Reply #4: There is some good stuff in the Ezra Klien piece Krugman cites [View All]

[emulatorloo]

http://www.washingtonpost.com/blogs/ezra-klein/post/2011-is-not-1995/2011/04/06/AFxPaT5C_blog.html

<SNIP>


And policy defeats are what will matter. The Obama White House is looking toward the Clinton model. After all, Clinton also suffered a major setback in his first midterm, Clinton also faced down a hardline Republican Congress, Clinton also suffered major policy defeats, and yet Clinton, as the story goes, managed to co-opt the conservative agenda and remake himself into a successful centrist. The Obama administration has even hired many of Clinton’s top aides to help them recapture that late-90s magic.

That story misses something important: Clinton’s success was a function of a roaring economy. The late ‘90s were a boom time like few others -- and not just in America. The unemployment rate was less than 6 percent in 1995, and fell to under 5 percent in 1996. Cutting deficits was the right thing to do at that time. Deficits should be low to nonexistent when the economy is strong, and larger when it is weak. The Obama administration’s economists know that full well. They are, after all, the very people who worked to balance the budget in the 1990s, and who fought to expand the deficit in response to the recession.

Right now, the economy is weak. Giving into austerity will weaken it further, or at least delay recovery for longer. And if Obama does not get a recovery, then he will not be a successful president, no matter how hard he works to claim Boehner’s successes as his own. Clinton’s speeches were persuasive because the labor market did a lot of his talking for him. But when unemployment is stuck at eight percent, there’s no such thing as a great communicator.

<SNIP>