Grading Obama Economic Policy: The First Year and a Half
The banking system collapse was averted.
The spike of the unemployment rate to 15% was averted.
Obama passed a pretty good regulatory reform.
Obama passed a pretty good health reform.
Obama passed the largest quick fiscal expansion he could get through congress (using Reconciliation would have taken a lot longer).
We are left with a jobless recovery, and with crippled mortgage finance and construction, and a ticking bomb in Europe.
But there was a policy process by which smart people with strong views argued about substance, and presented real options to the president, who chose. This sounds a lot like the Clinton administration--and we all remember Bob Woodward's The Agenda which was like "OMG! A contentious policy process! Who knew? I'm having an attack of the vapors!" until it became clear that the policies were working and that Clinton had a strong high-investment high-productivity growth recovery, at which point in time Woodward slunk off…
So all-in-all we are arguing over whether the economic policy team as a whole deserves a C+ or a B.
I would say the staff deserves a B. It is not Romer and Summers's fault that Bernanke-in-office forgot that the Fed has a dual mandate, or that Obama chose to go not with Romer-Summers but with Geithner.
Why Geithner and Obama thought their do-less policies were best is not something I have any insight into. We are in the lower tail of the distribution as it looked in March 2009, but not that far down in the tail...
