Obama's Economic Team Says It's All Under Control. Really?

Yesterday the White House hosted what it called the Personal Finance Online Summit, an invitational confab of online business journalists and some of the Administration's top economic advisers. Sarah Bernard of the White House Office of Digital Strategy noted that the two dozen online business sites represented in the room counted 50 million unique users a month among them-more than the major broadcast networks' news operations combined. It was time, she said, for the White House to reach out.

To reach out-and spin, of course. A little face time with the President's economic brain trust-plus an unexpected visit from the Leader of the Free World himself-was a clever way to put us in a mood to hear the Administration's view . But these are scary times, and there are questions not even Obama's brightest could answer. For example:

If the economy is so good why do I feel so bad? Since Friday's release of dismal May employment numbers, the lame duck chairman of Obama's Council of Economic Advisers, Austan Goolsbee, has been on a mission to apply lipstick to increasingly homely economic news. The anemic jobs report capped a long string of subpar numbers, including falling home prices, grim housing numbers, skidding revenues at Walmart and Target. Voters are so disheartened that nearly half told CNN polltakers the U.S. would fall into a Great Depression-that's with a "d"-- within 12 months.

Nevertheless, says Goolsbee, "We're not in a state of panic." And why not? It's not that the recovery is off track, he says, it's that Americans are expecting too much this early in the recovery. The comparatively strong job growth of the previous months was the anomaly, not the May results. The President's 2012 budget predicted that the average unemployment rate for 2011 would be 9.3%, Goolsbee noted, and Friday's poor report notwithstanding, we've been adding 112,000 jobs a month-more than the economy was adding at this point in the past two recoveries. In other words, by the Administration's forecast, we're actually a little ahead of schedule.

Problem is, people don't form their expectations from reading the President's budget, riveting as that document may be. They get them from observing the prices posted at the gas station, by talking to their friends, and by gut checking their own sense of job security. As CBS MoneyWatch blogger/economist Mark Thoma points out, it's not good enough to ask for patience while the recovery takes its course. That won't restore confidence, it won't reassure markets, and it won't get your man re-elected. "I have a Ph.D. in economics," Goolsbee joked in response to a political question. "If you're relying on me for your message, you're in trouble." Precisely.

If debt-ceiling negotiations are going so well, why is Gene Sperling so glum? Vice President Biden is heading up the bi-partisan negotiations to raise the debt ceiling and avoid a default by the U.S. Treasury, but Obama's chief negotiator in that meeting is the director of his National Economic Council, Gene Sperling. The Clinton-era veteran, who is often entertaining and drily funny, was merely dry yesterday, as he recounted the progress of the negotiations. He started in full kumbaya mode, expressing his respect for his Republican counterparts. But before long, he was taking sniper shots from the Democratic political trenches, poking fun at the Republican's Medicare math and waxing outraged at their insistence on lowering taxes for the rich while cutting programs for the poor.

When reminded that he had begun to leave the impression that the debt-ceiling negotiations were just more of the same old partisan stalemate, Sperling replied that compromise was the way of Washington and pointed to the meeting of minds that the Adminstration and the Republican-controlled House had reached to pass the budget last December. "Although in an ideal world we'd have preferred not to," he said, "we agreed to extend tax cuts for high-income taxpayers and they agreed to middle-class tax cuts they would have preferred not to."

Great. The compromise of 2010 proved nothing except that if you put politicians together in a room, they'll find a way to cut taxes and postpone tough decisions. That won't be good enough this time. Brinkmanship with the full faith and credit of the Treasury is playing with fire, and it would have been nice to hear something--anything--that suggested a path to serious compromise. We didn't.

If the banks have been put in their place, why isn't Elizabeth Warren running the Consumer Financial Protection Board? Warren showed up full of optimism about the consumer financial watchdog agency she is launching. She was particularly pleased with its use of new media to get voter reactions to proposed regulatory changes far in advance of the standard comment period. "We are changing democracy," she said. But the upbeat tone didn't quite cover the fact that the financial services industry considers her the devil and their Congressional allies have sworn to prevent her from heading the agency she dreamt up and is eminently qualified to run.

This is more than a little obscene. The Consumer Financial Protection Board will do nothing more than provide the same kind of transparency that the Food and Drug Administration provides to the nation's food supply. "The [CFPB] should be welcomed by any company that wants to compete on price, on service-on giving consumers what they want," she said. "It will not be welcome to companies whose business model depends on tricking people." Remember that the financial crisis started with banks tricking people into mortgages they couldn't afford. That the banks can get any standing at all in Congress to oppose an agency intended to drag them into the sunlight makes you despair of our government.

And yet Republicans have made it clear that Warren will get the job over their--and their lobbyists'-- dead bodies. The demonization of Warren, in New Yorker writer Jim Suroweicki's phrase, even grew nasty and personal in late May, when North Carolina Republican Patrick McHenry at first refused to let Warren leave a hearing for a previously scheduled appointment.

The only way Warren could get the job would be via a "recess appointment" that would take place without a Senate vote, and the Democratic base is calling loudly for such a maneuver. But given the virulent opposition to Warren and the urgent need to compromise over the debt ceiling, the Administration would have to seriously weigh the political cost of an end run. Indeed, Bloomberg reports that Obama is considering nominating one of Warren's disciples, Raj Date, for the CFPB post, and other Democrats are urging Warren to forgo the CFPB and consider a run against Senator Scott Brown. Republicans may have to be careful what they wish for.

Needless to say, when Warren had to leave the meeting with journalists for her next appointment, no one tried to stop her.

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