Economy Not Obama's Katrina

I woke up this morning to this article. James Pinkerton's thesis is that the ailing and anemic economy is Obama's Katrina. Thinking about the states of both the economy and Katrina, I do not agree with his interpretation of Obama's response to the economy because his argument suffers from a plethora of fallacies. First, his point of view is tainted by his republican ideology and it is obvious that he is writing for a mostly anti-intellectual audience who will believe anything anyone from Fox News says. Second, the purpose of his analysis is to not actually critique the efficacy of the stimulus package, but to personally attack Obama.

With that said, I too am skeptical of Obama. Also, I am anti-stimulus package, but it is not explicit whether Pinkerton is as well because his analysis is just a smorgasbord of bad analogy and ad hominem at the stimulus and Obama respectively. Pinkerton claims that Obama has not done much to help stimulate the economy (similar to Bush's glacial response to Katrina). This is wrong. First, Obama took immediate action to try to stimulate the economy, while Bush was hesitant to respond to Katrina. Second, $787 billion is a lot of stimulus money and that counts as something, not nothing, even though unemployment continues to rise and I don't agree with his macro policy. I would have argued alternatively that while the empirical reality is that excessive government spending correlates negatively with GDP growth, I think Obama pushed for the stimulus package to strengthen public confidence in the economy more so than to foster real output.

Pinkerton also argues that the New Deal was successful in bringing America out of the Great Depression. Again, this claim is just not true; statistics from that time and economic theory conclude this. In fact, the New Deal stopped the economy from achieving a speedy recovery and elongated the depression until 1939. Everyone keeps asking when the recovery will start. The answer is the stimulus package has hampered it and on top of a lengthy recovery the economy is going to get even worse than it is now. For more information, peruse this scholarly paper.

Let's not judge Obama on the economy. Yes, he could have focused on incentives to save, work, and produce more, but doing nothing "big" would have destroyed his popularity almost instantly. And Pinkerton could have realized too that Obama, with probably little more than an introductory economics education, surrounds himself accordingly with a team of populist, Keynesian economists who favor deficit government spending. Let's blame them for their disregard for sound macroeconomic policy and for whispering sweet nothings into Obama's ear. Instead let's judge him on his inertia to advance gay rights, his lackluster responses to the Iran uprising and getting it wrong again with the latest Honduras coup.

This is NOT Obama's Katrina. You heard it here first.