Harry Truman doesn’t live here any more!

MONDAY, JUNE 4, 2012

Bill Clinton’s remarkable text: In Paul Krugman’s new column, he notes how weak the reporting has been about our economic mess.

Beyond that, he says that “Obama’s political team” has done a poor job explaining this mess. Finally, he expresses a view about campaign strategy:
KRUGMAN (6/4/12): So why don’t voters know any of this?

Part of the answer is that far too much economic reporting is still of the he-said, she-said variety, with dueling quotes from hired guns on either side. But it’s also true that the Obama team has consistently failed to highlight Republican obstruction, perhaps out of a fear of seeming weak. Instead, the president’s advisers keep turning to happy talk, seizing on a few months’ good economic news as proof that their policies are working—and then ending up looking foolish when the numbers turn down again. Remarkably, they’ve made this mistake three times in a row: in 2010, 2011 and now once again.

At this point, however, Mr. Obama and his political team don’t seem to have much choice. They can point with pride to some big economic achievements, above all the successful rescue of the auto industry, which is responsible for a large part of whatever job growth we are managing to get. But they’re not going to be able to sell a narrative of overall economic success. Their best bet, surely, is to do a Harry Truman, to run against the “do-nothing” Republican Congress that has, in reality, blocked proposals—for tax cuts as well as more spending—that would have made 2012 a much better year than it’s turning out to be.
Warning! Krugman recommends an approach which worked for Harry Truman—in 1948.

We’re not experts on the public’s views in that distant year. Nor do we think there's an obvious winning play for Obama to make this year. (Krugman's suggestion may be the best.)

But uh-oh! By this year, voters may hear a term like “do-nothing Congress” in a new, different way.

For decades, voters have been told we’re better off when those crooks in the Congress do nothing. Approaches that worked for Truman—or for Ted Kennedy—may not work the same way today.

Regarding Kennedy, we’ll guess there were few Democratic complaints when he attacked Mitt Romney’s conduct at Bain Capital during Campaign 1994.

Eighteen years later, everyone from Bill Clinton on down has jumped on Obama for the same play. The political landscape has been changing, sometimes not in good ways.

For our money, the text of Bill Clinton’s statement on Bain is one of the most remarkable texts we’ve seen in our years at this site.

Did Romney engage in the type of “looting” Bill Clinton described? Plainly, you’re not allowed to ask! See THE DAILY HOWLER, 6/1/12.

Note to Obama’s political team: Harry doesn’t live here any more. So too, as you've already seen, with winning approaches by Ted.


  1. Well, you don't have to use that dated term. It wouldn't be accurate anyway. The house is passing all kinds of shit. But you can emphasize that Republicans in both houses are obstructing bills that they were once for; voting against ideas they came up with. And why would that be? Perhaps as McConnell said, their No. 1 priority is to make Obama a one term president and to hell with the peoples needs and the state of the economy. Framed and executed properly, it could be an effective approach to independents.

  2. I agree that Republican obstructionism has been a huge problem. But the thing about campaigning on this issue is that it amounts to saying "the Republicans kept me from getting anything done. Elect me again so they can continue keeping me from getting anything done." Obama is damned if he does and damned if he doesn't.

  3. Depends on how effectively you argue the point. People seem to hate Congress as a Thing (as opposed to their rep, who is often O.K.) and it's hard to bum rap it. I think some commercials with Rush Limbaugh in his revolting post election appearances, then cut to McConnell, and you remind people of the kind of unpatriotic scum Republicans actually are. When it was THEIR turn to come together for the good of the Country (as the Dems had after 9-11) we got the middle finger. But we don't have the stomach for such straight talk and TDH doesn't like it when we say mean things about the Tea Party.

  4. The literal 1948 approach won't work, as you say, but building a strong case for the action that needs to be taken -- ending the neglect of our infrastructure, putting millions to work doing real work that the country needs and earning income to spend and put millions more to work -- and explaining succinctly why and how it is the only solution to our current doldrums, followed by correctly blaming Republicans for blocking the necessary action so they can tank the economy and gain political wins, has a chance. It does, after all, reflect reality accurately.

    1. And part of it has to be a call to throw Republicans -- every last one of the bastards -- out of Congress, and out of every other national and local office for that matter. Either do that, or let things continue as they are with nothing that could help the economy and put people back to work getting done.

  5. No, Bain didn't engage in looting. Here are 6 reasons why:

    1. No prosecutions.
    2. No lawsuits.
    3. No contemporaneous accusations of wrongdoing.
    4. No mistreatment of employee funds.
    5. Bain had a sterling reputation, because it succeeded in saving with most of the troubled companies it took on.
    6. No quick profit for Bain. On the contrary, they spent 8 years trying to save this steel company.

    1. Also, we know no banks committed perjury and fraud in their several separate robo-signing conspiracies because there have been no prosecutions and Jamie Dimon has a sterling reputation everywhere in David in Cal's house. It's a QED thing, if I have to explain it to you further, you're not going to understand what I'm saying. Instead, "Trust me on this." (That last quote is Wall Street speak for F.U.).

  6. I don't think Obama can successfully run against a "do nothing" Congress, because I don't think the public buys into his recovery plans. IMHO we've had a sustantial "stimulus" every year of Obama's Presidency.

    What is "stimulus"? It's when the federal government borrows money in order to spend more than they take in. Well, for each fiscal year 2009 - 2012, the federal deficit has been around $1.3 trillion. Thus, we've had $1.3 trillion of annual stimulus.

    President Obama recommends another $400 billion of "stimulus". That would simply push our deficit up from $1.3 trillion to $1.7 trillion. It takes a lot of faith to believe that a $1.7 trillion deficit would fix our economy, when four years of $1.3 trillion deficits haven't done the job. On the contrary, I think a lot people are worried that deficits this high continued too long will lead to economic problems.

  7. Din C
    There are none so blind as those who WILL not see.

    "What is "stimulus"? It's when the federal government borrows money in order to spend more than they take in."

    Only a true simpleton would keep characterizing Keynesian economics in this fashion.

    Spare us all and keep your voodoo economics to yourself from now on.


    1. No, it's when the government either increases its spending to create more jobs directly, or gives tax reductions that are likely to be spent to increase demand indirectly. Except for already legally mandated payments that are triggered by unemployment. This shortfall comes from a massive revenue shortfall started by Bush's tax cuts for the wealthy that, because they are saved and played with rather than spent, have minimal stimulus effect, reinforced by two wars with minimal stimulus effect, and topped off by a huge recession. A deficit in and of itself is not stimulus, and I don't think Keynes (or Krugman or other of your betes noire) ever said it was.

  8. gravymeister -- In its discussion of Keynesian economics, wikipedia writes, "Fiscal stimulus (deficit spending) could actuate production." Evidently wiki considers "fiscal stimulus" to be synonymous with "deficit spending."

    I grant you that there's a theory that if the additional spending goes to certain "shovel-ready" projects, it could have a greater stimulative impact. However, I have no confidence that a new stimulus would be allocated that way. Obama's first stimulus wasn't. Instead the money mostly went to groups that had supported Obama, such as state government employees.

    1. The state government employees had jobs that, when the income was spent created more jobs. Whether 58% (or whatever percentage you want to pick) of those jobholders may have supported Obama is quite irrelevant. A huge number of those jobs, because there is no longer any Federal help for weathering a national crisis not caused by the states, are now gone. Net, net, there has been no stimulus because state austerity has offset any increases in Federal spending.

      Since when is Wikipedia the final word on the meaning of Keynesian economics?

  9. According to David, every Republican president we've had has been a great Keynesian stimulator -- every one of them presided over great deficit spending.

    In other words, David doesn't know what he's talking about, but hopes keeping it dumb works to sell his ideas.

    The question of whether government spending is a net stimulus of course is not so idiotic as David pretends.

    To begin with, one needs to know what state governments have done as well, since much federal spending (or contraction) is part of state budgets.

    One also needs to consider not merely *levels* of spending, where idiots can pretend that big numbers should be scary -- but the relation of those levels to other numbers such as GDP.

    Finally, the question of "stimulus" cannot be answered without asking whether the spending in question simply replaces spending that has been destroyed by temporary factors (such as increased unemployment payments, which far from being "stimulus" to the economy, merely offset the loss of spending due to joblessness) -- or whether it is in fact new project spending.

    The answers to these questions do not make David-in-CA look like a very smart fellow, more like a fool or a charlatan.

  10. Swan, maybe I'm too dumb to understand the full intricacies of "stimulus". I confess that I've never been over-impressed with complexity per se. In my professional career I rejected a number of highly complex vender-created models that I considered fundamentally unsound. I never had a reason to regret passing on those models.

    It's one thing to create a complex theoretical structure. It's another thing for it to actually work. E.g., the President's economists told us that if Congress passed Mr. Obama's stimlus package, the unemployment rate would be 5.7% today. It's actually 8.2%. Presumably the President's economists took into account all the details mentioned by Swan. Yet, they got it totally wrong.

    Or, consider the complex global climate models of the 1990's. They all predicted temperatures many degrees higher than we're actually experiencing today. Despite their impressive complexity, they got it wrong.

    1. When I think what it would take to inhabit your mind, DiC -- dividing as you so generously do the world into producers and parasites, convinced that global warming is a left-wing hoax because it's so much cheaper for the interests you love so much, persuaded that Obama's a socialist, that voodoo economics is the road to prosperity despite 30 years of evidence to the contrary, and (last but not least) that the economy simply must, above all, serve the interests of rentiers like you -- a sort of sickness comes upon me.

      It's true enough that we're all miserable in the end, but your particular hell of resentment, anger and self-serving delusion doesn't bear thinking on.

      How's that for a sneering liberal?

    2. "Swan, maybe I'm too dumb to understand the full intricacies of "stimulus". I confess that I've never been over-impressed with complexity per se."

      And there you have it, a self-confessed simpleton.

      David, the universe is complex.

      Handle it.

    3. Here's the problem, gravymeister. How do you evaluate model that too complex for you to personally understand? Do you simply trust the experts? And, what do you do if there are experts on all sides, as is common in political issues?

      IMHO when the federal government runs $1.3 trillion deficits year after year, that's pretty much a type of stimulus. No doubt the factors mentioned by Swan matter to a degree. However, the deficit as been so large that I'm pretty confident that even after adjusting for these factors, the huge deficit would still be a substantial stimulus.

      Furthermore, Mr. Obama evidently agrees with me. He chose to continue the Bush tax cuts, because raising taxes (thereby lowering the deficit) would have depressed the economy.

      Note how Swan used complexity as an excuse to reject something he didn't want to accept. Swan pointed out that equating deficit with stimulus ignored a bunch of factors. However, Swan didn't then check to see whether accounting for those factors would undo the stimulative impact of the deficit. He simply pointed to complexity and claimed that it proved his point.

    4. David, I assume you're worried about burning through your free clicks to the NY Times this early in the month and didn't read the Krugman piece linked to in the parent post. Here's a passage:

      What do I mean by saying that this is already a Republican economy? Look first at total government spending — federal, state and local. Adjusted for population growth and inflation, such spending has recently been falling at a rate not seen since the demobilization that followed the Korean War.

      How is that possible? Isn’t Mr. Obama a big spender? Actually, no; there was a brief burst of spending in late 2009 and early 2010 as the stimulus kicked in, but that boost is long behind us. Since then it has been all downhill. Cash-strapped state and local governments have laid off teachers, firefighters and police officers; meanwhile, unemployment benefits have been trailing off even though unemployment remains extremely high.

      Over all, the picture for America in 2012 bears a stunning resemblance to the great mistake of 1937, when F.D.R. prematurely slashed spending, sending the U.S. economy — which had actually been recovering fairly fast until that point — into the second leg of the Great Depression. In F.D.R.’s case, however, this was an unforced error, since he had a solidly Democratic Congress. In President Obama’s case, much though not all of the responsibility for the policy wrong turn lies with a completely obstructionist Republican majority in the House.

      That same obstructionist House majority effectively blackmailed the president into continuing all the Bush tax cuts for the wealthy, so that federal taxes as a share of G.D.P. are near historic lows — much lower, in particular, than at any point during Ronald Reagan’s presidency.

      As I said, for all practical purposes this is already a Republican economy.

      In FDR's defense, back in 1937 WWII was still in the future so the Keynesian prescription for what a government should do, when faced with an economy suffering from high unemployment despite its central bank having lowered its interest rates to near zero, had yet to be demonstrated irrefutably to be the right one.

      The right-wing can keep running these austerity experiments here and abroad but you'll keep getting the same failed results. Then again, if the actual right-wing objective is to make the wealthy more financially, politically, and socially powerful in a relative sense vis a vis the rest of the population then a prolonged economic slump works out just fine in accomplishing that.

    5. David in Cal, as he presents himself here, has said more than once that his concern, as the retired actuary he claims to be, is for the stable dollar value of his investments.

      So, for all DiC cares, the young and indigent can go to hell -- the only important thing is to keep inflation at 2% or less, so DiC's investments don't any lose value, whatever that policy may cost the rest of the population. Besides, folks who still work for a living are, unlike DiC, "parasites".

      One suspects the "Disaster Capitalism" model is also in play in DiC's generous mind, because anyone who repeatedly insists that distressed or under-valued companies "hire" LBO vultures is quite obviously trying to deceive. (Nobody could be so stupid to actually convince himself that distressed or undervalued companies go out and recruit firms like Bain to saddle them with debt and (in many cases) script them bare of assets.)

    6. The last word;
      David, I majored in economics at The American University in Washington, DC, a school well know for government studies.
      I worked 2 years in consumer finance, followed by 6 years in Wall Street brokerage firms.
      I read many books on economics, history, and finance during that time, and I still do.
      What you consider to be hopelessly opaque, I find to be challenging, but penetrable.

      BTW. I have been an avid student on science since I learned how to read, and the science of global warming is not a mystery to me.

      Just because you neglected your education does not mean everyone else has done the same.

      Better men than I have attempted to explain some fundamental principals of economics to you, to no avail.

      You have accepted the fact that your knowledge is limited, and explained why you are unable to expand it.

      So stop arguing with people that DO understand what they are talking about.

      Of course, if you enjoy being piled upon, don't change.

  11. Anon 8:16 -- high inflation is bad for everyone. Food and fuel inflation from the last couple of years are already hurting the middle class.

    You say, "Nobody could be so stupid to actually convince himself that distressed or undervalued companies go out and recruit firms like Bain." Do you have a cite or any evidence that distressed firms don't recruit Bain? Perhaps you're conflating Bain with corporate raiders.

    CMike -- Krugman claims that total government spending has been falling very rapidly. He provides no figures, so we can't directly verify his analysis.

    We can do a simple-minded, back-of-the envelope calculation. Federal spending at the end of Clinton's terms was around $2 trillion. At the end of Bush's terms, it was around $3 trillion. Today, it's almost $4 trillion. Given these actual figures, I don't understand Krugman's claim.

    1. And here I though, David in Cal, it was unemployment and low wages which were hurting the middle-class. No wage growth over the last 30 years, falling wages, and a real unemployment rate of well over 10%, but it's inflation which is the problem!

      Amazing also, isn't it, that productivity has shown huge gains over the last 30 years, but wages have barely moved up at all and, in some cases, actually decline? Except, that is, for the spectacular gains at the very top.

      As for the philanthropic activities of Bain Capital -- can you present a single example of any target firm "hiring" Bain Capital to take itself over, via (of course) government-subsidized leveraged-buy outs?

    2. David in Cal rest assured Paul Krugman is forever willing to bury the reader in data, it's just that he can't work in a lot of statistical backup when writing a 750 word column. Here's a recent blog post at Conscience of a Liberal wherein he graphs data points that show that, while the economy is performing at about 6% below a full employment level, government spending as a percentage of GDP, has grown only 1% or less since the beginning of the '07 recession.

      When he says he's taking a "first stab" at this Krugman means it's the first time he has plotted these particular ratios. He's been discussing dollar aggregates and other ratios right along for the last several years.

      As to your "simple-minded, back-of-the envelope calculation" Krugman puts that in context, and I, myself, will mention that what's relevant when analyzing government expenditures is the combined local, state, and federal totals, not just federal totals. Here Krugman makes an on point comment about the increased federal spending to which you referred, although in this instance he is considering a shorter time frame than you reference [my emphasis]:

      >>>>>A quick note on what has happened to the level of government spending since the economic crisis began.

      Of course it has risen — we have a growing economy (usually) and a growing population, and you expect spending to rise even if the role of government remains unchanged. The question is how it has changed relative to some unchanged-role-of-government baseline.

      The chart below makes a first stab at such a calculation, but requires some further comment; when all is said and done, the role of government hasn’t actually grown.<<<<<

  12. Anon 10:26 Wikipedia makes it clear that troubled firms engaged Bain. Note the discussion of how Bain would win work -- i.e., how they sold themselves to the company/client:

    Notably, Bain & Co. would only work with one client per industry to avoid potential conflicts of interest.[5] Partners did not carry business cards and clients were referred to by code names, further demonstrating its reputation for enforcing client confidentiality. The company preferred to win work by boardroom referrals rather than marketing itself, sometimes landing clients by offering several weeks of work at no cost until proving the results of its services. Bain consultants preferred to work on increasing a company's market value rather than simply handing clients a list of recommendations.[6] To win business, Bain demonstrated the increase in stock price of Bain's clients relative to the Dow Jones Industrial Average.[7]

    I agree with you that the middle class has been hurt by flat wages and high unemployment, as well as high food and fuel inflation.

    1. It's not inflation that killed the middle and lower classes (ie, 99% of Americans) -- it's the FACT that ALL of the wealth from the HUGE productivity gains of the last half century has gone to the richest rather than the rest of us.

      That was a change in our society and one we have to reverse.

      Everyone used to benefit from productivity gains. That hasn't been true recently. Now it all goes to the richest.

      Inflation isn't the reason. At all.

    2. What you don't say, David in Cal, is that the paragraph you quote refers to Bain Capital's activities in the 1970s ("early days"), and doesn't refer to its LBO acquisitions, courtesy of Mitt in the 1980s.

      For example, if we believe you, GSS "hired" Bain to become the sole owner of the company, to put hundreds of millions of unsustainable loans on its own books, to take a 20% management fee out of those loans for its own incompetent management, and to remove at least $12 million additional out of the company, and out of the pockets of the workers, before the company failed under Bain's own very pricey management, but at no expense to Bain Capital.

      If this is "hiring", where can I apply?

  13. Shorter David:

    I prefer to ignore the facts -- I can more easily maintain my views by dismissing the facts as "too complex."

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