Obama's Budget

Three comments worth reading/hearing:

Andrew Sullivan:

I've learned for two years now not to under-estimate Obama. I watched from the very start of the campaign how he strategized a path to achieving his goals partly by eschewing the kinds of tactics that Washington has come to see as political skill....

Now look at how Obama has framed the debate since the election. Every single symbolic act has been inclusive and sober. From that speech in Grant Park to the eschewal of euphoria on Inauguration Day; from the George Will dinner invite to the Rick Warren invocation; from meeting the House Republicans on the Hill to convening a fiscal responsibility summit; from telegraphing to all of us Obamacons that he wasn't a fiscal lunatic to ... unveiling the most expansive, liberal, big government reversal of Reagan any traditional Democrat would die for.

Smart, isn't he? He won the stimulus debate long before the Republicans realized it (they were busy doing tap-dances of victory on talk radio, while he was building a new coalition without them). And now, after presenting such a centrist, bi-partisan, moderate and personally trustworthy front, he gets to unveil a radical long-term agenda that really will soak the very rich and invest in the poor. Given the crisis, he has seized this moment for more radicalism than might have seemed possible only a couple of months ago.

Or Paul Krugman:

Elections have consequences. President Obama’s new budget represents a huge break, not just with the policies of the past eight years, but with policy trends over the past 30 years. If he can get anything like the plan he announced on Thursday through Congress, he will set America on a fundamentally new course.

The budget will, among other things, come as a huge relief to Democrats who were starting to feel a bit of postpartisan depression. The stimulus bill that Congress passed may have been too weak and too focused on tax cuts. The administration’s refusal to get tough on the banks may be deeply disappointing. But fears that Mr. Obama would sacrifice progressive priorities in his budget plans, and satisfy himself with fiddling around the edges of the tax system, have now been banished.

Krugman continues to be critical of the administration's approach to the banking crisis, although I suspect the ultimate path chosen may be to his liking.

Robert Scheer has a quite critical take from the left, which you can hear on KCRW via the Truthdig site.

My own sense is closer to Krugman/Sullivan but it is worth hearing Scheer's view, which is made more interesting by the counterarguments he receives from others on the show. Also take a look at this post on the Progressive Economics forum.

February Polls

Calgary Grit averaged the February polls. Interestingly, they are all a little old now. He found a slight shift to the Liberals from the Tories. The movement is too small to be meaningful. It confirms my impression that Canadian public opinion is still treading water.

Things to come - a new coalition?

It is not evident in polling now - there has yet to be a sharp or marked departure from trends of the past few years. Canadians seem to be in a wait and see mode, but they are deeply worried about the direction of the economy. Inevitably and eventually the public will turn in a clear way against the Harper government. They just haven't done so yet.

Even now the last two Nanos polls suggest a Liberal minority, which could command a bare majority in the House with the support of the NDP were an election on offer. When I average the last two polls and perform a seat calculation this is what I get:

C.P.C.	Liberal	NDP	Green	Bloc
109	128	29	0	42

The Liberals plus NDP would have 157 seats (a clear majority is 155). The NDP has not been in this potential position of leverage since 1979 (and all it led to was a Bob Rae motion of non-confidence that ended the Joe Clark government). After a disastrous decade in the nineties, the NDP has recovered much lost ground since Jack Layton became leader in 2003, but they have not won enough seats to make them the obvious governing partner for the Liberals. Paul Martin & Layton did a "budget" deal in spring 2005 but that reflected Martin's desperation, and it took the vote of Chuck Cadman and the defection of Linda Stronach to save the government then. The prospects for something quite different are now becoming visible as we see in the numbers above. There is a tendency to believe the future will be like the past - that the NDP plus Liberals in Ottawa somehow can't construct a majority. The radical changes in the economy these past few months should tell everyone that the recent past is certainly no guide to the future.

Obama's Early Days

Despite a few very minor missteps, it is abundantly clear that Obama is doing quite well in his early days in office, culminating in the passage of his stimulus bill. The small 'c' conservative Republican leaning media in Washington has been trying to see his administration as getting into trouble but the public isn't buying it. Take a look at this article in Politico, a Washington newspaper/web site that, because it is steeped in the capital's culture, has a Republican lean to it. In particular, I was struck by the following quotes from the piece, the first of which I saw on Political Wire:

“It’s eerie — I read the news from the Beltway, and there’s this disconnect with the polls from the Midwest that I see all around me,” said Ann Seltzer, the authoritative Iowa pollster who works throughout the Midwest....

“I don’t think he’s lost anything in terms of overall job approval or favorability,” said Andy Smith, a pollster at the University of New Hampshire. “That’s just the a perception inside the Beltway that everybody outside Washington pays attention to politics and eats and lives politics the way you guys do down there.”

More support for the Seltzer-Smith view can be gleaned from the details in the polling data contained in this post by Kos on Daily Kos.

Update on Sunday: today's column in the NY Times by Frank Rich reflects the theme of TC's post. Ditto this TPM item today: the Big Disconnect.

The First Test of the Politics of Recession

There are likely to be at least two provincial elections this year, one in Nova Scotia where a minority government is coming up to the end of its third year, the other on the west coast.

The first will likely be in B.C. on May 17. In lotus land the economy of Gordon Campbell is tanking just as the Olympics construction boom is winding down. Despite the downturn the most recent Mustel Poll suggests the BC Liberals have a 14 point lead coinciding with growing concern about the economy. However, this column in the Tyee by former Socred cabinet minister Rafe Mair argues strongly that Liberals are in deep trouble as various "chickens come home to roost". One example he cites:

...just a few weeks after he stated bluntly that we would have a balanced budget in 2009, Premier Campbell was forced to get amendments to his own law requiring a balanced budget so that his government can bring two consecutive massive deficits.

Campbell had to acknowledge this after the poll was taken. Indeed none of these laws, which can be found in many provinces, will prevent deficits in a recession. They are symbolic and will in all cases be ignored the minute a government finds it necessary, but the message will reflect negatively on the governments such as Campbell's that are compelled to break their earlier commitment.

Recessions will force governments to deliver many examples of bad news. This process is only just getting underway.

Stimulus

Here is an excellent brief explanation by Harold Chorney about the role of government in delivering stimulus to a failing economy.

John McCain complained today of Obama's stimulus proposal: "I think it's a massive -- it's much larger than any measure that was taken during the Great Depression..." Um, it was precisely the lack of such measures that made the Great Depression the Great Depression and caused it to last over 10 years. We should all be grateful that he lost.

The Politics of Depression

I was listening yesterday to a panel of Ottawa pundits yakking about the current situation and getting themselves in a tizzy about whether Michael Ignatieff had handled his Newfoundland MPs astutely when he authorized them to vote against the budget.  They really don't get it.

We are in a severe economic downturn (see this employment chart originally from U.S. Speaker Nancy Pelosi).  The economic crisis will soon begin to dictate political outcomes.  Incumbent governments of all political stripes face defeat.  Polls in Canada since the election suggest that the public remains in these early days in a "wait and see" frame of mind.  This will not last long.  

Historically recessions and depressions cause incumbent governments, particularly at the national level, to lose office:

1.  The Herbert Hoover example is the most obvious but in Canada, Mackenzie King lost in 1930 in part because of the depression just beginning to unfold.  Five years later the same fate befell R. B. Bennett.

2.  The early eighties deep recession contributed to the Mulroney landslide in the 1984 election, when the Liberals were reduced to 40 seats.

3. The early nineties downturn was critical to the PC demolition at the polls in 1993.  The same recession contributed to the defeat of both the Peterson and Rae governments in Ontario in 1990 and '95 and the defeat of the Bourrassa/Johnson government in Quebec in 1994.

It is clear that there will be a series of defeats of incumbent governments in Canada over the next few years.  Gordon Campbell might survive in B.C. as his opponents are the "dreaded socialists", but a national election - likely this fall or perhaps as late as spring 2010 - will make Michael Ignatieff the Prime Minister and the vote on the budget by Liberal Newfoundland MPs will be long forgotten.

The situation in the U.S. is quite different from Canada.  More on that in a future post.