Friday, November 2, 2012

The Economic Consequences of Mr. Obama

When British economist and public intellectual John Maynard Keynes wrote his famous essay entitled “The Economic Consequences of Mr. Churchill” in 1925, the British economy was still suffering the consequences of WWI, and was slowly sliding into the worst economic depression in world history. Today, as the Great Recession continues to devastate millions of people’s lives in the United States, Americans will decide in a matter of days whether they want Mr. Obama to continue on as President for another four-year term, or elect Governor Romney to replace him in the White House. As an economist who is committed to social justice, I would like to offer a brief assessment of President Obama’s economic policies during his first term, and speculate on the likely direction that the U.S. will take under a second term Obama administration versus a possible Romney White House.
President Obama came into power with massive popular support at home and abroad, with a lot of hope for real change in the way Washington operates, and especially with hope for the millions of Americans who began losing their homes and their jobs in 2007 and 2008. Instead of capitalizing on his election momentum to clean up the financial system and put forward a comprehensive and bold jobs program, President Obama surrounded himself by Wall Street economists such as Larry Summers, one of the leading figures behind the 1999 Banking Modernization Act, which unleashed Wall Street into the subprime lending frenzy that brought down the system in 2008. Obama’s bailouts mostly went to Wall Street, and relied on tax cuts rather than direct job creation.
Next, Obama wasted his political capital on a failed healthcare reform that amounted to the biggest subsidy to the health insurance industry in the history of the world. Obama’s political capital was big enough to buy him the best single-payer healthcare system in the world, but alas he settled for a minor reform, and gave a lot of ammunition to those who would like to scale back all social and medical support to the most vulnerable groups in society.

Read more: http://neweconomicperspectives.org/2012/11/the-economic-consequences-of-mr-obama.html

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