Barack Obama's progress
Coming down to
earth
Mar 26th 2009
From The Economist print
edition
The president has had a bumpy ride in his first two
months
TWO months after his
inauguration, Barack Obama can already point to some impressive achievements. He
has passed a $787 billion stimulus bill—the biggest in American history—and
outlined an ambitious agenda for reforming health care and education, tackling
entitlements and pushing ggreenh energy. He has also delighted his admirers at
home and abroad by beginning to reverse George Bushfs policies on such
controversial subjects as talking to Iran, global warming, the treatment of
enemy combatants and stem-cell research.
Unfortunately, Mr
Obamafs critics can also point to a striking record of failures. A startling
number of his nominees for senior positions have imploded. The upper ranks of
the Treasury remain empty in the midst of the most serious recession since the
1930s. Warren Buffett, an early Obama-supporter and a man legendary for holding
on to stocks that he has backed, thinks that the president is taking his eye off
the ball. Andy Grove, a former head of Intel, describes the administrationfs
performance as gineffectualh. Even the commentariat, which swooned over Mr
Obamafs campaign, is running out of patience.
Many of Mr Obamafs
achievements have a Potemkin quality. He signed a $410 billion spending bill
that contains 8,570 earmarks (directing funds to specific projects), despite his
pledge to reduce the practice. His budget rests on unrealistic assumptions about
Americafs future economic growth and about the cost of his spending programmes.
He throws out numbers like confetti: Peter Orszag, his usually impressive budget
director, made a dismal job of explaining to Congress where Mr Obama intended to
find the $634 billion gdown paymenth he promised for health-care reform.
Mr Obamafs erratic
performance is partly the result of the rollercoaster world he finds himself in.
Few presidents have come to power with as much political capital. Mr Obama beat
John McCain by seven points. His party has majorities of 39 seats in the House
of Representatives and ten in the Senate. The administration can also draw on
the brainpower and political muscle of a powerful network of liberal think-tanks
and pressure-groups that were formed during the Bush years. But this understates
his strength. His election represented a turning point in Americafs bitter
racial history. It also possibly coincided with the end of a conservative era
that began with Ronald Reaganfs election in 1980.
At the same time Mr
Obama confronts an unusually difficult set of challenges. America is in the grip
of a recession that is crushing jobs and reducing demand at an alarming rate.
Some of Americafs most famous financial institutions have collapsed. General
Motors is on the verge of collapse. The unemployment rate, which is already
8.1%, could hit double figures. The American political system is arguably more
dysfunctional than ever, with the parties heavily polarised and the 24-hour-news
cycle magnifying bad news.
All this means that Mr
Obamafs first two months in office are difficult to evaluate. But a few things
seem pretty clear. This is a strikingly ambitious president: he wants to be
gtransformativeh in more than just the sense of being the first black president.
But so far his presidency has been vitiated by a combination of incompetence and
a willingness to fall back on the very tactics that he denounced as a candidate.
Indeed, his desire to be gtransformativeh may be contributing to his problems,
distracting him from the economic crisis.
Mr Obama has already
outlined the most ambitious agenda for transforming America since the Reagan
revolution: proposing universal health care, expanding the role of the federal
government in education, tackling global warming and reducing Americafs growing
inequalities. This has ignited a fierce debate about his ideology. Is he an
unreconstructed liberal who will provide the leftfs answer to Ronald Reagan? Or
is he a New Democrat, as he himself claims? The answer is probably a mixture of
the two. Mr Obama is a pragmatic liberal, more confident about big government
than Bill Clintonfs New Democrats, but less wedded to liberal solutions than
many of the old lions in his party.
He has spent his career,
apart from a year or so in business consultancy, in the non-profit sector, first
as a community organiser and later as a rising politician. In his memoirs he
often speaks disparagingly about the private sector. He draws some of his
keenest support from trade unions and liberal pressure-groups. The most
influential think-tank in Mr Obamafs Washington, the training ground for many of
his top appointees, is the Centre for American Progress, funded by liberal
billionaires such as George Soros and Peter Lewis.
But the president also
has a pragmatistfs suspicion of ideology. Some of the most prominent figures in
his administration are centrists. Kathleen Sebelius, his prospective health
secretary, was a popular governor of Kansas, one of the countryfs most
conservative states. Larry Summers, his chief economic adviser, is a famous
gorer of liberal ones. Cass Sunstein, his regulation tsar, argues that the
government should use market incentives to gnudgeh people rather than
bludgeoning them directly.
Mr Obama certainly plans
to increase taxes on the rich—but only to their level during Mr Clintonfs
administration, which presided over the high-tech boom and a surge in the
small-business sector. Mr Obama wants to reform the health-care sector. But he
prefers to supplement the private system rather than replace it with a
gsingle-payerh national health service; many of his supporters are business
people crushed by the cost of health care. He wants to increase the role of the
federal government in education. But he also speaks eloquently about introducing
more merit pay and creating more charter schools. gThe resources come with a bow
tied around them that says ereformf,h argues his chief of staff, Rahm Emanuel.
The administrationfs nervousness about old-fashioned liberalism has contributed
to its hesitancy in dealing with the banking crisis. Rather than simply
gnationalisingh the weakest banks and taking over their bad debt, it has
preferred to create an elaborate system of incentives for private investors.
If his domestic policy
is a mix of pragmatism and liberal ambition, his foreign policy is a mixture of
pragmatism and liberal caution. He has revised the legal regime governing
al-Qaeda terrorists, put an end to brutal interrogations and promised to close
down Guantánamo Bay, to the delight of the anti-war left. But otherwise his
policy is characterised by a combination of realism and caution. Realism when
dealing with other powers: he has signalled to the Chinese that he will not make
a fuss over human rights, and to Arab rulers that he will take a more balanced
approach to the Middle East. Caution when it comes to unwinding the gwar on
terrorh: he has rethought his campaign promise to withdraw Americafs troops from
Iraq in 16 months, is increasing Americafs military presence in Afghanistan and
is stepping up strikes into Pakistani territory.
The biggest surprise of
Mr Obamafs first two months has not been his policy preferences (most of which
he advertised), but a certain lack of competence. The man who earned the
sobriquet gNo Drama Obamah for running such a disciplined campaign has, since
coming to office, slipped on one banana skin after another.
He has lost a remarkable
number of nominees: two potential commerce secretaries, Bill Richardson and Judd
Gregg; a health secretary-cum-health-reform tsar, Tom Daschle; a chief
performance officer, Nancy Killefer; and a head of the National Intelligence
Council, Charles Freeman. This has clouded his administrationfs claims to
ethical purity, not least because two of the nominees, Mr Daschle and Mr
Killefer, had tax problems. It has also contributed to the sense of chaos.
Mr Obama is paying a
heavy price for securing the nomination of his treasury secretary, Tim Geithner.
Mr Geithnerfs tax problems meant that the White House had to be super-scrupulous
in vetting other Treasury figures. He was uncertain in his early public
appearances and slow to produce a plan for sorting out Americafs banks. Mr
Obamafs confidence in him may at last be paying off; his plan for buying gtoxic
assetsh, released this week, sent the markets soaring, he gave a confident
performance before Congress, and the senior ranks of his department are now
beginning to fill up. But it would have been nice not to have waited so long for
the Treasury to start firing on all cylinders.
The Obama administration
has also made a long list of smaller mistakes. Gordon Brown, the British prime
minister, ought to be one of Mr Obamafs closest allies in fixing the global
financial system, for both ideological and historical reasons. But Mr Obama
badly mishandled his meeting with Mr Brown, giving him no more than half an hour
and presenting him with a gift of a job lot of DVDs which do not even work in
Britain. The G20 meeting in London is the first get-together of all the big
industrial countries since Mr Obama came to office. But the administrationfs
preparations have been cursory.
Many of Mr Obamafs
mistakes stem from a single strategic miscalculation: he is trying to do too
much too quickly. The financial crisis would overwhelm any administration, let
alone one that is still trying to fill key jobs. But Mr Obama has chosen this
moment to tackle a collection of problems, such as health care and environmental
regulation, that have defeated much less overburdened administrations.
The administration
advances two justifications for this, one substantive (you canft fix Americafs
economy without also dealing with its long-term problems) and one political
(gNever waste a good crisish). The American economy will certainly be stronger
if the country can tame its health-care costs. But health-care inflation has
nothing to do with the financial crisis. The problem with never wasting a good
crisis is that you alienate potential supporters, particularly Republicans, and
risk overloading the system. gMr Obama likes to say that presidents can do more
than one thing at a time,h remarks Peggy Noonan, a Reagan speech writer, gbut in
fact modern presidents are lucky to do one thing at a time, never mind two.h It
is worth remembering that Mr Obamafs idol, Franklin Roosevelt, introduced a
broad reform agenda only after he had gained credit for tackling the banking
crisis.
There is plenty of
evidence that the administration is much too thinly stretched. David Smick, a
consultant, argues that Mr Obama has a three-pronged approach to the
crisis—gdelay, delay, delayh. He announces grand plans only to stint on the
details. He promises budgetary discipline only to put off the hard decisions
until later. The president pops up with a speech excoriating AIG bonuses (gI am
angryh) but fails to explain the thinking behind his economic programme. Mr
Buffett has given voice to widespread worries about the administrationfs failure
to prioritise. gJob one is to win the war, the economic war. Job two is to win
the economic war—and job three. And you canft expect people to unite behind you
if youfre trying to jam a whole bunch of things down their throat.h
Mr Obamafs decision to
announce a big-spending budget just when he is spending billions to rescue the
financial system has also reinforced worries about Americafs fiscal situation.
The Congressional Budget Office estimates that some of Mr Obamafs social
policies will be more expensive than the White House claims, and that the
economy will grow more slowly. The deficit will be $9.3 trillion over the next
decade, averaging 5.3% of GDP a year. Mr Orszag concedes that such a number
would be unsustainable.
Almost as striking as
the contrast between Mr Obamafs soaring ambition and his frequent incompetence
is that between his promise to elevate politics and his willingness to continue
with politics-as-usual. All presidents run for office promising to change
Washington and end up becoming its captives. But few have reversed themselves as
quickly as the Hope-meister.
Take bipartisanship. It
is true that Mr Obama has made some bipartisan appointments, keeping Robert
Gates at the Pentagon and giving transport to Ray LaHood. He made concessions in
stimulus negotiations, and has invited a few Republicans over for cocktails. But
his bipartisanship has been mostly of the George Bush variety: he is quite happy
for his opponents to endorse his policies.
He has surrounded
himself with hardened Democratic gpolsh such as Rahm Emanuel, his chief of
staff, and David Axelrod, his campaign strategist-turned-senior adviser. He has
filled the top levels of his administration almost exclusively with people from
the world of government: a former senator (at State), two former government
officials (Treasury and Defence), two former governors (Health and Homeland
Security). David Ignatius of the Washington Post points out that this
administration is gas thin on business experience as a Hyde Park book clubh.
This not only limits the range of advice he can hear and the experience he can
draw on. It also makes it even more difficult to prevent panic on Wall Street or
Main Street.
Mr Obama is now
enthusiastically engaged in something that he foreswore as a candidate: the art
of the permanent campaign. Senior White House advisers meet every Wednesday
night to plot political strategy. Mr Obamafs former campaign manager, David
Plouffe, is e-mailing millions of Obama supporters to encourage them to put
pressure on their congressional representatives to pass the budget. Mr Obama
gives a striking share of his set piece speeches in swing states. The Obama team
has repeatedly suggested that the Republicans are a party of gnoh who owe fealty
to Rush Limbaugh, a polarising talk-radio host. In other words, Mr Obama is
squandering his political capital doing exactly what Mr Clinton did so often in
his presidency: justifying his mistakes, trying to get the better of the 24-hour
news cycle, and demonising opponents.
Mr Obamafs decision to
restart the campaign engine is a sign of his administrationfs troubles. It is
desperate to distract attention from the fact that it has broken some of its
promises. It is determined to manage the anger stirred up by the huge bonuses
paid to various AIG honchos. It is also desperate to make sure that the
Republican Party cannot make too much political capital from the chaos at 1600
Pennsylvania Avenue. The result is a downward spiral: the more Mr Obama fails,
the more he resorts to the permanent campaign, and the more he resorts to the
permanent campaign, the more he becomes just like any other president.
To add to the impression
of business as usual, Mr Obama is continuing the long-standing trend of amassing
ever more power in the White House. He has appointed a clutch of powerful White
House-based tsars to oversee Cabinet offices. These tsars have no accountability
to anybody but Mr Obama. They have every incentive to engage in empire building
and turf wars. For example, Jim Jones, the national security adviser, is
redefining the role of the NSC to oversee everything from traditional foreign
policy to climate change. American liberals complained bitterly about the Bush
administrationfs politicisation of intelligence. But Mr Obama has arguably taken
this politicisation to new heights by appointing Leon Panetta, a Democratic
loyalist with no roots in the intelligence world, to oversee the CIA.
The president cannot yet
be described as a failure. It is still early days. Americafs political system,
unlike Britainfs elective dictatorship, is designed to be frustrating. Power is
divided. Congress uses its position to inject bloat into legislation. Presidents
ricochet between success and failure. At this point in the election cycle Mr
Clinton was embroiled in the gays-in-the-military fiasco and John Kennedy was
heading towards the Bay of Pigs.
The confirmation process
has been getting ever longer and more traumatic. Every recent president has seen
presidential nominees flame out in disgrace. Polarisation has intensified. The
recession raises questions that go to the heart of the ideological division
between the parties: should you resort to Keynesian stimulus or Schumpeterian
creative destruction? Should you bail out people who have borrowed too much
money or let them sink? Even a president who had worked hard at bipartisanship
might have been undone by these divisions. Mr Obamafs approval ratings remain in
the 60s, despite the pressure of a global crisis, and the Republicans remain
unpopular and rudderless.
During the election
campaign Mr Obama was frequently slow to respond to crises. Then, just when his
supporters began to despair and his opponents began to smell blood, he would
pull himself together and rise to the occasion. Mr Obama has been slow to get
the full measure of the presidency. He has failed to establish firm priorities,
and has all too often let events dictate his agenda. All in all, his performance
has looked shaky. But at last this week there were signs, when he revealed his
bank bail-out plan, that he is starting to do what he did so often during the
campaign: justifying the enormous faith that has been put in him.
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