I suppose one might classify the logic here as a tactical loss to secure a long-term gain, or in chess terms, sacrificing a pawn to take the queen.
So get this: the Republicans (well, to be more accurate, House Minority Leader John Boehner, but we’ll treat him as a good proxy) are really really unhappy at all this recovery talk, since it is Team Obama’s only claim to fame thus far. And in case you missed it, it appears that all this great PR is working. They managed to turn a combo relief rally/short squeeze into something bigger by getting the media to play along (this is not just our conclusion, BTW). And then they cleverly pointed to the stock market as proof certain that Things Are Getting Better when the reality is Things Are Merely Getting Worse Less Rapidly. But this is America, the land of open skies, pink flamingoes, Prozac, and plastic surgery, so we’ll happily go along with the idea that maybe the powers that be can restore status quo ante, since the alternative is painful, and we don’t do the hair shirt and sack cloth routine very well.
So what do Boehner and Co. want to do? They want to attack the idea that the economy is getting better! Now if people quit believing that, the stock market would be one of the first casualties. But they are apparently willing to let a little blood from their collective constituents in the hope of winning a bigger prize, that of the mid-term elections and the presidency in 2012.
Frankly, I don’t think they need to go to this much effort. I am no fan of the Republicans (truth be told, I don’t like either party, but I have more antipathy for the Republicans overall). Unless the employment situation turns around (and David Rosenberg has given a very persuasive reading why it is likely to get worse), the cheery talk about recovery will be revealed to be the result of stimulus measures soon to wane and an inventory bounce (although some economists argue even that effect won’t be as strong as is widely anticipated). I suspect it will in the fullness of time become evident to all that things are as rosy as consensus forecasts now assume, and that calendar will play well into the mid-term elections, at least as far as the Republicans are concerned.
From Roll Call (hat tip reader John D):
House Minority Leader John Boehner (R-Ohio) has assembled a group of economic experts to help Republicans lob attacks at Democratic assertions that the economy has begun to rebound as a result of the Obama administration’s policies…
“One of the tools in that fight, [as] the White House gears up to make more outlandish claims about the ‘success’ of the ‘stimulus,’ is a kitchen cabinet of economic advisers that Boehner put together, including [Doug] Holtz-Eakin, Keith Hennessey, Alex Brill, Jim Capretta, Tom Miller [and] Donald Marron,” Boehner spokesman Michael Steel said. “This team helps us assemble the facts to push back and keep the pressure on the Democrats.”…
In his memo, Holtz-Eakin took aim at a letter sent Monday from White House economic adviser Lawrence Summers to Boehner in response to Republican assertions last week that the $787 billion economic stimulus package failed to create jobs or jump-start the ailing economy….
Holtz-Eakin said Summers’ response was “disappointing and often irrelevant.”
“Jobs keep disappearing, unemployment is expected to keep rising, and the Obama Administration’s only apparent plan is to double down on a failed strategy for economic stimulus,” Holtz-Eakin wrote..
Holtz-Eakin said the economic stimulus was poorly designed and placed too little emphasis on infusing state governments with capital and cutting tax rates to be truly stimulative.
If this sort of tit for tat continues, economic discourse will become even less grounded in reality, if such a thing is possible. Both sides seem to be perfecting an art form of making statements that have some truthful or at least defensible arguments and using that to camouflage claims that are utter rubbish. For instance, it is true that the Obama stimulus plan was not stimulative enough. Giving more dough to states to prevent them from cutting their budgets would have been a faster shot in the arm than some of Obama’s measures and therefore is a legitimate bone of contention. But tax cuts? Please.
I keep reminding this would all be great theater if we didn’t have to live with the consequences.