode that wave of hope through the election, hailed as the catalyst of change for an executive branch that had struggled under the George W. Bush administration. Despite this initial enthusiasm, however, in my mind and the minds of many others, Obama has fallen short of our expectations. What was the linchpin that reversed so many of our opinions?
On Tuesday, September 13th, the Alexander Hamilton Society chapter at Tufts welcomed Ramesh Ponnuru, a senior editor at National Review and columnist for Time magazine, to speak on “The Cost of Audacity, ” where he gave his opinion on the shortcomings of the Obama presidency. Ponnuru’s critique focused on the lack of transparency of the Obama administration and its unwillingness to enact the change that the president had spoken of in so many of his speeches. In Ponnuru’s eyes, Obama’s glamour, mystery, and coolness faded once he gained office. Since Obama’s position was sufficiently vague, the American population projected their hopes and dreams upon him, which in a sense set him up for failure. Although Ponnuru stated that it would have been impossible for Obama to ever live up to the expectations of the American public, he wasn’t shy in criticizing the president’s first term to this point. Despite Obama’s desire for bi-partisanship, Ponnuru believes that the economic slump would have been much shorter if Obama had strongly pushed for the necessary (though unpopular) policies to turn the economy around. Most of the policies Ponnuru suggested however were skewed toward the right.
I was surprised that Ponnuru attributed the recession more to the Fed’s carefree attitude than to the bursting of the housing bubble. Regardless of its causes, Ponnuru believed that Obama brought with him the notion of a great moderation, claiming the economy would continually grow without entering the business cycle. In his opinion, such optimism was unwarranted and cost the government valuable time that could have been used to dampen the recession.
In Ponnuru’s eyes, the crisis gave Democrats a perfect platform to increase the size of government. This Keynesian notion of increasing government spending is often attributed to aiding the US escape the Great Depression. But, according to Ponnuru, such spending will not (and did not in previous cases, such as in the 1930s) lead to increased private spending. So long as private sector confidence is low, individuals will not spend their money, and the multiplier effect will not be present. Ponnuru argued that a small government approach would have been more able to handle the recession.
Not only as an economics major but also as someone who has become much more self-reliant since coming to college, I find it increasingly difficult to believe that anything could have driven individuals to increase their spending during the recession. Ponnuru argued that, without fiscal spending, the administration would not have had to enact policies to curtail inflation, and would have instead worked to increase private sector confidence. If Congress or Obama had pushed for legislation that mandated a rise in nominal GDP by five percent a year, the private sector would have been confident in the future and would have put more money into the economy.
I, however, personally disagree. I believe that only in a perfect world would the Fed’s bolstering of confidence trigger private spending. I do agree with Ponnuru’s belief, however, that the Obama administration was either not fully aware of the magnitude of the crisis or did not share it with the American people. Despite the record stimulus package that almost reached $1 trillion, it is apparent that the funds were simply not enough.
Ponnuru went on to dismiss the cap and trade to stop global warming, trade agreements with South American countries, and the increase of the debt ceiling as ways of possibly stimulating the economy. He further discussed the pitfalls of the health care overhaul and the diminishing role the US will have in international affairs as the economy weakens. Ponnuru also feared the return of protectionist policies, such as Romney’s idea to impose sanctions on China; such policies could only further weaken America’s economy.
Although I was not in agreement with all of Ponnuru’s critiques, considering he denounced almost every one of Obama’s reforms, his lecture brought me back to my original question. Why do I, as a well-informed American, feel as if my president did not fulfill my expectations? Where is the change that he promised? I believe that the amicable candidate that I had admired for his attempts to reach across party lines, in effect, sabotaged his administration by attempting to moderate instead of enact the change that needed to happen. I am entirely unsure whether the economic ideas of Ponnuru would have been better for America. I am sure, however, that President Obama must alter his administration and himself if he is to rekindle the hope I had that night, nearly 3 years ago.