Learn­ing not to bad-mouth the econ­omy

The Washington Times Weekly - - Commentary - Don­ald Lam­bro

Barack Obama is learn­ing a psy­cho­log­i­cal les­son from a for­mer pres­i­dent about the econ­omy and what hap­pens when you keep com­par­ing it to the Great De­pres­sion.

For al­most two months of his pres­i­dency, he has been per­sis­tently and po­lit­i­cally neg­a­tive about the econ­omy — even pes­simistic, por­tray­ing it in near-hy­per­bolic terms. As a re­sult, the fi­nan­cial mar­kets fell into a deeper nose dive than be­fore and con­sumer sen­ti­ment, al­ready in the dumps, wors­ened.

Mr. Obama talked re­peat­edly of the “deep­en­ing eco­nomic cri­sis” he in­her­ited, the “big mess” and “fis­cal dis­as­ter” the econ­omy was in. He seemed locked into his cam­paign’s New Deal mythol­ogy that we were in the 1930s and he was Franklin D. Roo­sevelt.

In his last primetime news con­fer­ence, he con­tin­ued his danger­ous al­lu­sions to that era, say­ing we were in “the most pro­found eco­nomic emer­gency since the Great De­pres­sion.”

Wall Street was plung­ing and the coun­try’s mood was turn­ing darker. His ad­vis­ers warned that he was talk­ing down the econ­omy too much, scar­ing the busi- ness com­mu­nity, need­lessly stok­ing fear among al­ready-in­se­cure con­sumers, and fail­ing to give Amer­i­cans rea­sons to be­lieve that as bad as things are now, the econ­omy will get bet­ter. In the last cou­ple of weeks, the White House has dra­mat­i­cally changed its tune.

First, all this silly talk about be­ing in an­other Great De­pres­sion was non­sense. Not even close, Pres­i­dent Obama’s top eco­nomic ad­viser said two weeks ago. Nearly a third of the coun­try was job­less in the 1930s. Un­em­ploy­ment now is about 8 per­cent.

The re­ces­sion we are ex­pe­ri­enc­ing, while se­vere, “pales in com­par­i­son” with the Great De­pres­sion, Christina Romer, chair­man of the Pres­i­dent’s Coun­cil of Eco­nomic Ad­vis­ers, told the Brook­ings In­sti­tu­tion two weeks ago. Not only were we in noth­ing that ap­prox­i­mated the Great De­pres­sion, there were glim­mers of faint hope that things might be get­ting bet­ter, said Lawrence H. Sum­mers, di­rec­tor of the White House Na­tional Eco­nomic Coun­cil, and Mr. Obama’s chief eco­nomic ad­viser.

In re­marks to a Brook­ings au­di­ence two weeks ago, Mr. Sum­mers ven­tured to say he was “mod­estly en­cour­aged” by signs that “con­sumer spending in the U.S., which was col­laps­ing dur­ing the hol­i­day sea­son, ap­pears, ac­cord­ing to a num­ber of in­di­ca­tors, to have sta­bi­lized.”

“What we need to­day is more op­ti­mism and more con­fi­dence,” Mr. Sum­mers said. And that’s what Mr. Obama de­liv­ered in a chameleon-like, fence-mend­ing ad­dress and ques­tion-and-an­swer per­for­mance on March 12 be­fore an au­di­ence of busi­ness ty­coons.

To a large de­gree the news me­dia ig­nored the real news in the event, and that was Mr. Obama in­sist­ing he, too, be­lieved in free-mar­ket eco­nomics, cap­i­tal­ist risk-tak­ing, wealth cre­ation, and — brace your­self — “prof­its.”

In re­sponse to busi­ness con­cerns that he will im­pose dra­co­nian rules and reg­u­la­tions on them and slap them with higher taxes, the pres­i­dent said he was will­ing to deal on car­bon emis- sion tax lev­els and could fa­vor lower cor­po­rate tax rates, too.

In an ad­dress be­fore the Busi­ness Round­table, whose elite ros­ter is a Who’s Who of the coun­try’s rich­est com­pa­nies, Mr. Obama at times sounded like a cross be­tween cap­i­tal­ist cru­saders Ron­ald Rea­gan and Jack Kemp. Among the state­ments Mr. Obama rarely, if ever, voiced in his cam­paign stump speeches be­fore the Demo­cratic faith­ful:

“I’ve al­ways been a strong be­liever in the power of the free mar­ket. It has been and will re­main the very en­gine of Amer­ica’s progress.”

“I be­lieve that jobs are best cre­ated not by gov­ern­ment, but by busi­nesses and en­trepreneurs like you who are will­ing to take risks on a good idea. And I be­lieve that our role as law­mak­ers is not to dis­par­age wealth, but to ex­pand its reach; not to sti­fle the mar­ket, but to strengthen its abil­ity to un­leash cre­ativ­ity and in­no­va­tion that still makes this na­tion the envy of the world.”

He doesn’t “want to get the gov­ern­ment in ev­ery­body’s busi­ness. [. . .] I want you guys to do your thing.”

“This is the most dy­namic econ­omy on earth, and our ca­pac­ity [for eco­nomic growth] is undi­min­ished. [. . .] Things are go­ing to get bet­ter,” he said. “I tend to be pretty op­ti­mistic.”

It was a re­mark­able switch in tac­tics and tone.

In the depth of the 1981-82 re­ces­sion, when un­em­ploy­ment was more than 10 per­cent, Ron­ald Rea­gan talked re­peat­edly of the need to “re­new op­ti­mism and con­fi­dence and rekin­dle the na­tion’s en­tre­pre­neur­ial in­stincts and cre­ativ­ity.” The New York Times said it sounded like “psy­cho­nomics,” say­ing that Rea­gan seemed to be ad­min­is­ter­ing a form of “group ther­apy” to the busi­ness com­mu­nity and the na­tion at large.

In a ra­dio ad­dress in 1984, Rea­gan talked about the psy­chol­ogy of the econ­omy back then that mys­ti­fied the Times, say­ing “I re­mem­ber say­ing back when things looked worst that too much pes­simism could be deadly. There’s a psy­cho­log­i­cal fac­tor in re­ces­sion and too much ham­mer­ing at it makes re­ces­sion worse.”

Mr. Obama is fi­nally beginning to learn this, too.

Don­ald Lam­bro, chief po­lit­i­cal cor­re­spon­dent of The Wash­ing­ton Times, is a na­tion­ally syndicated colum­nist.

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