Obama's second year
Article added on April 15, 2010
  
No one could seriously expect the Obama Administration to produce miracles in the first year. Given the fact that the U.S. President had no executive experience before taking office, learning on the job was the obvious thing to do for him.

The first year produced not only fresh starts in several policy areas, but also the continuation of more Bush policies (e.g. on Climate change and in Iraq) than many thought possible as well as some blunders.

As a result of the mixed confidence of the markets in the U.S. economy and the ability of the Obama administration to handle the economic and financial crisis, the dollar lost over 10% of its value towards the euro before the Greek crisis reversed the downward trend. Incidentally, for U.S. exports to bounce back, a weak dollar would be an advantage.

In the foreign and international policy field, Barack Obama's strategy of talking to dictators has - as expected - not produced any results yet. Iran is still in search of nuclear weapons. North Korea is not renouncing on its nuclear capability. As a result, too many dictators don't take Obama seriously.

As for Obama's friends and natural allies, too many felt ignored, some even offended. The U.S. President himself announced his plan to abandon the ballistic missile shield project protecting Poland and the Czech Republic on September 17, the day of the Soviet Invasion of Poland in 1939. Obama, the man of powerful symbols and speeches, should have known better (or at least one of his aides should have advised him on the subject). He later explained that he had a better plan, better for all, the U.S., Poland and Russia. But the damage was done.

Forcing the Israeli to finally stick to their commitment to abandon new settlements is surely a step in the right direction. But there are ways and means to do this. Netanyahu, his allies and the Israeli administration surely weren't helpful, but publicly bullying each other does not advance the peace process.

Strangely, Obama has not seriously tried to build close personal ties with his allies. Friendships across borders can be helpful in times of crisis as just for advancing “ordinary” peace time projects. He should rethink his approach.

Obama remained strangely silent (for too long) regarding the stolen election in Iran and later accepted the result of the fraudulent election in Afghanistan. Not only Karzai, but friends and foes around the world may think now that they can get away with anything.

Regarding Afghanistan, Obama waited too long before committing more troops to that theatre of war. At least, unlike George W. Bush, it did not take him years to change his mind. But he could not keep his promise to close Guantanamo within a year.

He is cuddling up to China. He should at least try behind the scenes to convince the Communist leadership that it is in their best interest to respect human rights and to open up when it comes to accurate information about what is going on in the country, which is partly happening on TV, although critics still end behind bars.

It is evident that Obama needs good relations with China and Russia to advance his political agenda. However, betraying the principles of free and fair elections, free speech and other “Western” ideas as well as avoiding to meet the Dalai Lama is not the right approach. He has to stand firm on such principles if he wants to be respected, especially in those two countries.



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In Obama's second year, it can only get better. In extremis, with all kinds of “old style politics”, e.g. allowing a pork-ridden bill to be passed without bipartisan support as well as with the fuzzy claim that the bill would save money, the president managed to push trough his health care reform (ObamaCare to some critics). Is it the end of market driven health care? Not really. Already now, there is not enough transparency and competition between doctors, hospitals, pharmaceutical and health insurance companies. There are already state-sponsored insurance plans (Medicare, Medicaid). The new bill is a step towards more state control, allowing some additional 32 million U.S. Americans to benefit from healthcare, but without effective cost control measures. Obama promised the impossible, mainly health care for more people, but cost-neutral, without thinning services and reducing benefits for people already insured (Medicaid). The truth of the matter is that with the new (European-style) bill, health care will become more expensive in the United States.

It would have been best to have a fully market oriented American system, since competition between systems is what makes the world as a whole advance. In Europe, health care costs are out of control too. Health care plans, state solutions and a 2000-page bill, which no-one could read in time, won't make the health care system more transparent, efficient and cheaper. The American society is still aging and the baby-boomers will soon retire.

The health care reform was not on top of the agenda of American voters. A majority was even against the bill. Will it end in disaster for the Democrats in the 2010 midterm elections? Maybe. But they are still far away. Probably nothing dramatic will happen to health care costs until then. The higher expenses will only come in a few years. Therefore, the voter outrage may be less dramatic in November than some fear now. However, the fight is not over yet and a dozen of states still try to kill the bill as being “unconstitutional”. It looks like a run against windmills, but it will keep the issue alive.

President Obama had to pass some kind of health care reform, otherwise he would have become a lame duck already after one year in office. It is a very imperfect bill, but the most important one in decades. Obama achieved what presidents since Theodore Roosevelt had in vain tried to do. Obama has now proven that he can deliver, that he can implement change, as imperfect as it may be. His (Democratic) troops may rally again behind him. After the election of Scott Brown in Massachusetts, there was palpable panic among Democratic officials in both the House and the Senate. Incidentally, several observers pointed out to the irony that the Senate health care bill looked a lot like the one adopted in Massachusetts.

In most other policy areas however, all the work still lies ahead. Too many companies are still too big to fail and to inter-connected. Among them are not only banks such as Citigroup, but also AIG, Fannie Mae and Freddie Mac. There was and is still no accountability for people selling junk-mortgages as secure securities.

Consumer confidence and sustainable growth still have to come back. The U.S. unemployment rate is around 10% and likely to remain high for quite some time. The deficit is not under control. Spending is out of control. Overall military spending should be scrutinized, not just the commission of one state-of-the-art fighter plane abandoned. Higher taxes may well be on the horizon. Is the introduction of a European-style VAT (value added tax) looming?

Climate change does not seem to be on Obama's agenda anymore. Among us, climate change is a fact of life on planet earth. Climate change will happen anyway. The problem is not climate change, but pollution. Even if we stopped polluting today, there would still be climate change (maybe we would drift towards another ice age).

We can start reducing pollution today, just by driving more fuel efficient cars, using cleaner and more energy efficient washing machines and computers, building better isolated houses, etc. Substantial energy savings are possible in the next couple of years. The politicians just have to adopt higher energy efficiency standards and better inform the public about energy (and money) savings. In addition, Obama should push for state funded fundamental research (Grundlagenforschung) in the field of alternative energy sources, with the results open to be used by any company willing to invest in the alternative energy sector.

Despite the few success and the many shortcomings, it is still too early to rush to a judgment over the Teleprompter President. Obama's second year in office will offer more clues. Two years of learning on the job are probably the minimum required. Obama is likely to make or break his presidency only in the second half of his first term. He may move more towards the center after the November 2010 midterm elections. Lets wait and see.

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