Is GOP's Default Talk Slowing Recovery?
Michael Barone is one of the smartest and most even-tempered observers in Washington.
In today's D.C. Examiner he offers his answer to the important question, why is the economy so weak?
He blames the Obama administration both for bad public and - maybe even more - for dangerous political posturing.
On April 13, Barack Obama delivered a ballyhooed speech at George Washington University. The man who conservatives as well as liberal pundits told us was a combination of Edmund Burke and Reinhold Niebuhr was widely expected to present a serious plan to address the budget deficits and entitlement spending.
Instead, the man who can call on talented career professionals at the Office of Management and Budget to produce detailed blueprints gave us something in the nature of a few numbers scrawled on a paper napkin.
The man depicted as pragmatic and free of ideological cant indulged in cheap political rhetoric, accusing Republicans, including House Budget Committee Chairman Paul Ryan, who was in the audience, of pushing old ladies in wheelchairs down the hill and starving autistic children.
The signal was clear. Obama had already ignored his own deficit reduction commission in preparing his annual budget, which was later rejected 97-0 in the Senate. Now he was signaling that the time for governing was over and that he was entering campaign mode 19 months before the November 2012 election.
People took notice, especially those people who decide whether to hire or not. Goldman Sachs' Current Activity Indicator stood at 4.2 percent in March. In April -- in the middle of which came Obama's GW speech -- it was 1.6 percent. For May, it is 1.0 percent.
"That is a major drop in no time at all," wrote Business Insider's Joe Weisenthal.
After April 13, Obama Democrats went into campaign mode. They staged a poll-driven Senate vote to increase taxes on oil companies.
They launched a Mediscare campaign against Ryan's budget resolution that all but four House Republicans had voted for. That seemed to pay off with a special election victory in the New York 26th congressional district.
The message to job creators was clear. Hire at your own risk. Higher taxes, more burdensome regulation and crony capitalism may be here for some time to come.
Personally, I'm not very convinced of the "business confidence" theory of the weak recovery.
I would myself lay much more emphasis on economic factors like: (i) the continuing destruction of American consumer wealth as housing prices deflate; (ii) the burden of rising oil prices; (iii) the collective decision of American consumers to increase their saving by 6 points of personal income - a laudable decision, but one that subtracts a lot of demand from the economy.
But if I were a believer in the business confidence theory, here's the counter-question I'd put to Michael Barone:
Which is more likely to subtract from business confidence: a lame speech by the president - or a highly credible and sustained threat by the majority party in the House of Representatives to force a default on the debts, contracts, and other obligations of the United States?