Obama half-term report: must try harder in economics

January 22, 2013

–Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own.–

In the welter of comment on President Obama’s second term, one remarkable feature seems to have slipped under the radar. This has been a presidency blessedly free of scandal. When last did the White House remain more or less scandal-free for as long as four years? His predecessor, George W., had the average scandal quotient (Halliburton contracts, the Abramoff affair among others). Before him, there was Clinton, who seemed to clock up a scandal a week – we all remember the sex, but there was also Whitewater, which involved money, allegations of graft and ultimately suicide. Under Bush Senior and Reagan we had the Iran contra affair. As for Nixon, the less said the better. Even the saintly Jimmy Carter had a problem brother and some rather loose cannons among the pals he shipped in from Georgia to staff his administration.

What makes Obama’s record all the more remarkable is that he emerged from the mire of the Chicago Democratic Party, a bye-word for corruption for decades past, and in fact the Governor of Illinois was accused of trying to “sell” the new President’s abandoned senate seat only a few weeks after the election. Moreover, you can be quite sure that this administration’s many enemies will have subjected its dealings to the most microscopic scrutiny in search of even the tiniest flaws, misjudgements and personal peccadilloes. It is truly amazing that they have found so few.

All in all, Barack Obama seems to be a man of outstanding integrity, decency and intellect, a truly uplifting speaker and an inspiring leader.

So why has his first term been such a disappointment?

In my view, his (and America’s, and the world’s) tragedy is that he was elected in 2008. If he had been in the Oval Office on 9/11, he would surely have responded far better than W – he certainly wouldn’t have made the cretinous error of calling for a crusade against al-Qaeda – nor I suspect would he have ever got America involved in a new war in Iraq. If he had been elected in the Eighties or Nineties, he might have ridden the post-Cold War wave to greatness and at the same time made some progress on the ambitious social reforms he dreams of.

Instead, America’s first black president stepped into the White House only a few weeks after the blackest day in modern economic history. A lawyer, orator and visionary found himself landed with a banking crisis of global proportions, public finances in as big a mess as ours in Britain and a political class more polarised than at any time since the Civil War. Moreover, he arrived brandishing a list of dreams posing as policy objectives  – world peace (delivered the moment he took the oath, as far as the Nobel Peace Prize Committee was concerned), universal health insurance and an end to inequality in America – and found instead that the agenda was dominated by nitty-gritty economics, the dismal science, which he seems to find both boring and mystifying. Whereas the note pinned to Clinton’s wall said “It’s the economy, stupid”, Obama appears to have one saying “Forget the economy, get on with your agenda” – hence, a ruinously expensive and wasteful health insurance scheme, a cavalier attitude to the deficit and a commitment to tax-and-spend policies that harks back to Lyndon Johnson in the 1960s. The fact that the opposition to Obama is increasingly dominated by crackpot creationists, birthers and anti-tax fundamentalists may go a long way to explaining his determination to stick to his agenda, but it cannot excuse it.

Nor are there any obvious foreign policy successes to set against these failures on the domestic front. You might have thought that, in dealing with Iran and Israel, or North Korea, or any of the other foreign policy issues, a man of his intelligence would have planned beyond the opening gambit – but you’d have been wrong. He appears to have believed that soaring rhetoric alone would echo like the trumpets around the walls of Jericho. When the Iranians and North Koreans ignored the olive branch he offered, and Israeli Prime Minister Netanyahu publicly humiliated him, he had no ready response other than retreat, so that only a few months into the Obama presidency US foreign policy seemed set on a neo-isolationist path – instead of the much touted pivot towards Asia, America has turned inward. In fact, in this respect Obama has followed the script of the Republican Party’s right-wing more or less to the letter.

The withdrawal from the role of international policeman is no more than a realistic recognition of the limits of what America can achieve given its current problems. The sooner the Obama domestic program succumbs to reality too, the better – for America and the rest of the world. In both cases, the memo on his wall should read, “No, we can’t” – not until the mess in the US public finances is cleared up.

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