No Fighting in the Money Room

Reading between the lines.
March 3 2012 12:04 AM

No Fighting in the Money Room

Obama’s economic team failed—and still produced the best possible result.

Illustrated by Derf Backderf.

Illustration by Derf Backderf.

The moment when the economy seems to be turning around is perhaps not the best time to publish a book explaining why it took so long to get things right. Still, with his new book, The Escape Artists: How Obama’s Team Fumbled the Recovery, Noam Scheiber offers a persuasive take on administration policymaking, one in which there are no heroes and no villains, no fools, no saints, not even a clear road not taken. It’s a portrait of a team that failed in its responsibility to the country to avoid a prolonged and cataclysmic downturn, but did so under extremely trying circumstances—and still, arguably, produced the best possible result.

120228_BOOKS_theEscapeArtists
The Escape Artists: How Obama's Team Fumbled the Recovery
by Noam Scheiber
Simon & Schuster

That nuanced view comes, unfortunately, at the expense of drama. Unlike Ron Suskind’s more sensationalistic Confidence Men, Scheiber’s tale doesn’t have a single storyline to propel you through its pages. Different issues are faced, different coalitions of advisers emerge, and different choices are made for different reasons. On fiscal stimulus, Lawrence Summers was consistently to the left of Tim Geithner. On the Dodd-Frank bank regulation bill, their positions wound up reversed. But much earlier it was Summers who urged aggressive bank nationalization and failed to persuade the president to overrule Geithner. Christina Romer anchored the left flank of the team in demanding more aggressive action against unemployment, but by the same token was among the most skeptical about the wisdom of pushing for a major expansion of the welfare state in the middle of an economic crisis. Peter Orszag was just the opposite.

Perhaps the most revelatory detail Scheiber presents is that the most important member of the Obama economic team was Obama himself. There’s no one Svengali moving behind the scenes; there’s instead an authoritative portrait of a president and his efforts to balance competing considerations.

Time and again, many of those considerations turned out to be political. Administration economists had varying ideas about fiscal stimulus, but the conversation stopper was that “Emanuel and the other operatives were convinced that any stimulus approaching a trillion dollars was hopeless” politically. They may have been right.

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Later, contemplating the idea of boosting the economy with a big-picture fix for underwater mortgages, “Summers couldn’t shake the anxiety that the only way to solve the problem once and for all was to bite the bullet and spend $500 billion to $1 trillion bailing out homeowners.” But, again, feasibility reared its head. Austan Goolsbee, contemplating the same issue, “just didn’t see how the administration could pay a $750 billion price tag to fully address the problem.”

The longest thread in Scheiber’s narrative details the administration’s misguided, premature shift of focus off job-boosting stimulus and onto the budget deficit in 2010 and most of 2011. Scheiber especially chides Orszag for undue emphasis on the debt issue, but he ignores the fact that Orszag differed from others on the economic team in a fairly nuanced way—he favored stimulus paired with deficit reduction rather than two separate political and legislative tracks.

So why did the president spend most of his first term on a futile effort to secure a bipartisan deal on long-term debt, rather than focus on the short-term jobs crisis? Scheiber suggests that one factor was Obama’s own historical sense of mission. Told by Geithner that preventing a second Great Depression would be his signature accomplishment, Obama replied, “That’s not enough.” This determination to go big got the country health care reform but failed to deliver progress on climate change and left deficit reduction as a possible source of big-picture bipartisan compromise.

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