Krugman on Why Liberals Should be Happy with Obama's First Term

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Ben Cohen
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Nobel Laureate and professor of economi

The New York Time's economic sage Paul Krugman has written a reasonably flattering assessment of Obama's first term in office, outlining three major areas he sees Obama having a significant impact on. While Obama hasn't delivered everything he promised, when it comes to health care, inequality and financial reform, Obama has made substantial progress that has pulled the country back on the right track from the disaster left by the Bush Administration. Here's Krugman on health care:

This was what was possible given the political reality — the power of the insurance industry, the general reluctance of voters with good insurance to accept change. And experience with Romneycare in Massachusetts — hey, this is a great age for irony — shows that such a system is indeed workable, and it can provide Americans with a huge improvement in medical and financial security.

And on inequality:

Health reform will provide substantial aid to the bottom half of the income distribution, paid for largely through new taxes targeted on the top 1 percent, and the “fiscal cliff” deal further raises taxes on the affluent. Over all, 1-percenters will see theirafter-tax income fall around 6 percent; for the top tenth of a percent, the hit rises to around 9 percent. This will reverse only a fraction of the huge upward redistribution that has taken place since 1980, but it’s not trivial.

And finally, financial reform:

The Dodd-Frank reform bill is often disparaged as toothless, and it’s certainly not the kind of dramatic regime change one might have hoped for after runaway bankers brought the world economy to its knees.

Still, if plutocratic rage is any indication, the reform isn’t as toothless as all that. And Wall Street put its money where its mouth is. For example, hedge funds strongly favored Mr. Obama in 2008 — but in 2012 they gave three-quarters of their money to Republicans (and lost).

While it may not seem like a huge amount, given the ferocious opposition he faced from the Republican Party, the policy victories are actually quite significant. It should also be remembered that Obama had literally zero executive experience when going in and had to learn on the job. Given Obama's hammering of Romney during the Presidential election and subsequent bashing of Boehner and the House Republicans during the fiscal cliff negotiations, it seems Obama has learned how to use his power far more effectively. And as the Huff Post's Sam Stein notes, we should expect a far more aggressive approach in Obama's second term:

Barring some collectively cathartic Beltway experience, the Obama administration will not usher in an era of post-partisanship. The forces of gridlock continue to have the upper hand, and they will have a tangible impact on the president's tactics and ambitions.

Obama and his aides are neither fretting nor apologizing. Rather, while expressing a continued preference for politics by consensus, they are embracing the need for a more aggressive, even confrontational approach. The president signaled as much by vowing simply to not negotiate with Republicans over raising the debt ceiling. He upped the ante with the introduction of his gun policy reforms, which were more comprehensive than expected.

The training wheels have come off, and now it's time to see whether Obama can deliver more far reaching and transformational changes to America. There is a long way to go, particularly on the economy and on foreign policy, but given his achievements on financial reform and health care, and now the nomination of Chuck Hagel to Secretary of Defense (a major shift in the incestuously neo-con dominated Washington), it looks as if he has a fighting chance of doing so.