The liberal Democratic message is that prosperity can be achieved and sustained only by building infrastructure and human capabilities through public works, education, public health improvements, etc.
But it takes time to generate economic growth through these mechanisms. Investments in children, for instance, take years to pay off. And in the short run, it all costs money. So Democratic programs and electoral success depend on economic growth to generate the funds to get these projects off the ground.
The problem is economic growth will be limited in the foreseeable future.
William Galston takes a look at the economic and budget forecasts recently released by the Office of Management and Budget and the Congressional Budget Office, and it doesn’t lead one to be optimistic:
If the consensus these documents represent is in the ballpark, the country and the Obama administration are in for a rough ride. Consider the following:
After shrinking over 2009, real GDP will grow only anemically in 2010 before that growth accelerates for a few years and then subsides to below 3 percent for the second half of the decade.
Unemployment will remain persistently high, averaging about 10 percent in 2010, when Democrats will be trying to defend their recent congressional gains. It will be close to 9 percent in 2011, but remain well above 7 percent as late as 2012, when President Obama presumably will run for reelection.
After years of economic recovery and growth, budget deficits will remain larger throughout the next decade than most economists (and the administration) consider acceptable, raising debt held by the public to between 67.8 percent (CBO) and 76.5 percent (OMB) of GDP by the end of the decade.
Without spending, the Democrats can’t do what the American public elected them to do. But without economic growth in the short run, deficits will continue to increase, making the arguments for spending less convincing.
The message Obama has to sell is that the deficits will produce prosperity in the long run. But that is a tough sell for a public that expects magic ponies for Christmas. Getting the public to consider the long term is Obama’s biggest challenge. But the debate over health care and the disappearance of the global warming from the agenda suggest he hasn’t made much progress in convincing the public to take the long view.
As I pointed out earlier this week, the budget numbers are the responsibility of one G.W. Bush. But that is the card Obama has been dealt.
Unless Obama becomes the “magic neurosurgeon” with the skills to heal the collective American psyche, his electoral prospects may be dim.
