Meanwhile, economists overwhelmingly hold that increasing spending on social programs is a far better way to stimulate the economy and create jobs than tax cuts. Tumbling share prices and lack of investor confidence are all issues that would be rapidly remedied through a robust jobs creation program and stimulus programs that built or repaired public infrastructure and helped small-businesses gain access to lending.
I've previously written that Obama is far more in line with far right economic ideology, however, his lack of any comprehensible policy vision, a willingness to apparently muddle through is a very real problem. Obama's anemic positions have annoyed moderates, such as Robert Reich, as well as the progressives that elected him. Drew Weston argues meanwhile that Obama failed to create a pertinent national narrative that holds the financial industry publicly accountable, in the same way that Teddy Roosevelt and FDR did, and thus has avoided the policies that would naturally flow from that narrative. To me, one of the big differences is that both Roosevelt's were incredible people- strong charismatic leaders with strong, progressive agendas. Teddy Roosevelt in particular was something of a superhuman, capable of subsisting on almost no sleep and armed with both a photographic memory and near pathological need to win and push himself. Obama is simply not made of the same stuff.
Part of Obama's response may have something to do with a tendency, observed in neuroscience, that people, in the face of data that would disprove their positions, are more likely to retrench their positions than to head that data. If Obama is genuinely sold on the free-market capitalism that his economic team, notably Rubin and Geithner espouse, then he is likely to ride this wave of cognitive dissonance to electoral defeat to a Tea Party ideologue - like the illustrious Rick Perry. Such joy.
*As as afterthought, as far as the current stock market palpitations go, I have to agree with Paul Krugman: why anyone should care what S & P should have to say about US securities, regardless of their rationale, when they only recently gave junk bonds 'A' ratings in the lead up to the current financial crisis, is something of a mystery. China is justifiably angry, but has been arguing that the US needs to live within it's means (and 'be nice to the Countries that lend it money') for some time.