Less than two months ago, economist Nouriel Roubini, the "Dr. Doom" who foresaw the 2008 economic implosion, told our own Zach Carter in an interview for Alternet that the United States needed to focus on lowering its federal deficit, and "drugging the economy with more economic stimulus or more bailouts is not going to work."
But Roubini’s latest column for the Financial Times, posted late Monday, makes a significantly different argument. Concerned about weakening global economic growth, he writes, "President Barack Obama must again persuade America’s taxpayers that a new surge in government spending is needed to protect a fragile recovery," and that in the short run other major economics must do the same.
What could have changed Roubini’s mind? I reached out to Roubini, but as of writing, he has not responded to my call for comment. But he gives some hints in the FT column, starting with its lead sentence: "It looks as if the global economy is heading for a serious slowdown this year." He predicts the U.S. economy will grow at a rate of 1.5 percent during the second half of the year, a rate he says "will feel like a recession," with effects that will include increased unemployment, continued declines in home prices and larger losses by banks and mortgage companies. In the eurozone, he predicts growth by the end of the year at "closer to zero, as fiscal austerity and stock market corrections, along with rises in sovereign, corporate and interbank liquidity spreads, take their toll."
Roubini, of course, is far from alone in his assessment of the dangers of the conservatives’ preferred policy of slamming on the brakes to economic stimulus. Last week the Organization for Economic Cooperation and Development’s Secretary-General Angel Gurría warned that "creating jobs has to be a top priority for governments" even as they seek ways to address long-term deficits. The organization’s report on the global economy concluded that "the economic recovery will be too muted to result in strong job creation and that unemployment is likely to recede only slowly," and said in its chapter on the United States that the number of long-term jobless in the United states was "a particularly worrisome feature of the U.S. recession."
In that regard, the OECD said it was "troubling" that Congress allowed extended unemployment benefits to expire in June and called for "effective job search assistance or training to improve their prospects in the labor market."
Roubini, meanwhile, is calling for some adult leadership and behavior from both ends of Pennsylvania Avenue and from both political parties.
"Plans to boost government spending in the near term, and to embrace austerity in the longer term, will only become more difficult if the president fails to explain the need for them. For their part, America’s Republicans need to accept that the path to a global recovery begins at home, with extended unemployment insurance and help for state and local governments."
There’s new evidence that if President Obama presents a coherent message in favor of boosting spending now in order to jump-start growth that would enable deficit reduction in the long run, he would win support. In the latest ABC News-Washington Post poll, participants were asked if "the federal government should spend more money to try to boost the economy in a way that creates jobs" or if that should be left totally to the private sector. Public opinion was evenly divided at 48 percent. When registered voters were asked if they would be more likely to support a candidate favoring more government spending to stimulate the economy, 39 percent said they would, 36 percent said they wouldn’t, and 23 percent said it would not make a difference.
Roubini has been prescient in his analysis of the dysfunction in the global economic order, if not always aligned with progressives on his priorities for solutions. But the American people are no slouches, either. They know that the economic "recovery" is no recovery for them. The dissatisfaction they are expressing in opinion polls is not a call to rewind the clock to the policies they rejected two years ago but a demand to deliver the change they voted for. President Obama knows in both his mind and in his heart that Roubini is making the right call, both for what the U.S. and world economy needs and the kind of leadership he is called to exert.