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What Were They Thinking? by Elizabeth Drew | The New York Review of Books

Someday people will look back and wonder, What were they thinking? Why, in the midst of a stalled recovery, with the economy fragile and job creation slowing to a trickle, did the nation’s leaders decide that the thing to do—in order to raise the debt limit, normally a routine matter—was to spend less money, making job creation all the more difficult? Many experts on the economy believe that the President has it backward: that focusing on growth and jobs is more urgent in the near term than cutting the deficit, even if such expenditures require borrowing. But that would go against Obama’s new self-portrait as a fiscally responsible centrist.

Lawrence Summers , Obama’s recently resigned chief economic adviser, said on The Charlie Rose Show in July that he found it “dispiriting” that “all of the energy is on the projected deficits…when the problem right now is that the economy is in danger of stagnating from lack of demand.” The Republicans had made it clear for months that they would use the need to raise the debt ceiling as an instrument for extracting concessions from the Democratic President in the form of more cuts in federal programs. And the President assented to their premise, but only if there should also be some additional revenues. Were they all insane? That’s not a far-fetched question.

The President argued that it’s critical to make cuts that will “get our fiscal house in order,” so that the American people and the politicians would accept the idea of new programs leading to growth and more jobs. But there are numerous indications that the public is ready for such programs now, and serious analysts see no reason why he should not also be taking such steps now, even if this increases the deficit in the short run. But that would be at odds with Obama’s current self-portrayal. People who are looking for work, or worried about their unemployment insurance, or getting their kids to college, may not be impressed with the argument that they must be patient while the President adjusts his fiscal image in time for the 2012 election [....]