I participated in the White House Blogger conference call today, as a stand-in for the traveling Yves. The call was run by Jason Furman, the deputy director of the National Economic Council, who provided a brief recap of President Obama’s speech earlier in the day. The stated purpose of the call was to emphasize the importance of the Administrations three economic initiatives: a R&D tax credit, a $50 billion infrastructure investment and change in the tax code to all businesses to frontload their deductions for capital investments. Mr. Furman emphasized that the Administration had been working hard from the outset to bolster the economy and that these initiatives were a stark contrast to the “failed policies” of the past administrations. His prepared remarks were less than five minutes long and then he opened the call to questions.
While I appreciate the Administration’s efforts to broaden the reach of their communication, I must confess to feeling a bit let down by the presentation. As with prior initiatives with this administration, it was preceded by various rumors of potentially bigger, more game changing proposals, which failed to materialize. In addition, both the President’s speech and the presentation on the call seemed to be more concerned with the politics of the debate, rather than the realities of the economy. Even I, a relatively passive observer of Beltway politics, was able to detect a that the economic initiatives, the President’s press conference and the Blogger Conference Call were aimed more at influencing the election in November than they were at having an impact on the economy.
In fact, prior to the questioning, Mr. Ferguson didn’t seem to make any effort (nor did the President earlier in the day) to explain why or how yet another set of Administration proposals would have any impact on unemployment, the housing market or small business creation.
Finally, after some prodding from questions by Mike Konzcal and Felix Salmon, Mr. Ferguson addressed certain current economic realities. While quoting Christine Romer’s farewell speech, and sounding a bit like CalculatedRisk, he acknowledged that the impact of the housing market on the current recession. In prior recoveries from recession, residential investment has been an important factor in generating economic growth. Now, due to significant over-supply of housing inventory and the bursting of the housing bubble, residential investment is unlikely to help lead the economy out of recession. As a result, he said, with these initiatives the Administration is trying to find ways to generate economic growth from different avenues, since residential investment is unlikely to produce much anytime soon.
I found it refreshing to hear a genuine, rational economic explanation for the Administration’s plans for a change, rather than yet another attempt at political posturing about “failed policies of Republicans”. I don’t happen to agree with their analysis that these initiatives will actually help foster other meaningful avenues of economic activity. I think that the problems with housing, banking, and the financial markets need to be resolved, rather than hidden or ignored, before any real recovery can take place. I’m also not convinced that Federal and local government agencies have demonstrated an ability to do much more than produce pork and waste from the stimulus money so far, so throwing another $50 billion at them seems like a loser economically and politically.
But wouldn’t it be nice if more of the debate about the economy and the appropriate political responses to it, occasionally resembled the fleeting reference of Mr. Ferguson to the need for new avenues of growth? Unfortunately, the allotted time for our call expired after this remark. Soon enough, the President and his staff will return to playing politics, extending and pretending and doing their best to avoid any real debate or discussion of what the government can, and cannot do, to fix the economy.