Business Times - 04 Aug 2009
Time running out for Obama
Slide in opinion polls is making it difficult for him to win support on key legislation in health reform and climate change
By LEON HADAR WASHINGTON CORRESPONDENT
HE was elected as US president in the midst of the worst economic downturn since the Great Depression of the 1930s and at a time when America was fighting two unpopular and very costly wars in the Greater Middle East. Now after occupying the White House for the last six months, US President Barack Obama should be benefiting from an upward political momentum.
After all, the economic news seems to suggest that the policies adopted by his administration, including a massive fiscal and monetary stimulus, are creating the conditions for an apparent if slow recovery. Hence the GDP contracted at an annual rate of one per cent, which reflects a significantly slower decline than the past two quarters - of 6.4 per cent - and better than expected by most economists who had predicted a drop of 1.5 per cent. And, indeed, Mr Obama highlighted this better-than-expected figure of GDP shrinkage during a press briefing last Friday.
There are other signs that the economic recession may be coming to an end. Against the backdrop of improved earnings from big companies, the stock market has rallied about 44 per cent since March. Home sales have been rising in the last three months, and other economic indicators, including unemployment claims and personal saving rates, are showing an upward trend. So it's not surprising that most economists expect to see a relative surge in economic growth for the rest of the year.
But as Mr Obama met the 22 Cabinet-rank officials in Washington over the weekend to mark the six-month anniversary of the young administration, opinion polls released last week indicated that the president's approval rating was starting to slip below 60 per cent.
The president's approval rating averaged 62 per cent in early June and 61 per cent in late June, whereas it is standing now at 53 per cent, according to surveys from NBC/Wall Street Journal, NPR and Gallup, 56 per cent in a Time magazine survey, and 58 per cent in a CBS/New York Times poll. And that is about where former President George W Bush's approval rating stood six months after taking office.
Moreover, there is a growing sense in Washington that Mr Obama, who for so long has been enjoying never-ending media acclaim, may be starting to lose his political magic, that winning mix of personal charisma and Hollywood stardom that had helped him win the 2008 presidential race as a 'post-partisan' candidate.
His slide in the opinion polls is making it more difficult for Mr Obama to win support in the House of Representatives and the Senate for key legislation on health reform and climate change despite the fact that the Democrats control these two legislative bodies.
Mr Obama is already confronting very strong Congressional opposition aimed at his ambitious reform plan for the health care system - and not only from Republicans but also from conservative Democrats on Capitol Hill.
The sentiment in Congress seems to reflect the mood around the country. Indeed, while opinion polls indicate that most Americans would like to see some changes in the health-care system, the same surveys also suggest that many Americans are concerned that the legislation enacting universal health care promoted by Mr Obama and his allies in Congress would lead to a growing government intrusion in making decisions about their health care and would be very costly.
Indeed, there is a rising frustration among Mr Obama's supporters in Washington that the popular president has failed to utilise his skills as a public orator and a media star to do the required job of selling his health-care reform plan.
Instead, a lacklustre marketing strategy employed by Mr Obama and his aides provided an opportunity for the members of a powerful coalition of conservative pro-free market organisations, backed by the health-care insurance industry, to paint the Obama plan, that among other things, calls for establishing a government-backed health insurance programme to compete with the private ones, as a 'socialist' programme that would hurt the middle class.
In fact, pro-Republican anti-Obama groups have been running television commercials that create the impression that the health-care legislation that the White House is supporting would end up helping pay for abortion while denying medical services to elderly and terminally-ill patients, and encourage them to pursue the option of (supposedly government-financed) assisted suicide.
Or as the spin conveyed by these television commercials suggest, Mr Obama's health-care system would help the liberal administration achieve its alleged goals of getting rid of both unborn babies (through abortions) and aging men and women (through assisted suicides), to be paid by the struggling members of the middle class.
It's not clear to what extent this aggressive Republican media offensive has had on those Americans who, in any case, have been sceptical about the wisdom behind Mr Obama's health-care legislation. But even the most optimistic of Obama administration officials concede that the White House would probably not be able to get the ambitious plan approved by Congress. Instead, even under the best-case scenario, Congress is expected to adopt only a few modest changes in the current health-care system.
Similarly, a legislation being promoted by the White House to create a cap-and-trade system to curb greenhouse gas emissions seems to be in trouble as it faces resistance from a coalition of Republican and conservative Democratic legislators.
Republicans and conservatives have argued that a successful campaign against Mr Obama's alleged plans to establish a government-controlled health-care system along the lines of the British National Health Service - and that is an option that Mr Obama has never proposed - would help them advance their more ambitious efforts to persuade Americans that Mr Obama, who had run for president as a centrist Democrat, is really nothing more than radical figure, a member of the left-wing of his party who is trying to impose an European-style socialist model of big government.
Ironically and in reality, the socialist policies adopted the Obama administration and the team of Treasury Secretary Timothy Geithner and Fed chairman Ben Bernanke in response to the recession were an extension of steps taken by the Bush administration and Mr Bernanke - the loosening of monetary policy coupled with a fiscal stimulus whose main beneficiaries have been the investors on Wall Street - with unemployed workers and debt-wrecked consumers on Main Street waiting to enjoy the promised gains of the recovery.
In fact, what Mr Obama needs to do now is to demonstrate to the members of America's middle class, and in particular to struggling consumers and workers, that his domestic economic policies, including the health-care and climate change proposals, as well as his US$787 billion stimulus package, will benefit Main Street and are not a waste of taxpayer money.
Until now, only about US$60 billion of recovery funds has been distributed, the largest portion of which went to help states deal with rising health-care costs. At the same time, much of the US$43 billion in stimulus tax relief is beginning to flow to the individual taxpayer. This stimulus spending had some effect on the recovery, by allowing consumers to spend more and by encouraging state and local government to increase spending and help save the jobs of thousands of policemen, teachers, and health-care workers.
Even critics of the stimulus package agree and say that the GDP numbers would have been worse without these stimulus funds.
But once the stimulus money is spent, consumers will still be trying to dig out from under huge debt, weak wage growth and as Mr Obama pointed out last Friday, persistent unemployment.
'As far as I'm concerned, we won't have a recovery as long as we keep losing jobs,' he said. The President and his aides are hoping that a more speedy and effective use of the stimulus money in the coming months could help spur more economic growth in the third quarter - although the unemployment rate could actually rise above 10 per cent at the same time.
Some Democrats are urging Mr Obama to propose a second stimulus package, but admit that the chances of getting such legislation approved by Congress are slim. But if Mr Obama fails to advance his ambitious domestic economic agenda in the areas of healthcare and climate change, and to establish the foundations for a new economy with new job opportunities, he would probably be remembered as the president who had merely helped bailout Wall Street.
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