Here is a brief characterization of that history, according to my recollection. President Obama came into office wanting to be a conciliator and thinking (incorrectly) that he was above the political fray. TARP, a large package to stabilize the large banks, had been passed while Bush was still president, but the Obama administration had to administer it. Perhaps it wasn't designed this way, but it served as something of a poison pill. It was incredibly unpopular with voters, as it seemed the ones responsible for the crisis were getting bailed out while ordinary people were suffering financially.
The Stimulus Package was not a second New Deal. One read about the absence of "shovel-ready projects" so we weren't going to spend our way out of the slump via big construction projects, at least not immediately. In my view, it was a significant error not to keep at it till they were ready - a major infrastructure renewal plan, which did not emerge. Instead the Stimulus Package largely was block grants to the states, who were all in fiscal trouble as their tax revenues went down substantially. So this served to keep them with the same level of services as before the financial crises. I can't argue with this, but in a real sense it was not new spending. Then there were substantial tax cuts, mainly to lure the Republicans in Congress to support the bill. Yet there was no Republican support for it in the House and only 3 Republican Senators voted for it (but this was enough to have a filibuster-proof majority). I've written elsewhere that tax cuts are not sufficiently stimulating in a deep recession, which is still my belief now. There was a kind of second stimulus package passed in 2010 after the November election. Let's be thankful for Lame Ducks who understood what needed to be done and then did it.
However, the composition of the first stimulus is only one issue. The magnitude of the stimulus was another. Christina Romer, then chair of the Council of Economic Advisers, argued for a larger stimulus. Paul Krugman, writing in the New York Times, agreed with Romer. The package that was approved was in excess of $700 Billion. Romer wanted a package over $1 Trillion. The fear was that the larger package couldn't get through Congress. Political expediency won out over the economic necessity of the moment.
The next big thing to mention is the Affordable Care Act. Unlike the stimulus, which was dictated by the moment, the Affordable Care Act resulted because of campaign promises. Health Care was a big deal issue during the campaign. Yet, to get the package through, the Public Option was dropped. Many very enthusiastic supporters of Obama became less enamored with him, particularly young people who put in a lot of legwork getting out the vote in 2008. At the same time there was a reaction from the Right, the Tea Party. Democrats lost control of the House in the midterm elections of 2010.
What lessons have Democrats learned from this recent history?
Now I want to talk about private sector parallels. I'm going to focus on economics only, as I'm sufficiently ignorant about parallels on virus prevention and treatment to comment. If you've watched The Big Short or read books about the Financial Crisis like How Markets Fail, you'll know that the big banks were taking risks (think of credit default swaps) that were strongly correlated across them. In other words, when one of them failed the others would be on the verge of failure as well. The systematic risk was too great. We're seeing something similar now with respect to global supply chains, which all of the big-name companies rely on. When things are going swimmingly, then the global supply chain is a way to keep costs down so that prices to consumers are low. But when there are disruptions of a major sort, and it appears that the caronavirus will cause that or has already caused that, then there can be a negative feedback loop that brings the system to its knees. The stock market may not be a much better predictor than I am, but I think it fair to interpret the rather steep decline in stock prices recently as a portent of system meltdown due to supply chain disruption.
To my knowledge, no Democratic candidates are making this an issue during the campaign.
If we have the caronavirus still not under control in November and the supply chain disruption then a major issue, these two factors will make for job one when the new administration takes office. The economics of inequality issues: health care for all, a living wage, affordable child care, etc., will remain important, but won't have the immediacy created by those two other factors.
How can the Democrats avoid the cycle of enthusiasm for the new regime that propels an electoral win in November from subsequent voter disillusionment with the party in the midterm elections?
I am somewhat optimistic that party elders might address these matters I can only imagine the behind the scenes conversations that took place to get Buttigieg and Klobuchar to drop out of the race and support Biden. If and when Democrats do sweep into office, there needs to be something similar about sticking with job one until the situation is under control. At the same time, there needs to be strong messaging with ordinary voters that this is not a betrayal of the campaign, but an absolute necessity to put the disaster behind us.
Those who cannot learn from history are doomed to repeat it.
George Santayana
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