Barack Obama needs Warren Buffett more than Buffett needs Barack Obama.
During the presidential campaign, Barack Obama regularly name-checked the world's richest man. "I've got a friend, Warren Buffett," he would say before talking about how the two of them agreed on tax policy. Buffett was perhaps Obama's most powerful "validator," an unfortunate political term for a supporter whose unassailable credentials in a particular area make people feel good about a candidate's slim credentials in that area.
Obama could use a little Buffett validation right now as he seeks to bolster investor and consumer confidence about the plans he has enacted and the plans he has yet to unveil. He didn't really get it Monday as Buffett gave his views on the economic crisis during a lengthy interview on CNBC. Buffett made a broad critique of the politicians in Washington. And while he called out Republicans for being obstructionist, his most specific remarks were aimed at congressional Democrats and the president. "I think that the Democrats—and I voted for Obama and I strongly support him, and I think he's the right guy—but I think they should not use this—when they're calling for unity on a question this important, they should not use it to roll the Republicans." He also said it was unproductive to blame the Bush administration and use the crisis to get funding for "pet projects."
White House Press Secretary Robert Gibbs could not dismiss Buffett as quickly as he has other administration critics. Nor could he point out, as other Democratic strategists did to me on the phone, that Buffett isn't what he used to be. Buffett made a lot of bad calls in the recent economic crisis, as Buffett himself admitted, both in the interview and in his annual letter to shareholders. (Sample: "During 2008 I did some dumb things in investments.")
In prudent fashion, Gibbs embraced only part of Buffett's critique, saying Obama agreed with his frustration with the political process in Washington and his call for bipartisan cooperation. (Tuesday, he didn't take the opportunity to note that despite Buffett's remarks, the Dow went up almost 400 points.)
Buffett wasn't trying to assign blame. He was calling for focus, most of all from President Obama as the communicator-in-chief. A lack of communication, says Buffett, is at the heart of the economic problem. "We've had muddled messages," he said, "and the American public does not know. They feel they don't know what's going on, and their reaction is to absolutely pull back. … How fast we get [to better economic times] depends enormously on not only the wisdom of government policy but the degree in which it's communicated properly." (Buffett's own attempts at communication included repeatedly referring to the current economic crisis as a war and drawing elaborate analogies to the attack on Pearl Harbor.)
It's not as if Obama hasn't been trying to educate the country. He does it often in speeches and on the road. He did it at the start of his prime-time press conference and in his address to Congress. His economic advisers have also been speaking to think tanks and television news shows. Polls suggest Buffett is wrong: People feel good about what they're hearing. Some 41 percent of those polled say the country is on the right track, the highest that number has been in five years. In a recent Wall Street Journal/NBC poll, 56 percent said they approve of the job Obama is doing in handling the economy, while 59 percent gave their approval in a Quinnipiac poll. They approve of his economic policies, including his budget. In a CNN poll, 80 percent said they believed Obama's policies would improve the economy. When he spoke to Congress two weeks ago, people told Gallup they felt more confident. Even Obama's plan for housing gets support: While people think it unfairly benefits those who behaved badly during the housing bubble, a plurality nevertheless believes it will work.
But, Buffett would probably say (he wasn't available for an interview), those polls are misleading. To see whether Obama has really changed the economic climate, watch how people behave. People are nervous, and they're not spending. Since the stimulus bill passed, the consumer mood has not improved. Obama obviously worries about what Buffett is talking about, too, because he's been repeatedly making efforts to boost the market in public confidence. He suggested it might be time to get into the stock market, and in an interview with the New York Times last week, he urged Americans not to "stuff money in their mattresses," and tried to bolster confidence: "I don't think that people should be fearful about our future," he said. "I don't think that people should suddenly mistrust all of our financial institutions."
Whether Buffett is right and Obama needs to communicate more effectively to unlock the economy, the president also has other reasons to improve his pitch. He's got to convince people that his stimulus bill is working, and he may have more big spending requests to make—for another bank bailout or maybe for a second stimulus bill. He's got to make the case for his budget, which the chairman of the Senate budget committee says doesn't have the votes at the moment.
If Obama still puts as much stock in his friend Warren as he did during the campaign, he'll work even harder to educate the country and show he's doing everything he can to improve the economy. In the CNBC interview, Buffett repeatedly referred to FDR and the spirit of fellow-feeling in the nation during his presidency. So perhaps we'll soon see President Obama at the fireside, talking about his solutions to the country's economic woes. Maybe the president can even mention in these fireside chats how often he talks and listens to his good friend Warren Buffett.