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

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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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153 Comments

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skep41

What an arrogant thing to say! The meaning of 'never waste a crisis' is that the Left is happy to have a crisis, as severe as possible, so that they can herd desperate, frightened people into agreeing to things they never would have considered when times were good. It is a confession of complete moral bankruptcy; the moral bankruptcy of every self-important social engineer. These geniuses have a whole raft of plans they intend to inflict upon us for our own good, we're just too ignorant and reactionary to know what's good for us. If us ignorant and reactionary Americans really know what's good for us we will go to the polls this November and vote against EVERY Democrat, no matter how much they lie about how 'moderate' they are and how 'extreme' their opponent is, and show that pack of liberals the contempt we have for their bullying and their incredible incompetence. We need to be free of people who think they can brag happily about pushing the rest of us around.

September 04 2010 at 7:21 PM Report abuse +4 rate up rate down Reply
sysaphus71

Ok I says God bless Obama...but not for the reasons you might think. If this country is EVER going to reclaim what IS EXPECTED OF IT, then this social justice ,equal amount of stuff for all tripe has to be put down like a sick dog. Individuals, not collectives(unions) accelerated this country to the forefront and the top of the food chain. This administration is filled to the brim with educated(or so they think) eggheads who have to call in an electrician to change a light bulb. They are and remain the bain of this country's existence. The one and only thing this country can do to help itself is to elect those who have actually accomplished something meaningful ...Like start a corporation or run a company or managed a project of importance.....otherwise all you are getting is a Washington clock watchers who live to suck off the taxpayers to push around paper. Unless you has shown some kind of accomplishment in the real world ....no need to apply...we cannot endure tenured academics whose existence is dependent or a pseudo -intellectual publication that has little or no bearing to the immediate concerns of the nation. You can right all the research papers you want , just don't plan on running anything that has to do with the realities of today and the real world. The example of this is this administration...no experience and lots of theory and real good at spending other peoples money

September 04 2010 at 12:24 PM Report abuse +10 rate up rate down Reply
jkennedy806

Yup the crisis was JOBS, the glub glub of good paying secure employment for American workers was at that time 8% in 2007. Rmember IN NOVEMEBER. In addtion, 9/11 is fast approaching -- put your flag out in rememberance.

September 04 2010 at 12:11 PM Report abuse +3 rate up rate down Reply
srswofford

"Never let a crisis go to waste." Not a bad idea if you don't ignore the crisis

September 03 2010 at 4:09 PM Report abuse +16 rate up rate down Reply
boredwell

Had McCain won would there have been any different outcome? Well, certainly, there would have been no healthcare reform. However, the prevailing economic conditions were a critical mass, the cumulative effects of years, if not decades, of government deregulation, SEC and Treasury's failure to maintain effective oversight, a financial market making its own free-for-all laws including patently dangerous investments. Those calling for reform, sounding the alarm remained distant voices in the dark. So, yes, the president will be blamed and held accountable for a structure that needed-and still needs-to be drastically amended and more strictly, intelligently, fiscally regulated. The GOP should be equally held accountable for stalling and rewriting both TARP and the Stimulus package. Remember, it was the GOP that protested the administration's proposal to extend of unemployment benefits to those out-of-work Americans whose 16 weeks of benefits were due to expire. The GOP also wants to give business more tax cuts to stimulate job creation. Most economists have noted that this will do little to help Americans but much to inflate the bottom line of industry, banking and corporations that will use the cuts not as incentives to expand and reinvest and hire more workers but to provide a cushion that will enable them to comfortably ride out the recession. I do believe, though, that Mr Emmanuel's "mantra" elides the complex reality of any given crises. Crises are the result of long-term problems. Though Mr Emmanuel may remain hopeful that crises "provide the opportunity for us to do things that we could not do before" that hope has proved to be disproportionate to the severity of these seemingly intransigent crises.

September 03 2010 at 3:25 PM Report abuse -16 rate up rate down Reply
2 replies to boredwell's comment
wfischl

Do you miss bush yet

September 03 2010 at 4:46 PM Report abuse +20 rate up rate down Reply
jkennedy806

If the concentration was on job creation right from the get go -- the unemployment benefits about to expire would have been a non-issue. You can't put a band -aid on a bleeding gusher. Yes, there were so long-term problems, however, this administrtion is missing the opportunity afforded to them by the American public to fix the problem also. The Constitution is not an instrument for the government to restrain the >people, it is an instrument for the people to restrain the >government." Patrick Henry

September 04 2010 at 12:14 PM Report abuse +2 rate up rate down Reply
Amy

Wow, put a dem in office and watch the wealthy worry. Everyone's willing to bash and throw him out without so much as take a wait and see how things go. Could he have done better in terms of getting people back to work.. yes ---- the economy would progressivley get better. But without people those "haves but could use more's" back to work you might as well deal with the fact that it takes time. Oh wait... Obama is really God and he will magically make things right in in two years... give me a break! Imagine: the amount of time it took us to get into this mucked up mess so it will equally take that much time to get it back on track. He's not prefect but his on the job learning will make him better. Do I like my taxes going up? hell no! but you need to invest in order to see investments coming out. So tell me.. he invested all this money - where is it? because the banks and companies sure as heck arent bringing people back but sitting on a nice stockpile..

September 03 2010 at 2:52 PM Report abuse -30 rate up rate down Reply
1 reply to Amy's comment
allisonisa39e

He got pretty much everything he asked for. How many years should we wait to see how things go; I suppose you think 6 more years to see if he did the right thing. It is to bad, he seems like a nice guy to share a beer with out on the back lawn. If you let the people get on with it without overwhelming them with taxes and red tape they will work it out.

September 09 2010 at 8:12 AM Report abuse rate up rate down Reply
jaguar6cy

The liberal and democratic economic model dictates that when in a severe business slowdown, the solution is to: increase the cost of health insurance to business, increase taxes on business, increase regulation on business, promote the growth of unions, increase taxes on investors and increase taxes on investment profits. Any one of these actions will reduce growth, jobs and hiring. They decided to employ all of them. They didn't waste this crisis; they guaranteed its continuation and its expansion. Are you still a liberal? Why?

September 03 2010 at 2:26 PM Report abuse +29 rate up rate down Reply
borodinrodin

Thanks Harvey! We're told: Transparency we get the opposite. Wall Street Reform Bill is a great example of "never let good crisis go to waste". See provision 9291 buried within 2,253 pages Dodd-Frank Wall St Reform and Consumer Protection Act. Allows SEC to deny inquiries from taxpayers! The bill hands the SEC the power to NOT "disclose records or information that are typically allowed in accordance with Freedom of Information Act requests." This from the same organization that buried information on Bernie Madoff despite a former employee, Harry Markopolos, blowing the whistle on Madoff to SEC regulators in 2000! Health Care's 1300 pages of UNREAD bill rammed through yet when people given chance to vote on it (Missouri) it gets trounced by "the people" 3 to 1. Example, it had a provision that would have required all businesses to file a 1099 Form to the IRS for any transaction over $600! Fortunately the Republicans killed this provision on July 30th. "Illegal" immigration ignored UNTIL Arizona takes action to enforce the current FEDERAL law that the administration does something (partisan politics to curry favor with a potentially large new voter block). When "The people" get a chance to vote on it, the people vote 4 to 1 against the administration. Seems the Obama admin doesn't really care that much about Narco - Human Trafficking if it can mean more votes. And YES the Republicans do the same thing, Bush with the so called "Patriot Act", and the Homeland Security and TSA expansion. Clinton did it after OKC bombing, it's the same old power grab by politicians. Both parties are culpable.

September 03 2010 at 2:19 PM Report abuse +20 rate up rate down Reply
Ken McFarlane

The Dems are on their death bed and will be buried and gone on Nov. 02 2010 by the American voter. Funny thing though... They do not even think they are sick!

September 03 2010 at 2:17 PM Report abuse +37 rate up rate down Reply
beltanefires

What an article....obamas "sweeping passage of things culminting with the health care bill" these were not passed..they were RAMMMED DONW OUR THROATS

September 03 2010 at 2:17 PM Report abuse +36 rate up rate down Reply

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