The question of whether Barack Obama could have done more for the economy in his first two years has been burning up the intertubes over the last couple of days, feeding off of a pessimistic, or perhaps fatalistic, Ezra Klein post yesterday. Brad DeLong thinks so, and has a list of all the things Obama could have done that he didn’t.
My take: Obama certainly was dealt a tough hand, and it’s easy to lose sight of what he did right that might have prevented things from getting far worse. Overall, however, I think DeLong is right. There were indeed things Obama left untried that he probably could have done and that probably would have improved the economy — and made his path to reelection smoother.
Basically, we’re talking about two separate questions here. Could he have done more through the executive branch without Congress? And could he have gotten more out of Congress?
On the first question, my general sense is Yes. A good deal of economic drag is caused on the state-government level, through layoffs to teachers and other state and local employees and the fear of layoffs to hundreds of thousands of others. Obama can’t control that, but he might have done more to mitigate the damage. The administration could have been much more aggressive and innovative in getting money out to state and local governments, either through TARP (as DeLong suggests) or a triggered additional stimulus (Matt Yglesias’s suggestion) or by quickly passing some sort of stand-alone bill that would be long-term deficit neutral but set up automatic stabilizers during hard times. If thad been a priority, it could have made a real difference.
However, I’d also caution that only asking what Obama got wrong risks overlooking what he did well — areas where his policies averted disaster. The Obama administration prevented a full banking meltdown, the domestic automobile industry, and continued job losses similar to those in winter 2008-2009.
Could Obama have gotten more out of Congress? It’s important to consider what might not have been — what he got from Congress that might not have been gettable. Remember that Obama only had 58 Democratic Senators in the spring of 2009. There was no guarantee that any stimulus at all would pass. Also, it was not at all guaranteed that Arlen Specter would switch parties and start voting like a loyal Democrat. It’s very possible to imagine missteps leading to Specter voting like a very conservative Republican throughout the 111th Congress, and perhaps even losing Ben Nelson to a party-switch. If these things had happened, there might have been no follow-up stimulus measures — no unemployment extensions, no payroll tax cut, and no Wall Street reform.
As for Obama’s overall record in getting things from Congress, the ones who deserve the bulk of the blame for the inadequacies of post-Bush policy are the politicians who opposed additional stimulus and other economic measures while generally proposing nothing useful of their own. I’m talking about marginal Democrats and virtually every Republican. They are the most to blame for the current state of the economy. Obama’s policy mistakes mattered, and yes, he could have done more. But the big mistakes were made by Congress. And the most serious mistakes of all were made before he took office in the first place.