Team Obama: escaped depression, fumbled recovery

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The dark economic days of early 2009 — hundreds of thousands of jobs lost per month, the Dow sinking to 6,600, a sense of chaos — may now seem a distant memory. But the legacy of the deep downturn, and the economic policies forged in that crucible are still very much with us. And, so, too, are the debates over the response by the Federal Reserve and the Obama Administration. Was the stimulus too much or too little? Did the central bank exert itself excessively to aid Wall Street? And did the elite cadre of brilliant economic minds that flocked to Washington in 2009 accurately diagnose the situation and prescribe the appropriate cure?

In his timely, highly readable new book, The Escape Artist: How Obama’s Team Fumbled the Recovery, Noam Scheiber, a veteran Washington reporter with a solid background in economics, delves into these questions.

From the outset, Scheiber argues, the willingness of the Fed and Treasury to go all out to save the financial system was not matched by a similar desire by the administration to pitch big ideas to help the real economy. One of Scheiber’s big scoops was the unearthing of a memo written by Christina Romer, the head of the Council of Economic Advisers, in which she argued that a stimulus of $1.8 trillion would be needed to return employment to healthy levels by 2011. But the memo never reached the president’s desk, in part because the dominant political advisers believed a measure of that size was a non-starter. “I think they missed an opportunity out of the gate,” Scheiber says. While the stimulus worked and helped get the economy back on a track of growth, it ultimately was a half-measure that disappointed. “They were right about the shape but didn’t give it enough oomph to get escape velocity,” for the economy, Scheiber says. (In the accomanying video, Scheiber joins me and my colleague Aaron Task to discuss his book).

Scheiber also delves into the personalities, conflicts, and egos that made up Obama’s economic team: Office of Management and Budget Director Peter Orszag, Romner, National Economic Council Chairman Laurence Summers, Treasury Secretary Timothy Geithner, economic advisers Austen Goolsbee, Gene Sperling, and Jason Furman, and the political powerhouse of Chief of Staff Rahm Emanuel and advisers David Axelrod and David Plouffe. At times, this Dream Team of advisers turned out to be a Team of Rivals. Scheiber conducted hundreds of interviews with all the key players, unearthing details about their arguments, policy preferences, and tennis games. As a result, with its reconstruction of meetings The Escape Artists reads like a Bob Woodward book — albeit better written and informed by a more sophisticated understanding of economics and policymaking.