Monday, January 24, 2011

Obama at Two Years

President Obama passed the half-way mark of his first(?) term last week. When he took office two years ago we was a largely unknown quantity. He had gone from state senator to President in an amazing four years. He deliberately left his views a blank slate. He was a scary figure to conservatives. He had an extremely liberal voting record, identified himself as being a progressive instead of a liberal, and had made frequent use of communist and fascist symbolism during his campaign. His supporters saw him as everything from a pragmatic moderate to the second coming of FDR.

Two years in we are still getting a handle on exactly who Obama is and what he believes. Part of this is because he takes a hands-off approach to polices that do not interest him. Unfortunately, these include Defense and the economy. Other things that we know are that he has trouble minding his tongue, a problem he shares with his vice-president. Several times Obama has made off-the-cuff remarks that caused him problems. The most recent was in December when he called the Republicans "hostage takers", transforming what should have been a triumph into a defeat. We also know that he hates Washington DC. He takes every opportunity to leave it, something he manages to do once or twice a week.

I'm going to start at the outside and work my in on the President's interests. Ironically, the one he has shown the least interest in is what made him President - Bush's War on Terror. Obama ran against the war in Iraq, the Patriot Act, and nearly every other aspect of Bush's policies. The fact that Clinton and Edwards had voted in favor of the Iraq invasion gave Obama his first real break in the primaries. He promised to pull the troops out of Iraq within months of taking office. Guantanamo would be closed and its inmates would be tried in civilian courts. Once in office, Obama did an about face. He retained Bush's team and continued nearly all of his policies. It helped that, by that point, Bush had essentially won Iraq so any major changes by Obama risked turning victory into defeat. In Afghanistan, Obama's only consideration was balancing the needs of the military against his own party. The result of all this was been a vindication for the Republicans and a disappointment for the anti-war activists.

Obama has shown an amazing disinterest in the economy. Immediately after taking office he allowed Congress to write an unfocused, pork-laden "stimulus" bill. As soon as it passed he lost interest in actually helping the economy (although he keeps trying to take credit for any improvements). The actual running of the economy was passed to a couple of Wall Street insiders, Summers and Geithner. In the last few weeks Obama has shown interest in the economy but this came months later than it should have. Had he started concentrating on the economy in the Summer of 2009 instead of January 2011 the Democrats would have done better in the 2010 election. Obama has taken credit for saving the economy by passing the stimulus but economic indicators show that the recession officially ended early in the Summer of 2009, before any significant stimulus had been spent. Obama has also been deaf to complaints that his pet projects will hurt the economy.

Health care reform (or more accurately, health insurance reform) is a subject that Obama was interested in although, as with the stimulus, he allowed Congress to handle the messy details of actually deciding what was in the bill. His main input was to tell Congress what would not be included - tort reform and prescription drugs. While he applied pressure to keep the legislation moving, Nancy Pelosi deserves most of the credit (blame?) for actually getting the bill passed.

Obama's relationship with business is complex. In some areas he outright objects to private industry. When he took office student loans were split with half issued directly by the federal government and half through private institutions who made a profit on the transaction. Obama objected to anyone making a profit from student loans and eliminated the private role. He is not against profit in other areas as long as it is controlled. The health care bill shows Obama's preferences. Insurance companies are being transformed into the equivalent of utility companies. The amount of income that they are allowed to make a profit on is strictly controlled but, with nearly everyone required to carry insurance, profits are guaranteed. What is more, the insurance pools will eliminate the need to compete with other insurance companies. They all get a slice of the pie. This is in keeping with FDR's preferred way of dealing with business.

The environment is one of Obama's real passions. He talks about green energy a lot and has backed this up with billions of subsidies to advance it. His administration bypassed Congress on fleet millage standards and on CO2 emissions by power plants. Instead the Obama EPA has accomplished his goals by fiat. He has also obstructed off-shore oil drilling. His administration has been caught altering studies in order to justify this.

Obama is also passionate about nuclear disarmament. He has actively pursued this and negotiated a new START treaty with Russia. His success is mixed since both North Korea and Iran are still pursuing nuclear weapons.

Will Obama be reelected? This depends on a variety of factors. The biggest is the economy. Presidents tend to lose reelection when the economy is bad. Right now unemployment is higher than when Obama took office and is unlikely to drop much in the next two years. The President's economic team has been trying to fight unemployment by injecting money into the economy. This risks starting ruinous inflation. So far that has not happened but there are inflationary signs. Food and energy prices are up. Raw materials are getting more expensive. The threat of inflation in 2008 and a corresponding rise in interest rates is what brought on the collapse of the housing bubble. A new bout of inflation could end what little recovery we have. High inflation and unemployment led to Jimmy Carter's defeat in 1980. If these trends continue then Obama will be vulnerable in 2012.

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