LAST January, Barack Obama sat in the audience during the State of the Union Ad dress. As a top contender in the Democratic nomination battle, he was the subject of more attention than the other 535 lawmakers, to be sure, but still only a senator.
Now he’s the very center of the whirlwind, the world’s most powerful man at (if the normal laws of physics hold) the apex of his influence.
He will be trying to sell an ambitious liberal agenda while promising to cut the deficit; to reassure the market while acknowledging dire economic conditions; to keep the populist wolves at bay while explaining the banking, housing and auto bailouts.
Daunting as this is, he can take comfort in one small thing – at least his speech won’t be aired with a tiny box tracking the sinking Dow.
The conventional wisdom is that Obama’s warnings about the economy have scared its “animal spirits” and if he were only sunnier, the stock market would pick up.
Please. It’s reality, not Obama’s words, tanking the market. The banks are in perilous condition (and no one can be sure what Obama will do about it), and the housing market doesn’t appear to have hit bottom. The federal government is running the highest deficit as a share of GDP since World War II, and higher taxes (and probably not just the ones Obama has promised) are assured.
Obama still has a political cushion on the economy because he inherited such a mess – but, from now on, that cushion diminishes by the day. The ever-accelerating pace of the news cycle, plus Obama’s overexposure and the size of the stimulus package (and the rapidity with which it passed) all mean he’ll probably take ownership of the economy too quickly for comfort.
In an astonishing about-face, he’s already talking about cutting the deficit he was desperately urging Congress to increase less than two weeks ago. The idea is that once the Keynesian stimulus has worked its magic, it can be rolled back up as the economy recovers, jolted back to life by highway re-paving projects and upgrades to federal buildings.
Of course, in keeping with this theory, Obama should have objected to the more than $200 billion in the stimulus that is spent in 2011 or after. But that spending is “investment” for long-term growth.
As one wag observed, we’ve gone from the era of tax cuts supposedly paying for themselves to spending increases paying for themselves.
Obama’s emphasis on the deficit is driven by a simple fact: We can’t run trillion-dollar deficits forever without courting dire consequences. An alarming Brookings Institution report on the fiscal outlook notes that markets are beginning to consider it at least imaginable that the US will default on its debt in a few years.
Obama insists he’ll impose budget discipline – by conveniently doing all the things he already wanted to do: scaling back the Iraq War, raising taxes on the rich and further nationalizing (“reforming”) health care.
The first two at least reduce the deficit; the latter is a poorly disguised budget-buster. When has government ever expanded its health-care programs and achieved a cost savings?
Obama styles himself a post-partisan pragmatist, so he also talks about reining in entitlements. “Social Security, we can solve,” he told The Washington Post, with a dismissive wave of his hand before taking office. His plan was to form a commission to study the program, a typical Beltway expedient. But he has shelved even the commission idea for now under pressure from Nancy Pelosi and Harry Reid.
It’s much easier to host a “summit” on fiscal responsibility, as he did yesterday. One news item from that confab: He’ll be holding another summit, on health care, next week.
This all plays to Obama’s strength, which will also be on display tonight: the ability to talk, forcefully and persuasively. Ultimately, though, he’ll be judged on more exacting standards: Can his program cohere, and does it work?
comments.lowry@nationalreview.com