The Only Thing We Have To Fear Is...Overwrought Rhetoric?

From Bradley Schiller, author of a popular introductory economics textbook:

President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression....Mr. Obama's analogies to the Great Depression are not only historically inaccurate, they're also dangerous. Repeated warnings from the White House about a coming economic apocalypse aren't likely to raise consumer and investor expectations for the future. In fact, they have contributed to the continuing decline in consumer confidence that is restraining a spending pickup.

Although I wholeheartedly agree with Prof. Schiller that analogies to the G.D. border on evil, I tend to agree with Greg Mankiw that the totality of Prof. Schiller's criticism may be a tad overblown. In Prof. Mankiw's words, it is doubtful "that any president's rhetoric has a substantial influence on confidence." My view is that although there is ample reason to doubt the influence of mere rhetoric, it is also undeniable that in certain circumstances a president's "leadership" on an issue can be impactful. I think that's called the "bully pulpit".

Nevertheless, I do think the Obama administration intends to "talk down" the economy, but our worry should not be what the near-term impact of this will be on consumer confidence, much less overall economic performance. (BTW, anyone else recall the criticism of GWB in Jan., 2001, for "talking down" the economy, when he urged resolution of the election fiasco so that he could focus on a clearly declining economic condition?) Instead, our worry should center upon the administration's political goals, both short and long-term. Certainly, I believe the administration has a near-term goal of frightening the public, so as to enable it to sucker the nation into more of the "cure" (over-reaching and incompetent government) that has caused the disease. (I can't remember which econopundit very recently described the "stimulus" as the economic equivalent of "bleeding the patient". I wish I could claim that one.)

The larger goal of the fearmongering, however, is to provide political cover for the long-term underperformance that the "stimulus" all but guarantees. All reasonable people understand that President Hope-a-Dope inherited a sorry economic climate, and that it would therefore be unfair to blame him (too much) for the travails we are going to endure over the next several months. But at some point, a President will and should be held accountable.

Thus, the goal of talking down the economy, by making detestable analogies to the G.D., is both to (a) enable the administration, as Rahm Emmanuel would say, to take maximum advantage of a good crisis; but more importantly, to (b) convince voters that things are so bad they should not have high expectations for the economy along about, oh, say, 2012. Of course, the insidious aspect of this is that they know full well that the "stimulus", being a triumph of recklessness and cronyism, will be the direct cause of the malaise we'll likely be experiencing in four years. But that's a matter of mere ethics. As we all know, the numero uno, over-arching, all-encompassing goal of any office holder is: (all together now) to get re-elected.