Obama cancels the economic crisis

By Kim Priestap

San Francisco Examiner
OpEd Contributor | 3/15/09 10:33 PM

President Barack Obama told the American people last month that our economy faced a crisis larger than we have ever seen and the only fix was his monstrous economic stimulus bill.

Initially, the American people were skeptical of his claim that a bill overflowing with hundreds of billions of dollars in pork projects was the only way to save the economy. Bloggers, disgusted at the spending frenzy, renamed it the “Generational Theft Act.” Thousands of Americans telephoned their representatives to express their dismay at the size and scope of the bill.

To sway the millions of Americans who were unconvinced the stimulus bill was the solution, Obama did what he does best and hit the campaign trail. Speaking to a crowd in Elkhart, Indiana, he painted a bleak picture with grim strokes and said America was facing an "economic crisis as deep and as dire as the Great Depression.” If we failed to pass the bill now the economy could enter a “crisis that at some point we may be unable to reverse,” so “we can’t afford to wait.”

His speech stoked fear and hopelessness by conjuring up images of bread lines and soup kitchens. Public support for the stimulus turned in his favor, and on Feb. 17th Obama signed the American Recovery and Reinvestment Act of 2009 into law.

It is amazing how suddenly things can change.

On March 12, Obama cancelled the catastrophe. He told executives at a Business Roundtable that “I don't think things are ever as good as they say, or ever as bad as they say. Things two years ago were not as good as we thought because there were a lot of underlying weaknesses in the economy. They're not as bad as we think they are now.”

President Obama’s sudden shift from “dark days are ahead” to “things aren’t that bad” is more jarring than comforting. It creates more questions than answers. What does “not as bad as we think” mean?

Is there no longer a looming catastrophe? If not, since the vast majority of the $790 billion stimulus bill has not been implemented yet, can some of it be rolled back to reduce unnecessary debt on future generations? Will the Democrats’ second stimulus bill be abandoned?

Coincidentally, the president’s optimism comes just as complaints about his handling of the economy reached a crescendo. Warren Buffet, a high profile and much needed supporter, said the economy had “fallen off a cliff” and criticized the president for using the crisis to promote his pet projects.

Howard Fineman wrote in a recent Newsweek article that the Washington establishment is beginning to have concerns that perhaps the president does not have what it takes to tame this economic beast. Treasury Secretary Timothy Geithner and Obama received failing grades from economists for their mishandling of the economy.

While Obama focused much of his attention on health care reform, education reform, energy, cap and trade, and other pet causes, critics pointed out that his economic plan and mortgage relief plan still had not been created, let alone implemented. Meanwhile, many important positions in the Treasury Department remain unfilled.

With criticism coming at him from all directions, the president needed something positive to deflect it.

He got it with some good economic news: Retail sales numbers in February were better than expected. Bank of America and Citigroup both reported profits the last two months. And there is talk that the mark-to-market rule will be clarified.

All this good news led to four consecutive positive days on the Dow and a much-needed reprieve for Obama. And it all happened in spite of the president’s policies.

Obama clearly knows how to exploit a crisis for political gain. In the end, however, his incessant talk of an impending depression may have crippled his big government agenda and his popularity rating.

Expect him to now use this sudden trickle of good economic news to argue for a flood of big government entitlements and programs.

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