Here Comes Trouble: Stories from My Life

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Dean Baker

Dean Baker is co-director of the Center for Economic and Policy Research

February 14th, 2011 7:52 PM

The President as Storyteller-in-Chief

The celebrations surrounding the 100th anniversary of Ronald Reagan's birth overlooked an important part of Reagan's success: his ability to craft an image to serve as the focus of his political argument. When he was running for president in 1980 Reagan invented two great tales that highlighted the worldview he was selling to his supporters.

One of these tales was the story of the welfare queen. She drove to the welfare office in a Cadillac every month to pick up her welfare check. The other story involved a man who bought an orange with food stamps and then used the change to buy a bottle of vodka. Never mind that these stories were almost certainly not true: They crystallized an image of the world that Reagan campaigned against.

Unfortunately, in this respect President Obama is no Ronald Reagan. He has persistently refused to give the country a story of the economic downturn. As a result, the center and right have eagerly filled the void.

The center-right story centers on government excess: large budget deficits, overpaid public employees and bloated government social programs. Just as was the case with President Reagan's stories, these stories are not true.

The large budget deficits were an outcome of the crisis: Tax collections plummeted and spending on countercyclical programs like unemployment insurance rose. The deficits in the years preceding the crisis were actually relatively small when measured against the size of the economy.

As far as the pay of public employees, there have been a number of studies showing that, after controlling for education and experience, state and local employees are paid slightly less than their private-sector counterparts. It is possible to find examples of public employees who are arguably overpaid, but the data show this is the exception, not the rule.

Finally, we have the story of out-of-control social programs. There are two different stories here. There are a number of programs focused on helping low-income people that even collectively don't amount to a hill of beans in terms of the total budget. We can stop paying for nutrition for poor children or buying heating oil for low-income seniors, but even zeroing out these programs entirely barely makes a dent in the budget.

Then we have the universal programs, like Social Security and Medicare. These programs cost a lot of money, but people are willing to pay for them. Furthermore, the story of exploding growth in these "entitlements" stems entirely from our broken health care system.

If per person health care costs in the United States were the same as in any other wealthy country, we would be looking at enormous budget surpluses, not deficits. Everyone in Washington knows this, but they are scared of the drug companies, the insurance companies, the doctors' lobbies and other powerful interest groups, so instead they push for cutting these essential programs.

In short, the center-right story's can easily be shown to be nonsense. However, President Obama has put up nothing to counter it. He has backed away from telling the public the truth: The country faces an enormous economic hole right now because the financial industry ran wild over the last decade and the Fed and other government regulators let them.

It would not be difficult to come up with salacious images of people like Angelo Mozilo of Countrywide or Robert Rubin of Citigroup living the good life, while tens of millions of people suffer unemployment and/or foreclosures because of the fallout from their greed. President Obama could also highlight the incredible incompetence of top economic officials like Alan Greenspan and Ben Bernanke, who let the $8 trillion housing bubble grow unchecked.

This would provide a compelling and truthful narrative to focus the nation's attention. Polls consistently show that the public has an intense dislike of Wall Street. What better place to direct people's anger than on those who are actually responsible for the economic crisis?

However, President Obama has opted to go in a different direction. He has instead embraced the false narrative pushed by the center-right, actually implying the problem is somehow out-of-control government spending, as though the housing bubble was not the source of the economic crisis. This may endear him to the Wall Street crew, but this narrative is a disaster for those who care about putting people back to work, providing workers with a secure retirement, and protecting the gains that unions have helped to secure for workers in both the public and private sector.

At the time of his election, many progressives hoped that President Obama could play the same transformational role in this crisis as President Roosevelt did during the Great Depression. The more limited hope was that he could be an inspirational leader to his base in the same way as Ronald Reagan was for the right. At this point, the best hope is that he doesn't open the door to unwinding 75 years of economic and social progress.

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