Wednesday, February 15, 2012

Obama Presidency

"Of course, the presidency is not a lab experiment."

But does it mean then it can only be 'care taking presidency in the second term'  protecting 2 bills passed in the first term? No, that will be kind of under selling the presidency and even Obama. Way too underselling of power and legitimacy Americans lend to Presidency, even after discounting 'spoiler games' played by Boehner and McConnell. Intransigent political opponents is not some kind of novelty. Hell, Lincoln even had adversaries who fought real war - blood, death, tresuary and bullets all in reality. 

In domestic policy, apart from protecting Affordable Care Act and Frank-Dodd; Obama needs to fundamentally alter American trajectory where the final stop is Greece style Debt catastrophe. Presidency is not a lab experiment because it is needed to answer or facilitate resolution of historical challenges faced by the nation. Obama was needed to resolve our deficit problem permanently regardless of whether he campaigned to solve that problem or not. Great Recession of 2008 prevented him from doing that. Ok, then did he try to address fundamental causes/contradictions exposed by the Great Recession of 2008? Frank-Dodd is only one piece to tame down Wall Street. Bringing down health care cost is another piece and ACA is only partial there, still a long way from implementation. What about the root cause of Great Recession of 2008 - Housing and Mortgage Sector Reforms? How far is Obama there? One can safely say that Obama Team essentially lacked necessary imagination to come up with politically suitable way to revive American Housing Finance early on. Republicans did not derail any such policy because in the first place Obama did not take pains to define, articulate, sale and execute any plausible housing & mortgage finance policy. HAMP and all that, that was all playing on margins.

During the recession, it is understandable that Obama could not afford Tax Reforms (though some would sarcastically say 'however he could afford Tax Cuts'). But then what did he do to end the recession early and permanently? He did the stimulus act, but naively allowed his sub-ordinate (Christina Romer) to set high political expectations which could not be met and in the process completely disgraced Krugman style Keynesian approach which might have helped to end recession early. Given an opportunity he played safe with his Fed choice of Bernanke without exploring or selling an option of 'an aggressive Fed chief' who would have followed more intrusive monetary policies. Not that the choice was total bad (as Bernanke is still better than Greenspan), but Obama lost an opportunity to highlight what more aggressive Fed could do. Consequence of all this is longer misery for Americans.

Beyond rectification of recessionary causes and immediate aftermath, Obama talks a good game of reorienting American economy to better suit globalization and make it competitive. But so far it is a talk only or at the best tentative measures (few Free Trade Agreements). Challenge is when globalization has broken the back of American Middle Class, how do you adopt an industrial policy (which American Politics is not used to)  that will disrupt this zero-sum game between Global Corporations and American Labor. We are no where there. Neither there is any compelling narrative nor any attempt to fundamentally re-engineer and gear American Economy to face tomorrow's hyper competitive world. Republicans do not talk all these things and simply repeat their rote prescription of tax cuts at all times, but that is not an excuse available for the sitting President who wants to make a lasting difference. 

Further, during the Debt Ceiling debate of last year, it is true that Obama had much limited set of options. But the fact is he did not dare to stop Social Security and Medicare until the long lasting Debt Accord was reached. Eric Cantor was indeed able to call his bluff and America lost an opportunity at right time to alter the course from $1 Trillion deficit per year. 

Now do you still want to call job of Obama Second Term is to simply guard few laws passed or to undertake all the unfinished business of the first term? Or to rectify the mistake of missing more important work (like speedy recovery of Housing and fixing competitiveness of American Economy)? Obama got carried away by Rahm Emmanuel and his insistence that 'they wanted to fire on all cylinders simultaneously'. Bit of political instinct and sense of historic duty were required to prioritize and serialize policy execution. Obama's second term is an opportunity to undertake what was missed in the first, not just to guard what was done partially in the first term.

All this is without mentioning equally challenging problems to be solved in foreign policy - stabilizing Afghanistan without any further deep involvement, containing nuclear Iran and help move forward Arab-Israel conflict towards its resolution. World is grasping at the lopsided nature of global institutes (UN or IMF or WTO) where victors of WWII are lingering far too much on the world stage without commensurate capabilities to contribute nor abilities to compete with new power brokers like Brazil, Germany, Turkey, India apart from China. To think of an American Presidency where it is not instrumental in bringing any of these monumental changes in world affairs, is to believe GOP derision of Obama - he does not realize America's true potential and abilities in helping the world toward more perfect union. At that point it will not be just under selling of Obama, it will be under selling of America.

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