Obama under pressure
Article added on September 2, 2010
The American President Barack
Obama is increasingly under pressure. Government spending is out of control.
The budget deficit is gigantic and the US debt as a part of GDP is
skyrocketing. Fiscal discipline has not been restored. The Obama
administration and Congress are spending more on the military than
ever before. Healthcare costs will skyrocket. The idea that ObamaCare can
cover more people without costing more because hundreds of billions of
dollars will come from Medicare, without reducing the coverage for the
elderly, is a fairytale. Repealing the Bush tax cuts may well be necessary
to find back to a sustainable path, but it is not the one and only measure
to bring back a balanced budget.
In many States, the situation is dramatic. According to a July report by the
center on Budget and Policy Priorities, in California, the shortfall in the
2010-2011 state budget is 22%. And that's only the thirteenth worst budget
outlook among the fifty states. The worst shortfalls are in Nevada with 54%
and Illinois with 42%. Staggering numbers indeed.
America's special problem is that not only the federal government and the
states have been mismanaged, offering a failing infrastructure to their
citizens, but also the citizens themselves are highly indebted. The times of
living beyond your means are over in order to avoid a disaster of Greek
Living on credit is no longer an option.
As mentioned in early 2009, the catch-22 for the U.S. citizens is that,
at the same time, the US economy is driven by private consumption. If you
save more, you will slow the recovery. If you spend more, you end up even
With unemployment still between 9% and 10% and underemployment around 18%,
US voters are angry and will present the bill to the Democrats on November
2. According to a Gallup poll published on August 30, the intentions of
voters currently favor the Republicans with 51% over the Democrats with 41%,
the highest lead ever by Republicans since the creation of this poll in
1942. No wonder many elected officials of the Democratic Party are in a
state of panic and do not want to be seen standing next to President Obama
anymore. The teleprompter president has lost his Midas touch.
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Obama's financial reform falls
short of expectations. The banks are still too big. In fact, there are
fewer, but bigger banks. They remain too interconnected. The bankers'
accountability - e.g. when selling junk mortgages as secure securities - has
not been enhanced, existing anti-fraud laws have not been enforced and due
diligence has not been respected.
Fannie Mae and Freddie Mac still control half of all American mortgages.
They remain a ticking time bomb.
My advice of January 2009 was to split them up into 1000 companies and
limit the market share of mortgage companies to 0.5% nationwide and to 5%
statewide. Nobody needs giant mortgage companies. A five billion dollar
company would still represent a business big enough to thrive.
On the military policy front, President Obama wisely favored continuity,
even on the personal level. He kept the able Secretary of Defense Robert
Gates. In August 2010, twenty months after he took office, Obama kept his
pledge to bring the combat troops home from Iraq. Some 90,000 soldiers have
left the theatre of war, with some additional 50,000 troops still remaining
there. However, the situation on the ground is still not fully under
control. Numerous assassination attempts are being perpetrated on a regular
basis, with dozens of victims on too many occasions. The Iraqi politicians
have not helped improve the situation either. Six months after the
parliamentary election of March 7, 2010 Iraq is still waiting for the
creation of a coalition government.
In Afghanistan, President Obama rightly criticized the incompetent and
corrupt government Karzai. In the end however, he decided to accept the
result of a totally
fraudulent election. President Karzai, a man fluent in English, must
have bewitched his American counterpart with his fairytales about progress
regarding the democratization and alphabetization, the fight against
corruption and for the rule of law. With such a dubious ally, the United
States and the West as a whole have only limited credibility when
criticizing fraudulent elections in Iran, Myanmar or elsewhere.
Afghanistan strategy remains a mystery. Bringing in tens of thousands of
additional troops just to send them home after a year or so does not make
sense. A long term military effort has to be backed up by a decade-long
economic and financial support to improve the countries infrastructure, the
army, the police and the schools. To erase the all-corrupting drug traffic
and to combat the rampant illiteracy (situated around a staggering 70%)
alone will take a decade. If the West's Afghan effort is serious, it is
still only at its very beginning.
In the Mexican Golf oil spill disaster, President Obama looked weak too. BP
had an abysmal safety record before it was allowed to take up its offshore
deep sea drilling. The authority overseeing the oil industry, the Minerals
Management Service, has been scandal and corruption ridden under George W.
Bush. President Obama, reversing his presidential campaign pledge, should
have made sure that both BP and the Minerals Management Service had
seriously overcome their own flaws. In reality, nothing had fundamentally
changed. Furthermore, Obama's crisis management was weak. His decision to
forbid all further offshore exploration was a panic reaction punishing
companies who played by the rules and further damaging the regional economy.
Instead of going on holiday on the Mexican Gulf coast, the US president
decided to stick to his initial holiday plan, vacationing somewhere else in
the US, playing golf instead of taking care of the Gulf crisis. He seemed to
have lost his “Mojo”
The passing of “ObamaCare” was
surely not on top of the priority of American voters. However, Obama needed
to pass some kind of reform to present himself as a “doer”. Otherwise, he
would have ended as a lame duck after just a year in office. Still, the kind
of reform he passed looks like a black hole. It was surely a major reform,
but one that points in the wrong direction.
The teleprompter president has disappointed on many other fronts. Guantánamo
has still not been closed down. He has been unable to connect with other
world leaders. He seems to ignore his European allies. If he wants to
achieve his ambitious goals on the international level, he needs good
personal contacts with his partners around the globe.
Wavering on the constitutional rights of Muslims to build a
Mosque or a community center in New York City near Ground Zero does not
enhance his standing either. NYC Mayor Bloomberg looks much steadfaster.
It was clear that Barack Obama, a man with no executive experience, would
rely on learning on the job in the highest office. If he doesn't turn the
situation around after November 2 - set to be a disaster for Democrats - he
will end up like Jimmy Carter. Bill Clinton, who moved to the center after
two disastrous years as president, has to be his model. Not
social-democracy, but the political center is the clue to success. L.G.
with the help of H. Harriet.
music from the Great American Songbook.