The fact that President Obama spent most of his press conference belittling Republicans for not wanting to raise taxes is further evidence that a deal to raise the debt ceiling may not happen. If it is actually true that the only taxes Democrats want to raise are tax expenditures, then perhaps Obama would help matters if he backed a global cap on spending through the tax code, as Harvard economist Martin Feldstein has proposed, or singled out subsides that benefit liberal constituencies as well as those that favor business. Instead, he's playing the same old game of coalition politics, desperately trying to divide the public by pitting Republicans and the rich against the rest of America. I doubt the blame-shifting will work, though. At the end of the day, Barack Obama is the president, and he will be judged on the basis of whether he's presented a compelling plan to raise the debt ceiling while cutting government spending in a significant way. So far, he's done no such thing.
One of the reasons Obama's arguments are unlikely to convince Americans is that there is a huge divide between elite and popular opinion streams on the economy. Since the 2008 financial crisis, elites have made promises to the public that have not been kept. Most people were never comfortable with the idea that the only way to preserve the financial system was by bailing out its worst members. The claim that the stimulus bill would keep unemployment at 8 percent or below was proven false long ago. The Federal Reserve's Quantitative Easing program has not resulted in sustained recovery.
The idea that the way to solve America's debt problem is by raising the debt ceiling is the most counterintuitive of them all. The public doesn't buy it. In the experience of most Americans, the way to get out of debt is to cut up the credit cards and stop spending. They have not read Lord Keynes and doubt whether his prescriptions work in the real world. For them, thrift is not a "paradox" but a virtue.Â
This intellectual divide between the president and the public is the reason his ratings on the economy are so poor. One suspects the gap is unbridgeable.
