David Leonhardt does a nice job of describing where Obamanomics went wrong.
WORKING out of cramped, bare offices in a downtown building here in Washington, President-elect Obama’s economic team spent the final weeks of 2008 trying to assess how bad the economy was. It was during those weeks, according to several members of the team, when they first discussed academic research by the economists Carmen M. Reinhart and Kenneth S. Rogoff that would soon become well known.
Ms. Reinhart and Mr. Rogoff were about to publish a book based on earlier academic papers, arguing that financial crises led to slumps that were longer and deeper than other recessions. Almost inevitably, the economists wrote, policy makers battling a crisis made the mistake of thinking that their crisis would not be as bad as previous ones. The wry title of the book is “This Time Is Different.”
In my interviews with Obama advisers during that time, they emphasized that they knew the history and were determined to avoid repeating it. Yet of course they did repeat it. After successfully preventing another depression, in 2009, they have spent much of the last three years underestimating the economy’s weakness. That weakness, in turn, has become Mr. Obama’s biggest vulnerability, helping cost Democrats control of the House in 2010 and endangering his accomplishments elsewhere.
Entire books and countless articles have taken Mr. Obama to task on the economy, and administration officials have a rebuttal that makes a couple of important points. The Federal Reserve and many private-sector economists were also too optimistic, Obama aides note. And they argue that the Senate would not have passed a much larger stimulus in 2009, given Republican opposition, regardless of the White House’s wishes.
But from these reasonable points, the Obama team then jumps to a larger and more dubious conclusion: that their failure to grasp the severity of the slump has had no real consequences. Even if they had seen the slow recovery coming, they say, they couldn’t have done much about it. When Mr. Obama has been asked about his biggest mistake, he talks about messaging, not policy.
“The mistake of my first term — couple of years — was thinking that this job was just about getting the policy right,” he has said. “The nature of this office is also to tell a story to the American people that gives them a sense of unity and purpose and optimism, especially during tough times.”
We can never know for sure what the past four years would have been like if the administration and the Fed had been more worried about the economy. But my reading of the evidence — and some former Obama aides agree — points strongly to the idea that the misjudging of the downturn did affect policy and ultimately the economy.
Mr. Obama’s biggest mistake as president has not been the story he told the country about the economy. It’s the story he and his advisers told themselves.
Of course, there were major GDP revisions well after Obama’s team made their decisions in late 2008. It was only much later that we realized the fourth quarter GDP of 2008 was the worst since the Great Depression. That said, it should not have taken them long to figure out that this was, in many ways, a worse international economy than we faced in 1929. As Leonhardt notes, having never faced this kind of economy before, the Obama team decided this time was different also. Having stopped the acute output drop, they assumed that the economy would right itself fairly quickly and/or there was nothing else they could do. Which is why we get the chart of the day* at the top of the post.
Our growth in debt has far outpaced our economic growth. In particular, household debt had reached record levels akin to what we saw in 1929. I think that if the CEA had recognized that we would enter a sustained period of deleveraging, that we may have seen a different policy response. A failure to diagnose properly, lead to inadequate treatment.
* Chart is from the FRED site. At that site you can download the raw data along with the graph of your own making. The raw data shows that our total debt went from about 1.8 times GDP in the 50s, to over 4 times GDP in 2008.
The problem with these sorts of abstract quantitative analyses is that they are entirely irrelevant to the sorts of concrete qualitative choices which ultimately comprise economics policies such as “Obamanomics”.
True, if we are at record levels of debt, adding another trillion of public debt to fund a stimulus will necessarily have its quantitative component, but on the other hand no level of debt (nor, for that matter number of meteors heading for the Earth, number of angry ducks mysteriously smothering Hoboken, NJ, number of children suddenly screaming “SNEE!” and running away from home, &c, &c) is relevant to whether such stimulus funds are spent in pursuit of the public good or, as they largely have been under Obama, are instead under the cover of crisis exploitation (much as with the pigs in Orwell’s Animal Farm) privately squandered in order to reward cronies, punish political enemies, and enshrine private partisan goals and agendas.
The problem with Obamanomics is not relative levels of debt, but unapologetic kakistocracy.
While public debt has made ratings agencies and peripatetic investors episodically jittery and while private debt has preemptively absorbed both Washington handouts and private wages in lieu of further consumption within current, stagnant business activity, the problem with current economic policy with respect to the expansion of business activity is now as it ever has been for the past several years: uncertainty over the impact of government regulatory and tax policy on the risk and ongoing cost of doing business.*, **, et. al.
(Quantitative) Levels of debt have absolutely no bearing on policy choices already qualitatively bad in and of themselves.
Like images of fractals, though, charts such as the above or secondary and tertiary homogenizations of data such as Rogoff’s and Reinhart’s will always remain abstractly mesmerizing in their own independent right, as of course they should.
H. M. Stuart
Alexandria
*Fewer US CEOs Planning To Expand, Hire
**Fed’s Fisher says U.S. “drowning in unemployment”
“uncertainty over the impact of government regulatory and tax policy on the risk and ongoing cost of doing business.”
Yes, debt is irrelevant. You articulate the right wing perspective well. (We had absolute certainty under Bush II, and the weakest recovery until the current one, driven by a subprime scam. There has been no growth under a conservative GOP president w/o major expansion of our debt. It was not certainty, but credit driven growth.)
Steve
Speaking of weakest recoveries – is there any argument that 2000ies were worse than 1970ies?
I seldom see the two eras compared. We had GDP and job growth in the 70s. We had debt going down, as a percentage of GDP. However, we had inflation, and eventually we had recession. Also, IIRC (really should look it up to confirm) we had increased labor force participation over the 70s.
Steve
My good Steve,
I can only assume if you had something else to bring in reply to my comment than multiple logical fallacies and an egregious misrepresentation of my words above, clear enough for any to read, you would have brought it.
I understand why you are clueless about business uncertainty. When you sell people their lives back if they pay you and leave them to die if they don’t as you do in the multimillion dollar business in lives you run, there is never any business uncertainty, only relative profit margin uncertainty.
Things are different in the world outside the operating room and the blogosphere.
H. M. Stuart
Alexandria
There is zero proof that uncertainty causes our current problems.
Steve
HM, You comment above, “When you sell people their lives back if they pay you and leave them to die if they don’t as you do in the multimillion dollar business in lives you run” Are you referring to health care? If so, where is this the practice. I engaged in solo private practice, military health care, and a large HMO (Humana). In all three instances, emergency care was provided when needed without requirement that recipients either pay or prove ability to pay for the care (and, in the military and HMO, no requirement to prove eligibility for the care first). Yes, we did bill for the care and, yes, we hoped to receive payment.
When in the solo practice in an economically deprived area, I encountered quite a few persons with no money and no insurance. When care was important for their health, my office provided it. If admission was needed, I discussed the condition with the hospital administrator and the care was provided gratis despite the fact that the hospital was essentially bankrupt and depended upon infusion of money from the Catholic group that owned it.
Perhaps things are different in the real world outside than in the blogosphere?
My good Edward,
My life experience, including having collected charged off medical debt (seizing assets, including homes, garnishing wages, forcing individuals into bankruptcy) and including counting among my close family several physicians who would themselves describe the world quite differently, would appear to differ from yours.
However, are you wishing to claim, as you seem to be doing based on your anecdotal accounts above, that a) emergency room care providers will do so without requiring payment for their services in providing such care and/or b) that individuals at large today requiring non-emergency room life-saving care will receive it upon demand from physicians qualified to provide it without such physicians first requiring payment as a non-negotiable condition of providing such non-emergency room life-saving care?
By non-emergency room life-saving care I mean care without which an individual would be expected to die of his or her ailment in predictable course, such as our good Lynn.
If what you are insinuating – you realize you are offering nothing more substantial than insinuation and suggestion, don’t you – is true, though, this whole recent brouhaha over the critical need for the PPACA/Obamacare may in fact be some sort of terrible, tragic misunderstanding.
In addition, please supply the following information to clarify the value of your anecdotes for our readers:
-the dates you were in private practice and a reasonable estimate of the number or the percentage of life-saving procedures you provided without first requiring payment as a condition of providing them out of the total of life-saving procedures you provided;
- the dates you were affiliated with an HMO, the capacity in which you were affiliated with an HMO, and a reasonable estimate of the number or the percentage of life-saving procedures you provided without first requiring payment as a condition of providing them out of the total of life-saving procedures you provided;
- the dates you were affiliated with taxpayer-funded military medicine.
H. M. Stuart
Alexandria
1. Current law in the US requires emergency rooms to treat life or health threatening conditions without regard to capability to pay. In addition, there is regulatory prohibitions against simply transferring such patients elsewhere. I have been retired for 12 years now so it is possible that these requirements have changed, but I doubt that.
2. Clearly emergency room care for anything other than emergencies is cost inefficient, less than effective, and undesirable. Yet, when other alternatives are unavailable, that is where people go. The lengthy discussions about health care reform in Hong Kong spend a great deal of time addressing exactly that issue and how to get persons out of ER and into offices. My point in regard to your posting was addressed at your inference that people are simply deserted and allowed to die. There are some such cases but there are also many in which care is provided with or without remuneration.
3. I am not certain what if anything the years of my service are of import. However, I was in the Army from 1967 through 1975. I then was in solo private practice (board certified in both Surgery and Family Practice) from 1975 to 1981. I reentered the Army in 1981 and retired in 1995. I worked for the staff model HMO of Humana until 1997 and then as a medical director in the TRICARE program from 1997 until I retired in 2000. I also was on active duty my senior year of medical school (1965 – 66).
4. At Humana, I was a clinical medical director and, in that capacity managed a group of physicians, carried a full load of patients, mentored some medical students, served on a credentials committee, and various other actions. We had an urgent care clinic in which we saw non appointed patients from noon to about midnight. I have no idea what percent of these did or did not have insurance. I do know that, if uncovered patients arrived, we saw and evaluated them and prescribed treatment.
5. When in private practice, my office saw all comers. We, obviously hoped to get paid. However, the county (Sierra County in southern New Mexico) was very low income. The overall breakdown of the county was about 65 percent on Social Security, 15 or so percent on welfare, 10 percent, no health care coverage, and 10 percent with traditional insurance. My fees were 20 dollars for a new patient history and physical examination (hands on with all clothing removed for thorough evaluation of their health), 10 for follow up visits, $260 for a hernia surgery, I think gall bladder surgery was about $450. After 6 1/2 years, when I left practice, we wrote off over $300,000 in uncollected debts. My “salary” was $60,000. A friend who was a teacher heard some of his fellow teachers complaining about how wealthy I must be as a physician. He calculated out my hourly income and found that the teachers were actually earning more per hour than I.
6. Being in a rural area 100 miles from the border, we had influxes of carloads of illegal aliens on occasion when the vehicle would crash as running from the border patrol. These involved ten to 15 or even more persons with trauma. The medical staff was 5 physicians so I leave it to you to figure if I was involved in any life saving activities in which I would not be paid.
7. Our nation has a serious problem providing payment for health care to a significant percentage of our population. That is a result of multiple factors from over charging, over prescribing, over demand, outright incompetence all too often, over supply of questionably needed care, suspicion of patients of their providers and of providers of their patients, regulatory insanity, over promising by politicians, and even fatigue of providers (there were a lot of reasons I chose to reenter the Army and to completely retire at age 58). Discussion of how to improve access and affordability is not served by denigrating aspersions from either side. Yet, that is pretty much all we hear from our politicians. I had hoped that some of the blogosphere areas would be more productive but am pretty much giving up on that hope.
8. For what it is worth, I spent a little over two years as the commander of a moderate sized military health care system. In that time, we had significant cuts on budget and staffing imposed on us. At the same time, we initiated a community oriented primary care program, converted most of our civilian staff to “flex hours”, and aggressively addressed bringing some civilian care back to our staff. Our total budget was composed of what we spent directly and what was spent on CHAMPUS care. We cut the CHAMPUS bill by about ten percent in two years while our direct budget actually decreased slightly. The reason for our savings in the cost of care were almost entirely attributable to the improved quality of our primary care program and were reflected not only in lower total cost but major improvement in satisfaction. I do not question for a second that implementing an aggressive and effective primary care program in the US would lead to significant decrease in the overall cost.
My good Edward,
While I see the distinction between the law mandating that emergency rooms serve all in dire need and the actual physicians which staff them requiring guaranteed payment before doing so still eludes you entirely, thank you for the comprehensiveness of your reply.
H. M. Stuart
Alexandria
I was stimulated to find out just what is the current status both legal and in practice so did a little research on patients being denied health care.
http://en.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act gives a brief summary of the act that requires hospitals to render emergency care on site rather than denying or simply transferring the patient. Hospitals not following the requirements can be fined or, if egregious, can be disallowed for treatment of Medicare and Medicaid patients. It applies to all hospitals in the US except for VA, Indian Health Service, and Shriner system facilities. The act was passed in 1986 as part of the COBRA. It does not provide any remuneration for hospitals and physicians complying with it. The act has the following definition: An emergency medical condition is defined as “a condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in placing the individual’s health [or the health of an unborn child] in serious jeopardy, serious impairment to bodily functions, or serious dysfunction of bodily organs.
The question I “googled” was “how many patients are denied care in ers” There are a few cases cited in which care was not rendered and the subsequent reactions from regulatory agencies and from hospitals in which physicians worked. I cannot speak for current status but, the Joint Commission on Accreditation of Hospitals used to evaluate for this action as part of their accreditation surveys and failure to comply would be a category I finding. Category I findings can lead to loss of accreditation which is serious indeed for a hospital.
I do not question that there are instances in which either hospitals or individual physicians have failed to comply with this law but cannot imagine that this is either common or, when it occurs is not addressed if and when knowledge surfaces of the case.
PS, note that the Army hospitals in which I worked and the civilian hospital in which I practiced from 1975 to 1981 were always in compliance with this act long before it was created. At Letterman Army Medical Center, we received all Golden Gate bridge jumpers who survived long enough to be brought there and a fair number of persons injured along the coast line north of SF. I remember well a man struck by a great white shark who had horrendous injury to his right leg who we took care of. At that time, Army charged $50 a day for civilian emergency care regardless of insurance or capacity to care. He received several units of blood transfusions and two major surgeries during a ten or so day stay.
My good Edward,
What was the point in contention when you elected to enter this thread?
How does the practice of medicine uniquely relate to that point?
I offer these questions only to try to entice you back out of the weeds if I can. You are, of course, free to answer them or not – they are there solely to help you refocus – - and you remain equally free to continue your research and posting on these other matters of interest to you whether in this thread or elsewhere, as you choose.
H. M. Stuart
Alexandria
The weeds, in this case were planted by your comment, “I understand why you are clueless about business uncertainty. When you sell people their lives back if they pay you and leave them to die if they don’t as you do in the multimillion dollar business in lives you run, there is never any business uncertainty, only relative profit margin uncertainty.
Things are different in the world outside the operating room and the blogosphere.”
I did not find this to be accurate nor a proper reflection of most physicians’ attitude in the US.
My good Edward,
I understand from your own narrative above that you have lived a simple, romantically sheltered medical life (there is nothing more sheltered from civil society at large than military institutionalization), like a happy little squirrel in a hollow tree.
I know you want to convince yourself if not others that “attitude” is somehow even relevant to the outstanding fact that overwhelmingly lives get saved medically only if money changes hands first. You have already twice demonstrated that you, too, know this to be true when confronted with the fact that, emergency room laws notwithstanding, emergency room physicians will not save lives in such emergency rooms if not first compensated to do so.
If this were not the case, if remuneration, at the highest going rate possible, was not the sine qua non for medical care, if payment for life was only merely a good suggestion and not an indispensable requirement – again, at the highest going rate possible – then it is hard to see how we could ever end up in a situation where gargantuan modern mass economies are being eaten alive from the inside out, hollowed out as if by gnawing termites, by the prices charged for medical care.
No other factor than that life commands infinite market price within a market of infinite demand for more can explain such a civilizationally-lethal phenomenon. “Attitude” of self-rationalizing physicians seems to have had little effect.
I understand, because of your simple-minded naivete and because of the cloistered life you have led, that the fact that people will not tempt fate, will not often even chance if there might be an alternative to paying full going rate to live when their lives are at stake is a phenomenon that escapes you entirely.
I am sorry that you are so late to come to the realization that, whatever sort of angel of mercy you might have imagined yourself to be throughout your life, in the final analysis you have always been a merchant selling lives for money.
Regardless, your cognitive dissonance with respect to the ugly facts about how medicine in the real world at large actually operates – see, if the insurance won’t pay, the doctor won’t save the life, and so we have to have a cookie sale for little Muffy/Billy/Megan/Brittany/Egbert, &c to get that expensive treatment they (or our good Lynn, had she no insurance) need – and your hurt feelings when someone finally brought that to your attention is unimportant to me.
Finally, if you were following the discussion at all, then you know the only point at issue anyway was business uncertainty in the broad world outside that enchanted realm where, magically, an individual’s demand to preserve his own life by paying someone to do so never seems to fall off, unlike vendors in widgets and other non-life-essential services. This is why the pronouncements of a solipsist like our good Steve who has known nothing but medical business with respect to the business climate at large is not only spectacularly wrong, but laughably so when it is tendered in the presence of quotes from business leaders saying out loud that they are not hiring because of their uncertainties over tax and regulatory policies.
H. M. Stuart
Alexandria
My good Edward,
I think you have successfully achieved your goal of attempting to defend our good Steve by hijacking this thread into such distraction that it is no longer comprehensible. Grandpa Simpson describes this technique you have just amply demonstrated here in “Tied an onion to my belt”. For instance, my comment about “selling lives back” was to Steve in reference to his personal multi-million dollar anesthesiology group, one I can assure you does not operate on charity. You decided it was quite alright for you to grab that and run off with it like a dog with a shake toy, first universalizing it to all medicine, then universalizing all medicine from your brief stint as a kindly, charitable country doctor. Remember, though, the thread was about business uncertainty and in particular about who was best qualified to comment on it.
And, sweet Jesus, Grandpa, you do understand that “doing surgery in what is basically a tent on a 13 year old girl whose legs and one arm were blasted off by an artillery shell (not one of ours)” as well as the entire institutional apparatus that provides you a career in it is precisely what is meant by being “sheltered from civil society at large”: Edward, you spent all of your life in an entirely alternate universe from that of any legitimate subject of this thread, whether it be business uncertainty or modern civil medical practice.
But now that I have a better grasp of your character, in particular, your phony, avuncular facade and your slavish, chickenshit reflex to piously and cynically hide behind whining platitudes bemoaning the nature of discourse when anyone gets so out of line as to dare to question your comments or to force you to justify them, I will be able from now on to avoid the hustling Tarbaby you present.
Perhaps you were a good Army doctor, a stalwart Colonel Potter, my good Edward, but on this blog you have unfortunately but clearly presented yourself as little more than a shape-shifting, calculating, mendacious, two-faced dissembler, albeit one lonely for attention and validation in his declining years.
Ita missa est,
H. M. Stuart
Alexandria
HM,
Once again on this site I find that attempts to discuss issues in an adult manner using adult language and ideation is greeted with ad hominem, inananity, and attempts to insult the discussant rather than addressing issues. Frankly, the continued wasted effort has now exceeded my tolerance level so consider this my resignation from your “stable” of authors. There are other sites where discussants actually engage in debate using logic and thoughtfulness. At one time, I found Alexandrea to be one of these but in recent months that has, more and more, ceased to be the case.
Goodby.
My good Edward,
Yes, it is probably wisest that you leave. You are clearly too morally and intellectually frail to thrive here without the necessary crutch that rank and being a physician critically provided you with during most of your life. In particular, although not absolutely necessary in Alexandria, it is always helpful if an Author knows what, in fact, an ad hominem argument is and what it is not. Because of the way you consistently misuse the term, you clearly do not.
As any reader can ascertain from this thread, I repeatedly and consistently addressed your claims and attempts at arguments. When I did so, you were unable to substantiate and defend your claims, but instead chose to ignore my challenges, change the subject, move the goalposts, and otherwise evade dealing with what you had unilaterally elected to bluster your way into. Instead of addressing the principles you challenged – whether medical business for money never, ever suffers from absence of demand while doing so almost always and universally at full free market rate – you countered with unverifiable personal anecdotes about how charitable and wonderful you yourself were.
Because of your relentless evasion and dissembling in the face of my consistent challenges, I could have concluded one of two things. The first, which I did, was that you were intellectually competent and canny and therefore, given your responses, a shape-shifting weasel. Just the opposite of our good MI, when I am faced with Hanlon’s Razor – “Never attribute to malice that which can be adequately explained by stupidity” – I always choose the intellectual competence of malice over reflexively assuming that the person I am confronting is stupid. The alternative choice for me, of course, was that you were simply an intellectually feeble old man who had bitten off more than he could chew argumentatively and became only further confused and disoriented the more the conversation continued. You choose which you are, if not both; I don’t care.
In either case, though, your congenital slavish reflex, and even now in parting, to claim (falsely) ad hominem attacks and people otherwise being mean to you any time anyone actually has the audacity to challenge claims you unilaterally choose to make continues to mark you unequivocally as a cynical manipulator and ultimately a consummately chickenshit little pussy of a man. In fact, any reference to the distaff sex with respect to you is an unworthy insult to every one of our female Authors, every one of which has more intellectual integrity and intellectual moral courage than you could ever hope to muster.
One does not have to be an intellectual giant to be welcome in Alexandria, one can hold any views on anything under the sun, but the combination of intellectual dishonesty inescapably infused with and defended by slavish whining which you congenitally epitomize is a human stain I cannot abide.
Thank you for leaving.
H. M. Stuart
Alexandria
HR, I must say that I find myself disappointed to find that you join together with so many of the highly vocal but lowly thinking members of our society who believe they can make their points in discussion through use of terms such as “naivete, poor comprehension, cognitive dissonance and so forth”. I assume you must have spent some time in military health care in order to make the assumption that “(there is nothing more sheltered from civil society at large than military institutionalization)”. I can assure you that there is nothing particularly sheltered about doing surgery in what is basically a tent on a 13 year old girl whose legs and one arm were blasted off by an artillery shell (not one of ours).
Am I to assume that you believe health care should be rendered for free since you seem to hint that “in the final analysis you have always been a merchant selling lives for money.” Yes, I was a merchant. I provided a high quality product that was damn well worth what I charged for it. I believe enough in the principles proposed by Ayn Rand that I refuse to apologize for having earned a good living doing so. On the other hand, I never once denied my product to those unable to pay for it.
Among the rather inane things you say in your commentary is “if the insurance won’t pay, the doctor won’t save the life, and so we have to have a cookie sale for little Muffy/Billy/Megan/Brittany/Egbert, &c to get that expensive treatment they (or our good Lynn, had she no insurance) need – and your hurt feelings when someone finally brought that to your attention is unimportant to me.” Am I to assume that you have become a proponent of the Affordable Care Act? A number of participants in this web site believe it to be an abomination yet it is one of the very few real efforts to correct the situation that you describe. Or, is it that you think doctors, pharmacies, and hospitals should be free for all? Please help me here as your commentary makes no sense unless one or the other makes sense.
Your final paragraph frankly makes close to no sense. I guess your assumption is that all health care is life saving and, therefore, physicians can charge whatever the market will bear. Actually, 99 percent of health care is quite mundane and routine. I am not at all clear that it is worth what is the current price. However, the right side of the political spectrum appears to believe that the free market is the best means of cost control and supply. The fact that this has not worked real well in health care for the last half century does not bother them at all, apparently. In my own opinion, the unregulated market is not a viable means of health care management in our current world.
That subprime scam was driven by government and opposed furiously by banks, who were sued by the Reno DoJ and the Cisneros HUD through the 1990s (all those court cases are easily referenced)…..the courts duly ruled that “…traditional lending criteria had a negative and disparate impact on low income Americans.” Those rulings mandated the “creative financing that followed, in the 2000s.
Disparate impact is the law of the land….it’s STILL the law of the land, UNTIL such time as the Scalia court can get its hands on a case they can use to rein it in. It’s unfortunate that such constructs inevitably develop unintended “lives of their own.”
“Disparate impact,” is a legal construct that has been losing favor within the legal arena for years…the courts are actually (as usual) behind the curve in addressing its widespread abuses.
“The nature of this office is also to tell a story to the American people that gives them a sense of unity and purpose and optimism, especially during tough times.”
He’s wrong, but he prefers telling stories, especially about himself. In the long run, stories don’t do much good when facts run against them.
But, as I cited the radio money guys as saying and the chart says, this is a debt recession. Getting further in debt doesn’t help much.