Good Week for the President, the Prime Minister, and the Economy
12:00 AM, Mar 17, 2012 • By IRWIN M. STELZER
When two working politicians get together in a mutual help pact—which is what the president and the prime minister did—the small matter of differences on economic policy is dwarfed by the greater need for a show of harmony, a rule to which only meetings between Israel prime minister Benyamin Netanyahu and Barack Obama are the exceptions. Cameron has held tenaciously to the view that the way to cope with excessive deficits is a dose of austerity, even if that means hard times during the climb to the broad sunlit uplands in which living standards rise; the president prefers borrow-and-spend stimulus with deficits to be attended to at some later, unspecified date. In this dispute the president and Labour shadow chancellor Ed Balls are in agreement that the austerity imposed on southern European countries by Germany—oops, Brussels—is self-defeating, while the Tory chancellor and prime minister side with Republicans who call for spending and deficit cuts—now. It is not known whether David Cameron was invited to address a Tea Party rally on this subject—he would have received wild applause—but if so he chose to please his host by turning it down in favor of a hot dog and a basketball game—one of the sloppiest this writer, an aficionado of the sport, has ever seen. The president noticed and commented on the poor shooting; the prime minister, less tutored in the art of slam-dunks and fast breaks, enjoyed the show and promised the president an explanation of cricket.
The president is too clever not to allow ticking time bombs to temper his joy. Polls show that high gasoline prices are putting a big dent in Obama’s popularity ratings, not to mention the economic outlook. Economists at Credit Suisse estimate that every one-cent increase in the price of a gallon of gasoline reduces what consumers have to spend on other products by $1 billion. That means that the recent price jump will force consumers to redirect about 1 percent of their retail purchases to gasoline from clothes, appliances and other products. That won’t devastate the economy, especially since about half the impact on households heating with natural gas was offset by falling prices of that fuel, but the fact that gasoline is a frequently repeated purchase, with its price blazoned on large signs at over 100,000 gas stations, makes this particular price increase more noticeable than most others.
Obama undoubtedly can hear another bomb ticking, this one in his left ear. Nobel prize winning economists Joseph Stiglitz and Paul Krugman, the latter a much-read columnist in the Obama-supporting New York Times, are adding their voices to those of Robert Reich, Clinton’s labor secretary, criticizing the president for doing too little, too late. Stiglitz estimates that at the current rate of job creation it will take America 13 years to reach full employment. News such as this just might prompt some of the voters who supported Obama in 2008 to sit this election out, or at minimum reduce the ardour of some of the young foot soldiers who now find themselves having completed college but unable to find the sort of jobs they hoped an Obama administration would have waiting for them.
Still, it has been a good week for the president, and for his distinguished guest. No Churchill-Roosevelt, no Thatcher-Reagan, but announcement of the death of the special relationship has proved to be premature.