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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 proportions.

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 more indebted.

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.


Obama's 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” definitively.

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.

 
 Sheet music from the Great American Songbook.

 







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