A Report Card on Obamanomics, Approaching One Hundred Days

The Administration is coming up to that magical 100-day mark, at which point measures are taken of how a new president is doing. As a university professor I’m accustomed to giving grades. So here’s my report card on Obamanomics so far:

The 10-year budget gets an A. It’s an extraordinary vision of what America can and should become, including universal health insurance and environmental protections against climate change. And the budget takes a little bit more from the rich and gives a little bit more back to the poor and lower middle class, which seems appropriate given that the income gap is wider than it’s been since the 1920s. I’d give the budget an A plus except for its far-too-rosy economic projections.

The stimulus package gets a B. Good as far as it goes but doesn’t go nearly far enough. $787 billion over two years sounds like a lot of stimulus. But the economy is operating at about a trillion and a half dollars below its capacity this year alone. And considering that the states are cutting services and increasing taxes to the tune of $350 billion over this year and next, the stimulus is even smaller.

The last grade is for the bank bailouts. I give them an F. I’m a big fan of this administration, but I’ve got to be honest. The bailouts are failing. So far American taxpayers have shoveled out almost $600 billion. Yet the banks are lending less money than they did five months ago. Bank executives are still taking home princely sums, their toxic assets and non-performing loans are growing, and the banks are still cooking their books. And now the Treasury is talking about converting taxpayer dollars into bank equity, which exposes taxpayers to even greater losses.

So that’s the report card. An A on the budget, B on the stimulus, and F on the bailout. On the whole (given how I weigh grades) that gives Obamanomics a C-plus. Not bad given the magnitude of the problems Obama inherited. But by the same token, not nearly good enough.

Originally published at Robert Reich’s Blog and reproduced here with the author’s permission.

3 Responses to "A Report Card on Obamanomics, Approaching One Hundred Days"

  1. NS   April 28, 2009 at 5:43 pm

    If they fail to properly & completely rebuild the banks, the remaining components to America’s financial health will become failures too. NS.

  2. Charles   April 28, 2009 at 6:41 pm

    Have to disagree with you on the budget plan. If you give me a trillion to spend today, I’d gladly make promises on how I’ll pay it back in 10 years. Who knows, maybe I’ll still be employed, maybe I’ll have a new job. We need 4 year plans, not this pie in the sky stuff.

  3. Anonymous   May 1, 2009 at 11:55 am

    I agree with Reich. Being trained under Keynesian macroeconomics and models, I have a hard time forgetting the basic definition of the national economy: C (consumption) + I (investment) + G (government spending) = Y (GDP). It contains no explanatory variable for “banks.”I understand the need to have large or small insolvent banks go bankrupt or into receivership in an orderly way, but their trillions of financial paper dollars of losses will never be recovered, and have nothing to do with the productive economy. Taking public dollars to bail out these paper losses will do nothing to reflate the economy.We know that “C” is weak because it is primarily a function of disposable income which is dropping. “I” is weak both because of the collapse of residential housing (which is included under “I”) and because business inventories are weak because of lower retail sales (lower consumption). Most U.S. business investment is done through retained earnings by U.S. corporations and large enterprises that have enormous cash reserves for investment. But they will do nothing until the GDP recovers.That leaves only “G” for economic recovery. The modest efficient way would be to directly fund government jobs program at all levels of government, state, city and federal to employ perhaps 10 million people.As to the long term consequences of repaying the debt, who cares? As Keynes said we are all dead in the long run. And perhaps five years from now when the economy is at full employment and humming, a modest income tax rise could be imposed to begin repayment then.