Thursday, October 13, 2011

The conning of Barack Obama

Business Times - 14 Oct 2011


The conning of Barack Obama

A controversial new book claims that the idealistic president has been systemically thwarted in his reform programmes

By LEON HADAR
WASHINGTON CORRESPONDENT

EVEN in the age of 24/7 news when the most recent gossip in the blogosphere can ignite never- ending debate on cable TV news shows, forcing a politician to resign from office or produce a diplomatic row, the printed pages of that most archaic form of 'dead-tree-ware' - the Book - can still upstage the Web page and make a difference in Washington's online media-saturated universe.

Indeed, every once in a while, excerpts from a soon-to-be-published non-fiction book (which critics immediately denounce as, well, fiction) are circulated among officials and journalists, creating a 'buzz' and, in the process, redefining the political discourse and resetting the policy agenda.

For example, a series of books by prominent investigative reporter Bob Woodward that provided insiders' accounts of policymaking and of political and bureaucratic infighting and backstabbing under President George W Bush drew attention to the ineffective decision-making process in the White House that resulted in the military fiasco of the Iraq War.

It also helped shape the attitudes of the media and Congress towards the former Republican president and his national security team.

And now another prominent journalist, trying to provide a deconstruction of the response of President Barack Obama and his administration to the mess on Wall Street and the Great Recession has ignited an explosive debate in Washington over the economic policies pursued by the current White House occupant and his top economic advisers.

More specifically, in his just-released Confidence Men: Wall Street, Washington and the Education of a President (New York: Harper, 2011), Pulitzer Prize-winning author Ron Suskind tries to explain why a young and talented politician who had promised during the election campaign not only to rescue and revive the ailing American economy, but also to transform the way Washington works, has failed to maintain the support of an economically distressed electorate.

Indeed, he is now facing the prospect of not getting re-elected to a second term in office.

Insiders dishing dirt

Suskind's tale of the economic policy- making woes of the Obama administration (which, as in the case of Woodward's book, relies heavily on accounts of insiders dishing dirt on one another) raised the political temperature in Washington even before it hit the shelves in bookstores three weeks ago.

The media reported that Mr Obama was portrayed in the narrative as an inexperienced president whose ineffective managerial style, including his struggles with a divided group of economic advisers, was at the heart of what many see as the failure by the administration to deal with the economic crisis.

In fact, in one of the more sensational revelations in Confidence Men, Suskind reports that US Treasury Secretary Tim Geithner ignored a direct March 2009 order from President Obama calling for dissolving banking giant Citigroup as part of an effort to reconstruct the financial industry.

Mr Obama told Suskind that he was trying to be decisive but 'the speed with which the bureaucracy could exercise my decision was slower than I wanted'.

When asked how he felt after finding out that the Treasury had failed to carry out his order, the president recalled that 'agitated may be too strong a word'.

'The Citibank incident, and others like it, reflected a more pernicious and personal dilemma emerging from inside the administration: that the young president's authority was being systematically undermined or hedged by his seasoned advisers,' Suskind writes in his book.

And he quotes former National Economic Council chief Lawrence Summers telling his bureaucratic rival, former Office of Management and Budget (OMB) director Peter Orszag, that there was 'no adult in charge' at the White House during the first two years of the Obama presidency.

Mr Summers has denied making that comment, and the White House has launched a major media campaign aimed at discrediting Confidence Men and undermining the assertions made by Suskind.

But notwithstanding the accuracy of this or that quote (Suskind, who taped most of the 200 or so interviews he conducted, stands by most of them), the book raises a more fundamental issue than just President Obama's managerial skills.

Even Mr Obama's harshest critics would argue that the challenges he faced (and still faces) were clearly more formidable than those of his predecessor.

At the centre of Suskind's narrative is the following thesis: not unlike President Franklin D Roosevelt (FDR) - who was elected during the Great Depression by an American public that wanted him to transform the entire structure of the American economy - President Obama, who entered office during the Great Recession, was provided by the American people with a similar political mandate to redefine the relationship between Washington and Wall Street.

The way Suskind sees it, the American voters expected President Obama to embrace a New Deal-like economic and social agenda that would have re-empowered the federal government to take bold action to tame and regulate a wild and irresponsible financial industry, and ensure that its institutions would operate under tight public scrutiny and cease to be 'too big to fail'.

Moreover, Suskind seems to believe that Mr Obama could have emerged as a transformative president like FDR by mobilising public and Congressional support - and by managing the bureaucracy - as part of a strategy to change the way Washington does business.

He should have checked the power of lobbyists and their corporate clients, and thus empowered the American people. Instead, Suskind blames Mr Geithner, Mr Orszag, Mr Summers, and former White House chief of staff Rahm Emanuel, and other members of the White House's economic team of pursuing the kind of Wall Street- friendly policies that President Bill Clinton had promoted in the 1990s and of placing major obstacles on the way towards New Deal II envisioned by President Obama.

The White House occupant, in turn, lacked the managerial skills to overcome this kind of alleged obstruction by the unelected bureaucrats.

Congress power balance

But the notion that Mr Obama had a mandate to carry out a set of transformative social-economic policies in line with the agenda of the progressive wing of his political party tends to disregard the balance of power on Capitol Hill in the aftermath of the 2008 election.

Even the most progressive president could not have won a clear majority in the House of Representatives and the Senate for such dramatic steps as nationalising some of the ailing financial institutions or establishing a government-controlled healthcare insurance system.

It was not only the opposition from the Republicans that would have made it impossible for Mr Obama to gain support for these and similar progressive plans; conservative Democrats (who constitute at least a third of Democrats in the Senate) would have constrained President Obama's ability to move in that direction.

And that assumes that the president himself was committed to left- of-centre ideological principles - as alleged by his Republican and Tea-Party critics and imagined by many progressive Democrats and Suskind. But contrary to the fears on the right and the hopes on the left, Mr Obama had no intention of becoming another FDR.

In fact, by bringing former Clinton administration officials like Mr Geithner and Mr Summers into his administration, President Obama made it clear that, if anything, he was hoping to pursue a series of Clinton-like centrist economic policies.

And in many ways, Mr Obama and his economic team proved to be successful in implementing that kind of agenda.

They did save the financial system, rescue the auto industry, pass a massive health reform bill and a historic financial-reform act - while getting Congress to approve a major stimulus plan to counterbalance the disastrous drop in GDP.

It is possible that they could have done better and achieved more - but in the circumstances, everything they did achieve sounds very transformative.

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