Letting Obama off the Hook

The Atlantic 's Megan McArdle, in a justly celebrated post, argues that Obama's failure to try to fix the nation's fiscal mess isn't necessarily all about his reelection (which was my take). It's just that Obama can't do anything to fix the mess, so he acts like CEOs in troubled companies usually act.

The nation is facing some really difficult problems, particularly on the fiscal front. There's no longer any way to put it off; pretty soon, the government is going to have to start making some very hard choices about taxes and spending. No matter what it chooses, that probably means lower economic growth, angry voters, and some real loss on the part of whoever's ox is gored.

Listening to earnings calls means listening to quite a few CEOs in analogous situations.  Often, the situations they are in are largely not of their making, or indeed anyone's fault at all. But they are expected to fix it.  And too often, they can't, at least not yet. Think of Rick Wagoner, and the other managers at GM who knew they were on the road to disaster, but couldn't exit without the consent of stakeholders who weren't quite ready to believe it was necessary ...

It's not that Obama doesn't know how to fix the problems; I think that like most people in Washington, he understands the broad parameters within which the fixes will be carried out. But he can't make Congress do it before there's an actual crisis. And saying all of this is all too likely to trigger the crisis—a crisis he'd much rather would happen during someone else's presidency. [Emphasis added]

Doesn't this let Obama off the hook way too easily?
 
1)  The dude just sold us an expensive universal health-care program on the grounds that it was really a program of deficit-cutting entitlement reform (because it would "bend" the health-care cost curve)! Now that it's time for real deficit-cutting entitlement reform instead of fake reform, he throws up his hands and says, "Sorry, can't be done. I'll just tread water for a while."
 
2) Why can't it be done? Largely because of opposition in his own party. Even if Obama ultimately failed at, say, promoting a gradual increase in the Social Security retirement age, or means-testing benefits—or simply explaining that actually we really will need to get more revenue from somewhere to pay for universal health care—he could help educate Democrats and soften them up for what will probably be a necessity coming down the road. That would be a patriotic service even if he's not the person down the road who cuts the deal. But it might cost him some 2012 votes—especially since, by explaining the need to fund health care, he'd embarrassingly undercut the bogus sales pitch Democrats just made when they pretended passing the health-care bill was a painless long-term "curve-bender."
 
3) Is there nothing Obama could actually achieve that would at least diminish the deficit problem, even if it didn't solve the problem? Tinker with the cost-of-living increases of the rich? Raise the ceiling on the payroll tax by another $100,000?
 
4) What is the duty of a CEO anyway? McArdle acts as if GM's Rick Wagoner did nothing wrong by talking up his company even if he knew it was sliding toward bankruptcy. After all, the "stakeholders" (e.g., the UAW) weren't "quite ready" for the solutions! But if that is the situation, isn't it the duty of the CEO to sound the alarm and resign or threaten to resign? (Some of Wagoner's "stakeholders"—his shareholders—got creamed as the result of his inaction, don't forget.) In parliamentary systems there is a tradition of leaders resigning if their own party refuses to reform. I remember Felipe Gonzalez of Spain doing this when his Socialist Workers Party wouldn't abandon Marxism. The party caved and Gonzalez was subsequently returned to power and elected prime minister for four terms. Obama's foremost duty isn't to do nothing that might jeopardize his own election.

Nor would sounding the alarm itself seem likely to "trigger" a credit crisis. Are the credit markets that dumb? I would think they'd welcome a sign that an American leader was facing reality and at least preparing his electorate for action.

P.S.: And if Obama were to lose ... well, he's a relatively young man. He could run again. In the meantime a Republican president might actually fix the budget problem and make the country's finances safe for the Democrats ...
 
P.P.S.: Maybe Obama is just picking and choosing his battles. Having just run for office as a Democrat on a platform of opposing union power and opposing immigrant amnesty, I'm acutely aware of the need for politicians to limit the number of issues on which they will cross their base. Obama may be thinking, "I'm going to annoy a lot of my labor people with my education initiatives, which the teachers' unions hate. It would be too much to also pick a fight over Social Security." Clinton may have made a similar calculation when he conspicuously chose not to challenge affirmative action while he was also reforming welfare.

But Obama's situation isn't the same as Clinton's. Clinton had handed his party a huge bitter pill on welfare (after softening it up in advance, during the 1992 campaign). Obama's just given his base a huge victory on health care. He doesn't owe them. They owe him. And is his education initiative such a big deal that it justifies letting the nation drift into financial crisis? Maybe if it were bolder. But it isn't. If a few billion in anti-union "Race to the Top" grants is the full extent to which Obama thinks he can challenge his base, then he's too captive of his base ... (Hmm. Where else might he need to cross his base big time? Afghanistan. Maybe he knows something about the lack of progress in the war that we don't.) ... 6:57 p.m.

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What's Happening in General Motors Product Development? This Year's CEO at GM, Dan Akerson, has promoted the recent head of human resources to run this all-important division. Blogs are filled with complaints. It's very hard for an outsider to judge these gripes—obviously some the bloggers are going to bat for their buddies who have either been upset by Akerson's changes or are about to lose their jobs. But sometimes the CEOs that entrenched executives think are "misguided ... egomaniacal corporate opportunist[s]" really are misguided egomaniacal corporate opportunists.  If Akerson, as Peter De Lorenzo charges,

is quite certain that GM is spending too much time and money differentiating sheet metal between the divisional nameplates, when a little creative marketing would suffice

then I wouldn't want to bet on GM in the long run. GM has tried to use marketing to distinguish its brands before, and the result was a disaster. ... The new Buick Verano even has slightly different sheet metal than the Chevy Cruze from which it is derived—and it's still not different enough ... 7:27 p.m.

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Shameless Disgraceful Absurd Absurdity Watch: In the course of blasting Glenn Beck for his attacks on Columbia professor Frances Fox Piven, Time's Joe Klein writes:

But the notion that Piven's ideas had any widespread influence, or are even worth commenting on 45 years later, is beyond absurd; it is another case of Beck's show-paranoid perversity.

Hmm. Wasn't Piven's early work with the "community" organization Mobilization for Youth, alongside her future husband, Richard Cloward, the basis for much of Lyndon Johnson's War on Poverty? I think it was! That's the kind of influence maybe a handful of social-science researchers and theorists have in a generation, no? ... P.S.: I don't defend Beck. It seems to me his semi-apocalyptic rhetoric has the potential to justify violence. Many right-wingers who know him better than I do privately think he's a phony, which would mean that in his efforts to gin up his audience he's relatively uninhibited by conviction ... 8:39 p.m.

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