The economy needs a bullish Obama
Barack Obama has delivered blunt economic talk lately. If Washington doesn't act, he warns, this recession could "linger for years"; 4 million people could be thrown out of work in 2009; trillion-dollar deficits are likely "for years to come"; America could "lose a generation of potential and promise." What's happened to "Yes, we can"?
The president-elect is probably directing these dire predictions at Congress to spur it to act urgently in support of his economic recovery plan and endure higher deficits for now.
But the public is also listening, as are financial markets. Mr. Obama must be mindful of the many hats he wears, with the most important being that of a leader whom the world looks to for confidence.
Consumers and markets can suffer more from imagined or expected fears than from actual experience. At this moment, the unemployment rate (7.2 percent) is not as bad as the postwar peak of 10.8 percent during the 1980s recession. It even beats Europe's current rate.
This week, Federal Reserve Chairman Ben Bernanke underscored the beneficial psychological effect of government spending, and said the economy may stabilize in the second half of the year.
Yet the suspicion – justified? – that this will not be a "normal" recession prompts even employed Americans to hold back and financial markets to gyrate.
Of course, the country needs straighttalk about troubles. But it also needs to hear from its leader how it can overcome them. When presidents appear at times to be just as morose as the population, they lose their ability to lead.
In 1979 and 1980, when US inflation reached a stubborn 13 percent, it did not help to have Jimmy Carter go on national television, declare a "crisis of confidence" in the nation, and then analyze the subject as if he were in a therapy session. To state that "all the legislation in the world can't fix what's wrong with America" made himself part of the problem, and the situation sound utterly hopeless.
That's why it's so important for Obama to manage expectations. Not only Americans, but a jittery world needs encouragement.
Despite all the derision of his campaign of hope as little more than gauze, the country needs that sentiment right now – but anchored in workable, concrete plans. He has the opportunity to offer both next week, when he gives his inaugural address.
The president-elect says he's been studying previous addresses. He'll find that the most successful ones are those that acknowledge challenges, yet appeal to America's can-do spirit and follow up with a believable action plan.
"We're not, as some would have us believe, doomed to an inevitable decline," said incoming President Ronald Reagan. High interest rates and "Reaganomics" slew inflation and created jobs – though at the price of a deep recession.
"There is nothing wrong with America that cannot be cured by what is right with America," said Bill Clinton, and then he helped tame the federal deficit, in part with a controversial tax hike.
In his economic speech last week, Obama also invoked the American spirit, but it got lost in all his dire warnings. He, as the first black president, knows the power of that spirit. Lay it on.
