The change we don't need

Robert Samuelson:

As he assembles his economic team, Barack Obama faces a central strategic decision that only he can make. Starting with his "economic stimulus" plan, will he focus mainly on reviving the economy and relieving the financial crisis? Or will he use the economic crisis as a vehicle to advance a more ambitious social and economic agenda? The two approaches are at odds. The first aims at building political consensus and economic confidence; the second would intensify political conflict and economic uncertainty.

The decision ought to be easy. Every new president is assaulted by his own supporters, who want him to put their particular agendas atop his "to do" list. That's already happening, as Obama allies clamor for speedy action to provide universal health insurance, combat global warming and support trade unions. But Obama -- and the nation -- would be better served if he concentrated for his first year on stabilizing the economy while patiently laying the groundwork for more far-reaching proposals.

The hallmark of this economic crisis has been its capacity to surprise: the desperate plight of the Big Three U.S. automakers is the latest reminder. We can expect more surprises, because the U.S. and global economies continue to weaken at a worrying pace. Consumer confidence has plunged. In October, U.S. factory orders for durable goods (machinery, autos, appliances) dropped 6.2 percent. Abroad, signs are no better. Worldwide manufacturing production is declining at an 8 percent rate. Germany is in recession; China's growth has slowed sharply.

Against this backdrop, the parallel pursuit of crisis management and sweeping domestic reform is at best distracting. In practice, it may be politically poisonous. Superficially, the two objectives can be made to seem compatible. Obama can plug "green" investments as a way to restore job growth; he can tout a more efficient health-care system as a way to control health costs. But these rhetorical debating points obscure as much as they reveal.

Any program to refashion the energy and health-care sectors -- to take these obvious candidates -- would be complicated and contentious. Some producers and consumers would win; others would lose. Proposals would create massive uncertainties for businesses and raise the probability of higher costs. To succeed in curbing greenhouse gas emissions, for example, any "cap and trade" program must involve higher energy prices.

The notion that "green" investments would be large, permanent net creators of jobs is mostly a mirage. Somehow these investments must be paid for. If that happens through higher prices, higher taxes or cuts in other government programs, then "green" jobs will mainly substitute for other types of jobs. As for curbing health-care costs, that's desirable. The trouble is that the first effect of Obama's health-care program would probably be the opposite. Expanding insurance coverage would initially raise health spending, as greater demand for medical care met a (relatively) fixed supply of doctors, hospitals and clinics.

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The temptation will be to press ahead with a "bold" legislative agenda -- to ape the New Deal. This would be a mistake. The psychology of bruising legislative battles will not bolster confidence. The country does need to face its health and energy problems as well as deficit-ridden federal budgets. But trying to do too much too soon risks doing none of it well. We -- and he -- are caught up in a web of contradictions. In the long run, we need to discipline our appetite for health care and energy; we need to reconcile our desire for government benefits and our willingness to be taxed. But Obama's first job is to avert an economic freefall.

Obama's health care and energy policies would turn a downturn into a rout. So would his tax policies. With the falling price of energy, there should be less pressure for the green team approach. We still need to encourage domestic production of energy for national security reasons. That is something Democrats have opposed for nearly 30 years. If he overcomes that, it would be change for the better, but it is probably safer to say he want.