Geithner’s “Happy Talk”

Timothy Geithner:

Welcome to the Recovery

Dean Baker:

The US economy is not yet on the road to recovery

I responded negatively the first time Geithner came out with his “happy talk.” My response prompted Brad DeLong to say “I would put it much less politely: have Tim Geithner and Barack Obama lost their minds?” Paul Krugman makes the same point I made in response to Geithner’s latest attempt to convince us that the administration has the economy on the path to recovery:

we clearly should be doing more; but obstructionism from Republicans is preventing action. … So one way to play this politically would be to tell the truth, and try to place the onus on Republicans, accusing them of perpetuating high unemployment. Instead, however, the administration has decided to engage in happy talk, saying that it’s all good. Do they really think this will work? … I live in fairly rarefied circles…, and even so I know a number of people whose lives have become a living hell: men in their late 50s who fear they’ll never work again, small business owners who have lost everything. Does the administration really believe that it can convince these people that it’s all on the mend? I just don’t get it.

I don’t get it either. Robert Reich sees trouble ahead:

Whatever the outcome of the upcoming midterm elections, the activist phase of the Obama administration has likely come to a close. The president may have a fight on his hands even to hold on to what he’s already achieved because his legislative successes have been large enough to fuel strong opposition but not big enough to strengthen his support. The result could be disastrous for him and congressional Democrats. …

A stimulus too small to significantly reduce unemployment, a TARP that didn’t trickle down to Main Street, financial reform that doesn’t fundamentally restructure Wall Street, and health-care reforms that don’t promise to bring down health-care costs have all created an enthusiasm gap. They’ve fired up the right, demoralized the left, and generated unease among the general population. …

And they are now patting themselves on the back for their accomplishments. Again, “Do they really think this will work?”

About Mark Thoma 243 Articles

Affiliation: University of Oregon

Mark Thoma is a member of the Economics Department at the University of Oregon. He joined the UO faculty in 1987 and served as head of the Economics Department for five years. His research examines the effects that changes in monetary policy have on inflation, output, unemployment, interest rates and other macroeconomic variables with a focus on asymmetries in the response of these variables to policy changes, and on changes in the relationship between policy and the economy over time. He has also conducted research in other areas such as the relationship between the political party in power, and macroeconomic outcomes and using macroeconomic tools to predict transportation flows. He received his doctorate from Washington State University.

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