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The Power to Fix the Economy Rests With the Next President
This isn't to say that the identity of the president in 2009 won't matter. Presidents tend to have the most success enacting new policies in the first year in office (the tax cuts of Reagan and Bush II, the budget and NAFTA for Clinton). And Tom Gallagher, head of policy research at ISI Group, notes that the next president will appoint a Federal Reserve chairman early in his term. But—and this is the first but—the macroeconomic impacts of early-term policies are often evident only after several years. Harvard economist Benjamin Friedman notes that Nixon's imposition of wage and price controls in August 1971 helped smooth his re-election in 1972. "But these controls became a substitute for serious anti-inflationary policy, and were the beginning of a set of policies that led to really severe inflation."
So here's some straight talk about change we can believe in. Most of the promises that Obama and McCain are making about the economy will founder on the shoals of a Congress unwilling to be a rubber stamp, organized industry opposition, unanticipated events, budget realities and changes in the macroeconomic climate.
We shouldn't discount entirely the next president's powers. The most troublesome economic data points aren't necessarily the rising unemployment rate and plunging home prices. Rather, they're the miserable consumer-confidence numbers, which have hit a 16-year-low, and the high percentage of Americans who believe the nation is on the wrong track. When consumers, whose collective actions constitute more than two thirds of U.S. economic activity, are in the dumps, they're less likely to spend, to invest and to take risks.
But—and this is the second but—history has shown that presidents do have the ability to affect the short-term national mood about the economy. Think about the juxtaposition of Hoover's cool response and Franklin Delano Roosevelt's exhortations to fear nothing but fear itself. George H.W. Bush's "Message: I care" didn't have a prayer in connecting with the anxieties of middle-class Americans when confronted with a sweet-talking Arkansas governor who oozed empathy.
Presidents can function as mood enhancers only when the rhetoric is backed by action. "Whatever beneficial effects FDR or Reagan had on the economy had more to do with their policies than with their pleasant demeanors," says Richard Scylla, a historian at New York University. FDR's inspiring speeches and fireside chats in 1933 were accompanied by a profusion of policy experiments, many of which worked. And without the stimulus provided by the Reagan tax cuts, the "Morning in America" theme of the Gipper's 1984 re-election campaign would have fallen as flat as Gerald Ford's 1974 exhortations to "Whip Inflation Now."
Answer: False
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Member Comments
Posted By: RO in Reno @ 09/18/2008 3:07:43 PM
Comment: The President has a great deal of power to deal with the economy. What we have is a straight line economy the money goes to the top 2 % and stays there.
Companies such as Hewlett Packard see themselves as the supplier in a supply side economy. they are not the supplier, the manufacturer is, and the manufacturer is China and India, the true supplier clearly benefits, this short sided view so many of this countries corporations have excludes the majority of America from the economic process, I have no idea if the next president can recover or develop new products that would put the labor force in play once again, Obama says he will, Personally I believe him.
But Infrastructure has always been a key element in creating jobs and getting the economy moving again a good example of bottom up economics, most memorable Presidents used it well.
Taxes are a good way of economic stimulus, Bush's tax cuts certainly have not helped, an example is Obama???s proposal to give seniors a tax break, Those making less than $50,000 would pay no tax or even have a requirement to file. This tax break would put 12 to 14 billion annually into the economy, again from the bottom up.
The opportunity seems to be in the green technologies both in some manufacturing again developed in this country, and in infrastructure, Can you imagine what the infrastructure of this country would be if the trillion plus spent on removing Saddam had been spent in this country?
We would have looked like what we should look like in the 21st century and certainly would have no concern fixing bridges that actually go somewhere, but there are so many examples of missed opportunities by this administration they are hard to count.
An interesting side note speaking of missed opportunities is McCains view the missed opportunity was the failure of the government to entice people to community service, while most of us feel the missed opportunity was losing world support on fighting terrorists and most likely ending the war in Afghanistan when we could.
Posted By: RO in Reno @ 09/18/2008 2:22:09 PM
Comment: You have to be kidding, McCain only two days ago figured out there was a problem, 25 years in the Senate and he just work up with a "plan"
What McCain needs to do is go back to Sedona fire the illegals he pays $274,000.00 a year to and mow his own grass the exercise will do him good, who knows maybe he will remain consious for a month or two
If he really wanted to serve America he could withdraw from the race, if Palin is the kind of person he'll pick for important posts it would be to the benefit of the country.
Posted By: D_Smith @ 09/16/2008 11:56:38 PM
Comment: With McCain and Palin we will have a prayer, nothing more! With Obama we will have deregulation in a market that has billions of dollars of American's hard earned dollars. Obama gets it! McCain has historically repeated the same phrase over and over like one of those, that came from a seed pod in the invasion of the presidential candidate snatchers sequel! Scary prospect huh?
There is a boycott of Alaska as it apparently lawless and not deserving of American's tax dollars. let Russia be the only ones to visit them, they already have their fishing licenses.