Last week, I had the privilege of attending a finance roundtable at the White House and the opportunity to participate in Q&A sessions with the highest-ranking economic officials in the administration – including President Obama himself.
I asked for your questions, and through dozens of emails, you gave me the ammunition for some hard questions for Obama and his team.
There were a number of good questions asked of White House officials at last week’s summit. And while the answers were often well-crafted and non-controversial, a closer read of the responses reveals some important insight into what Obama’s economic team is doing to fix things right now.
Or more particularly, what they aren’t doing to fix things.
Now that I’ve had a chance to go through my notes, I’d like to share three key topics from last week’s White House summit that could be of grave concern to investors:
Reason to Panic No. 1: Slow and Steady May Not Win This Race
Obama’s youngest Cabinet member and chairman of the Council of Economic Advisors, Austan Goolsbee, was the first official to visit us for a Q&A. He was defensive about the unemployment picture right out of the gate, and urged perspective on the disappointing May numbers that caused the unemployment rate to rise to 9.1%.
His stance? The long-term trend is more important than “a variable series like the monthly job numbers.” Goolsbee warned the financial journalists in attendance not to “overreact.”
Fair point – and the focus on sustainable job growth and not another boom-and-bust cycle is admirable. In fact, it’s one of the biggest reasons I found for optimism over Obama’s economic policy.
However, Peter Goodman of AOL/The Huffington Post was sharp enough to interject the concern many Americans share: Slow and steady growth is all well and good, but where is the sense of urgency?
Goolsbee demurred. He said there is indeed a sense of urgency, but not “a sense of panic.”
Unfortunately, he also let a bombshell drop rather nonchalantly: That the average unemployment predicted by the White House across 2011 was 9.3% – making 9.1% “ahead of schedule.”
Who’s schedule involves barely beating 9.3% unemployment something to cheer about?
Since Goolsbee tap-danced around Peter’s question, I tried another tact: If we are “on schedule,” I asked, does that mean Americans who expect significant improvement on the unemployment front are just plain unrealistic and those out of work need to readjust their expectations?
Goolsbee’s response to me and my colleagues was that “the president’s the first to say ‘That’s not enough. We’ve got to do more.’” But as for setting America’s expectations, he seemed to believe that was on the media and the public – not the administration.
“If you’re relying on me for your message, you’re making a terrible mistake,” he said.
Not very inspiring. Nobody was disputing the value of one million jobs in sustainable businesses, but the point of our questions was to see whether Obama’s team was truly in touch with the severity of the downturn and whether they understood the urgent need to fix the job market.
The answers we got were a variation on “be patient.”
The Obama team has to get a better slogan than that for the 2012 race, because I don’t think that will cut it.
Reason to Panic No. 2: ‘Shared Sacrifice’ Assumes There’s Something Left to Give
Gene Sperling, director of the National Economic Council and counselor to Treasury Secretary Timothy Geithner, also sat in with us last week. He was very clinical and rational when talking about the budget issues plaguing Washington. But again, there seemed to be a disconnect with the severity of the situation for many Americans.
In a phrase, Sperling said he is working towards “shared sacrifice” where legislators “go along with things they would not agree with in an ideal world because the benefit of compromise is better for the country.”
If you’ve read my article running Uncle Sam’s $2.2 trillion budget like a normal American family, you understand that it is simply impossible to fix the current deficit without severe cuts and severe compromises. So, I respect Sperling’s pragmatism.
However, the fatal flaw with the Obama administration’s approach to the deficit – or the job market for that matter – is that every consumer, business and even governmental department has the wherewithal to suffer through a little while longer, or perhaps to give up a little more in the hopes of a long-term recovery taking shape in the years ahead.
As Yahoo! Finance columnist Daniel Gross put it in his recap of the Personal Finance Online Summit, welcome to the “grind-it-out” economy.
That logic overlooks people who are already just scraping by, out of work or underwater on their mortgage. What about the idea of giving consumers more money to spend and businesses a break so they can expand – instead of just belt-tightening?
And on a related note, must we be forced to sacrifice our way out of this hole? While some Democrats deride so-called “trickle-down” economics, the $787 billion stimulus pushed through only weeks after Obama took office is proof that those on the left believe there is a way to find growth through focusing on the demand/spending side of the equation.
For now, it seems the Obama administration’s focus is on asking the American economy to do more with less. But for some people, the prospect of doing anything with less is a gruesome one.
Reason to Panic No. 3: We Need Results, Not Cheerleading
Perhaps most puzzling were the number of times Obama administration officials called out specific businesses or programs as beacons of growth in these gloomy economic times. But in my first year of journalism school, I learned a basic concept I have never forgotten: Every story, every paragraph and hopefully every sentence should answer the question, “so what?”
Goolsbee pointed out the economy has gained a million net jobs over the past six months. So what? The worst downturn in decades cut loose as many as eight million workers. That’s nice, but the first step in a very long (and slow) process.
Gene Sperling said, “We believe it is important for confidence in the economy to show significant progress on deficit reduction in the very near future.” No kidding! That’s like saying you believe fixing the job market or the housing market is important. Where are the specifics of said progress?
Aneesh Chopra, the administration’s chief technology officer, pointed to programs “with a lowercase P” that were a “call to arms,” where businesses were called on to mentor entrepreneurs. He also stressed efforts to hold town-hall style meetings and find out the real challenges to small businesses – specifically citing an arcane immigration Visa restriction. So what? Did we really call a summit to convince skilled journalists that a pat on the back and a few skilled folks from Asia or Europe are going to turn things around for American businesses?
There were plenty of other instances: hand-wringing over gasoline prices, but no plan to control crude, lamentations over the depth of the hole we are in, but no urgency to see the light of day, and so on.
I expected political posturing and sound bites at such an event, seeing as it was sponsored and hosted by the Obama administration. But to be continually confronted with vague platitudes at a time when the nation seems to be losing its momentum and risking a double-dip, it was pretty disappointing to behold.
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