In an ABC interview last night, President Obama defended his economic policy actions saying he thinks he made "all the right choices." While one could easily point to the failure programs like ARRA, cash-for-clunkers, and HAMP to help lower unemployment, boost the economy, or help the housing market, success is all in how you define it. And the president is defining success in very short-term metrics. We don't have -10% GDP. We don't have 20% unemployment. And we still have houses. Yay.
This short-termism is exactly the same attitude that Wall Street took during the bubble years. Many traders and firms were just focused on short-term profit, and had little incentive to think about the long-term risks. That led to serious problems that undermine the structural integrity of balance sheets and our financial system. So why does the president continue to have a short-term focused attitude. He says:
the thing I'm spending most of my time thinking about right now is how can I put people to work right now and how can I improve the economy right now and stabilize it.
If, in 2009, we'd focused on policies that would have created long-term stability we might not be in this mess today. Or it wouldn't be as bad. President Obama says the American people can't afford 13 months of politics (until the next election), so maybe he should stop thinking about policies in a re-election perspective and focus on the steps that would promote a recovery in the long-term and fix the many structural problems in our own economic policy framework.