What could Obama have done?

On Sunday the New York Times ran a piece If I Were President.... "Then I asked a range of Americans who don’t labor in politics or the media what they’d do if they were president." I thought it was particularly lame.

Jonathan Chait says, "If you looking for an anthropologically perfect sample of the cult of the presidency, check out the feature of the Sunday New York Times, entitled "If I Were President." The feature asks a series of leading lights to outline their vision for the country. But the entire concept makes no distinction between the notion of "if I were president" and "if I were king." If you were the president, of course, you would need a course of action that could be accomplished either through an executive order or that could be passed through both the House and Senate. The proposals generally make no allowance whatsoever for Congress."

Ezra Klein asked, What could Obama have done? "I’ve spent a lot of time thinking about ways in which the past few years could have gone differently. I’ve even come up with a few. But none of them lead to dramatically better outcomes today."

"Indeed, if you had taken me aside in 2008 and sketched out the first three years of Obama’s presidency, I would have thought you were being overoptimistic: an $800 billion stimulus package — recall that people were only talking in the $200-$300 billion range back then — followed by near-universal health-care reform, followed by financial regulation, followed by another stimulus (in the 2010 tax deal), followed by the repeal of “don’t ask, don’t tell,” followed by the killing of Osama bin Laden and the apparent ousting of Moammar Gaddafi? There was no way. And yet all that did get done. But the administration hasn’t able to get unemployment under control — perhaps it couldn’t have gotten unemployment under control — and so all of that has not been nearly enough."

Matthew Yglesias came up with Imagining Better Yesterdays. "For example, back on ARRA, would it have been impossible to negotiate a deal that featured a smaller headline stimulus number but contained a payroll tax cut “trigger” mechanism if unemployment shot over 8 percent? Maybe it would have been, but it’s not obviously an objectionable idea from the point of view of the pivotal stakeholders and it just wasn’t tried. Similarly, timely nominations for Federal Reserve Board vacancies would have made a difference. The administration could have moved swiftly to nominate someone to run the Federal Housing Finance Agency who was committed to using the powers of that office to move the economy...The original sin here was not thinking seriously enough about the question 'what will we wish we’d done if 30 months from now the BEA turns out to have been underestimating the recession?'"

Klein followed up, What Obama could have done, Part II. "So you could make the argument that Matt’s policy would have been marginally better or marginally worse — I’d prefer it, actually -- but it’s hard to make the argument that it would have been dramatically different." Even on housing he can't come up with much Obama could have done. Now what Congress could have done is another story.

Brad DeLong wrote, "I think Ezra is simply wrong. There were a large number of things that Obama could have done--there are even things he could do now, if he wanted to." He lists 10 things:

1. Use Reconciliation to get a second stimulus through Congress in the fall of 2009.
2. Expand the PPIP to do $3 trillion of quantitative easing through the Treasury Department.
3. Have a real HAMP to refinance mortgages.
4. Use Fannie and Freddie to (temporarily) nationalize mortgage finance, refinance mortgages, and rebalance the housing market.
5. Announce that a weaker dollar is in America's interest.
6. Nominate a Fed Chair who takes the Fed's dual mandate seriously and pursues policies to stabilize the growth of nominal GDP.
7. Appoint Fed governors who take the Fed's dual mandate seriously and support policies to stabilize the growth of nominal GDP.
8. Take equity in the banks in January-March of 2009 and keep them from lobbying against financial reform.
9. Use Reconciliation to pass an infrastructure bank.
10. Use TARP money as a mezzanine tranche to fund large-scale additional aid to states and localities to reduce their fiscal contractions.


Kevin Drum followed that with Obama's Missed Chance. "My own guess is that #6 and #7, though desirable, probably wouldn't have made too much difference. And #1 and #9 both would have required reconciliation instructions to be written by April 2009. That was only a couple of months after the stimulus bill had passed, and at the time the House and Senate were willing to include reconciliation instructions in the budget resolution only for healthcare and education funding. Perhaps Obama should have pushed harder for open-ended instructions, but at the time the administration and Congress both thought the 2009 stimulus would be enough. Obviously that was a mistake, but broadly speaking, that was the mistake, not all the subsequent details that resulted from that original misjudgment. Still, even if my understanding of the reconciliation process is right — and I'll accept correction from anyone who's an expert — that leaves six strong ideas plus two more that would have been worthwhile even if their effect would have been modest. Not bad."

My own answer? Obama could have used the bully pulpit to to explain and support the progressive argument to the American people and to prevent virtually every policy from moving so far to the right. That might have resulted in a bigger stimulus, health care reform with a public option (though not a single payer system), Peter Diamond on the federal reserve board, Elizabeth Warren heading the CFPB, financial reform with some real teeth, and maybe less time devoted to such stupidity as deficit reduction in a recession. I'm not saying progressives would have gotten everything they wanted, but I do think that conservatives dominated the discourse, even while in the minority, and were much more effective in getting what they wanted. If Obama was making a stronger case instead of preemptively conceding, I think things could have been very different. Maybe the nation would have spent less time debating health care, birth certificates, and debt limits and maybe we could be talking about solutions to climate change that involved jobs modernizing our energy infrastructure.

Update: Klein sums up some responses in What could Obama have done, Part III