Many voters see the economy as the most important issue heading into the 2012 election, and President Obama's chances for a second term may hinge on how voters feel he handled the 2008 financial crisis. Noam Scheiber, a senior editor at The New Republic, examines the decisions made by Obama's economic advisers in the first 2½ years of his term in The Escape Artists: How Obama's Team Fumbled the Recovery. Scheiber recently spoke with U.S. News about the mistakes the administration made—from underestimating the crisis to overestimating Republicans' willingness to cooperate. Excerpts:
Why did you call the book The Escape Artists?
The premise was that Obama inherits this economic crisis, and he's got other things he wants to do, and he looks around and says, "Who am I going to be able to hire who will be able to handle this and get us out of this terrible situation," and the only people who really fit that bill were a group of people who had done this in the '90s. At that time there were some pretty serious financial crises overseas. I think of them as these "escape artists," by which I mean they were able to pull us out of this really dicey situation in the '90s and he was looking for a similar thing. As I write, it wasn't quite that simple this time around.
Why didn't the administration realize the severity of the economic crisis?
I think in fairness to them, if you just look at the way the numbers have been revised, even as late as last summer, they just kept getting worse and worse and worse. They weren't the only ones who didn't realize how bad it was. And on top of that, I think, many of them did realize that it was going to be really bad, and even the numbers that they had understated how bad it was. But to different degrees, they just felt like there were really practical constraints to what they could do. One of those practical constraints was Congress—they had to get approval from Congress to spend money.
Why did they have so much trouble with the politics of the recovery?
His advisers, a lot of whom had served in the Clinton administration, felt as though they really knew how politics had worked, how Capitol Hill had worked, how you can get stuff through Congress and the constraints that Congress imposes, how the opposition party will deal with you and the best way to deal with them. I think the problem is that they did know something—their previous experience in Washington was actually helpful in some respects—but they overestimated the degree to which they knew how to navigate the political terrain and I think that overconfidence was really damaging.
Did Obama's team misread the opposition?
You have a lot of guys who worked for Bill Clinton in the '90s and they had hammered out this budget deal with the Republicans after the Republicans took control of Congress in '94. They just had this idea that, well, a lot of [the Republicans] said a lot of crazy stuff when they first took over, but eventually, when we got them in a room, they were much more reasonable behind closed doors and we hammered out a deal. That analogy wasn't right for two reasons. One, they were actually a lot less reasonable than they were 15 years ago. And two, the economy was weaker, so, 15 years ago, because the economy was gaining strength very quickly, you could afford a couple years to just kind of haggle over this stuff.
Did Obama try too hard to be bipartisan?
You cannot underestimate the importance of his own views on politics, his own interest in wanting to change politics, what he had campaigned on. Bipartisanship was something that he really wanted to realize, not just talk about. I talked to a lot of Obama advisers who just told me, look, there might have been some people within the White House political team like Rahm Emanuel, for example, who would have been totally fine coming in there and trying to kneecap Republicans, kind of going with a scorched-earth partisan approach. It was really important to Obama to not just be seen as being bipartisan, but actually be bipartisan. This is what he believed in.