It's hard to know exactly when the Bush economy becomes the Obama economy. But if I were an Obami I'd be hitting the panic button right now.
Why? Because the GDP growth estimate for the first quarter of 2010 has just been lowered to 3.0 percent. Already, therefore, the gangbusters growth of the fourth quarter, 5.7 percent, has moderated, according to AP.
The economy grew at a 3 percent annual rate from January to March, the Commerce Department said Thursday. That was slightly weaker than an initial estimate of 3.2 percent a month ago. The new reading, based on more complete information, also fell short of economists' forecast for stronger growth of 3.4 percent.
The usual guesstimate is that you need more than 3 percent growth to get the unemployment rate down. So 3 percent doesn't get that headline barometer on the economy down fast enough to make the Obama economy look like a winning issue, not in 2010 or in 2012.
Conservatives would say that it serves him right.
Obama's economic policy has been right out of the Keynesian playbook: print money and crank up government spending "stimulus." Next year Obama will be raising tax rates.
It's the opposite of the Reagan playbook, which was tight money, lower tax rates, and cut domestic spending.
So we are getting a laboratory test of the two competing recipes for cooking up economic growth. They can't both be right.
The reasoning behind the conservative policy is pretty simple. Government is a dead weight on the economy, so if you reduce government spending you reduce the weight. Tax rates affect economic behavior. Low tax rates encourage business activity. Easy money doesn't really help the economy. Business and savers need a solid monetary unit that keeps its value. Easy money creates a bubble economy in which the least sophisticated get burned, as we saw in the recent real-estate bubble.
We can expect more and more desperate measures from the Obama administration in the months ahead as it tries one thing after another to ignite growth. After November, of course, there's a good likelihood that the president will have a Republican Congress to deal with.
Wouldn't it be delightful if the president, against his instincts, agreed to tax cuts and spending cuts proposed by a Republican Congress--you know, with its foot on his neck, as we say these days--and then got reelected when the economy caught fire.
Because never mind whose idea it was, if the economy turns around before 2012 then it turns around on Obama's watch.