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Rahm Emanuel's Misguided Mantra: 'No Crisis Should Go to Waste'

4 years ago
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During the heady days after the 2008 election, as Democrats basked in their Wordsworth moment ("Bliss was it in that dawn to be alive"), Rahm Emanuel embodied the governing philosophy of the new administration.

"No crisis should go to waste," Emanuel told the Washington Post for its post-election edition, stressing that he was speaking for himself as an Illinois congressman -- and not Barack Obama. Two weeks later, having been named White House chief of staff, Emanuel gave his mantra the presidential imprimatur as he told a conference of business leaders organized by the Wall Street Journal: "You never want a serious crisis to go to waste. . . . Things that we had postponed for too long, that were long-term, are now immediate and must be dealt with. This crisis provides the opportunity for us to do things that you could not do before."

Rahm Emanuel, President ObamaNow with the glub-glub economy going down for the third time and almost certainly taking congressional Democrats with it, Emanuel's aphorism about the can-do benefits of a crisis seems more likely to make the Hubris Hall of Fame than the next edition of "Bartlett's Familiar Quotations." At minimum, with the benefit of hindsight, it should be rewritten as "No crisis can fester for two years without dire political consequences."

It is no secret that early on the Obama economic team misjudged how high the unemployment rate would soar -- and how intractable the crisis would become. In contrast, Nobel Prize-winning liberal economist Paul Krugman presciently warned in a New York Times column written just after the 2008 election, "Democrats won big last week -- but they won even bigger in 1936, only to see their gains evaporate after the recession of 1937-38. Americans don't expect instant economic results from the incoming administration, but they do expect results, and Democrats' euphoria will be short-lived if they don't deliver an economic recovery."

During the transition period in December 2008, the incoming administration warned that the jobless rate (then at 6.5 percent) would jump to 8 percent unless Congress immediately passed a stimulus package. Instead, we got both a stimulus and double-digit unemployment. As White House economic adviser Larry Summers conceded in a July 2009 interview with Politics Daily, when the jobless rate was already at 9.5 percent, "What's noteworthy about this recession is that GNP over the last six months has been only marginally worse than people expected it would be in January, while we are experiencing higher than expected unemployment."

Jonathan Alter's recent book, "The Promise: President Obama, Year One," offers the best account so far of the early internal Obama deliberations over how to ward off a deep recession. Read in the light of the current dispiriting outlook, these debates within the economic team give off a whiff of Rebecca of Sunnybrook Farm innocence. As Alter tells it, veterans of the Clinton administration would marvel that they were considering $700 billion-$800 billion in stimulus spending when they used to be arguing over $20 billion appropriations.

Obama loyalists argue with some justice that the votes were never there in Congress to approve a larger stimulus even if the White House had believed (as economists like Krugman did) that $787 billion was insufficient to jump-start the economy. Getting the legislation past a Senate Republican filibuster required protracted negotiations and compromises with GOP moderates Olympia Snowe and Susan Collins of Maine.

Perhaps a larger problem than the dollar figure was that the stimulus was never structured to be spent nearly as quickly as the fast-worsening unemployment rate required. As Alter points out, "The president-elect's lack of experience in the bowels of the federal bureaucracy didn't help." Even Obama himself later admitted that "one of the biggest lies in government is the idea of 'shovel-ready' projects."

Obama never truly embraced the stimulus bill -- even though the future of his presidency and the Democratic majority in Congress may well have depended on it. Instead of the standard White House ceremony, Obama signed the February 2009 legislation in Denver. The president spoke far too optimistically about "the beginning of the end -- the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs." But Obama also burbled about all the economically irrelevant benefits in the bill like building "a newer, smarter electric grid" and the "biggest increase in basic research funding in the long history of America's noble endeavor to better understand our world." (My colleague Jill Lawrence has reached a different and more positive conclusion about the structure and lasting value of the stimulus).

Obama has often spoken with frustration about his failure to receive enough credit from either the media or the voters for his long string of landmark legislative victories climaxing with health-care reform. But maybe the president's fatal error was that he saw the 2008 election as a mandate for far-reaching change when, in truth, it was a narrower political rejection of Bush-administration economic and military policies.

In 1943, Franklin Roosevelt memorably announced at a press conference that old "Doctor New Deal," an internist, had been supplanted by a new surgeon, "Doctor Win-the-War." With an approval rating hovering around 45 percent, Obama might have done better so far in his presidency if "Doctor Do-Everything" had handed over his scalpel to "Doctor Fix-the-Economy."

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