So why did Obama and Democrats pivot so hard towards deficit reduction, and away from job creation, after the 2010 elections?
The question is one of the central conundrums of the Obama presidency. The pivot led to a grueling series of standoffs with Republicans on their political turf that arguably damaged Obama further, at a time when more government action was desperately needed on jobs and the economy, the primary preoccupations of voters.
We now have a new book that sheds some fresh light on what drove this pivot. And it won’t make progressives any happier.
In “Showdown,” an insider account of Obama’s response to the 2010 midterm losses, author David Corn reports on a number of behind-the-scenes disussions that led to the Dems’ emphasis on deficit reduction. Here’s what drove Obama strategist David Plouffe’s thinking (page 132):
Plouffe was concerned that voter unease about the deficit could become unease about the president. The budget issue was easy to understand; you shouldn’t spend more money than you have. Yes, there was the argument that the government should borrow money responsibly when necessary (especially when interest rates were low) for the appropriate activities, just like a family borrowing sensibly to purchase a home, to pay for college, or to handle an emergency. But voters needed to know — or feel — that the president could manage the nation’s finances. The budget was a test of government competence — that is, Obama’s competence.
This is a reference to the “government must tighten its belt” analogy. Obama repeatedly has invoked this language, arguing that government, like families, needs to live within its means. As Paul Krugman has explained at length, this analogy is flawed on many levels. And judging by the above passage, Plouffe knew this. He knew the policy justification for the pivot was thin. But Obama’s team clearly didn’t feel they could win this argument with voters.
There’s also this very illuminating description of a meeting in February 2011, just after the shellacking, between White House adviser Gene Sperling, Dem pollster Geoff Garin, and a number of Dem Senators (page 146):
With Sperling sitting in on the presentation, Garin reinforced the White House view that Democrats had to up their game on deficit reduction. His firm had conducted extensive polling and focus groups. He told the senators that voters saw jobs as the most pressing priority. This might seem to support those Democrats who believed Obama had gone too far overboard on the deficit-reduction cruise. But when asked what the president and Congress should do to boost job creation, most voters said reduce the deficit and the debt. They had imbibed the GOP message; the problem with the economy was governmental red ink.
That was not accurate. The financial crash that triggered the economic collapse was unrelated to federal deficits. But Garin measured voter perceptions, not whether voters were correct. And he told the senators that voters would not listen to what the Democrats — including the president — had to say about jobs and investments if they did not sense that the Democrats were willing to wrestle the debt monster to the ground.
Of course, progressives argue that it’s precisely because voters conflate economic anxiety with worry about the deficit that Dems shouldn’t have allowed concern about the deficit to drive them to make the pivot. But Democrats decided to draw the opposite conclusion. As both these passages show, Dems and White House officials knew that the policy justification for the pivot to deficit reduction was flimsy at best. But they decided they couldn’t win the short-term argument, and went ahead and pivoted, anyway.