"At
the beginning of Obama’s tenure, the basic strategy seemed clear: Prevent a
decline into depression by spending vast amounts of money; then prepare for a
systematic reduction of the national debt. But this rational strategy collided
with the reality of Washington's party struggle. … America has lost four years.
Can it regain lost ground? … The next president must show leadership on the
budget. And given the Republicans who want to be president, one hopes that he
will once again be named 'Obama.'"
President Barack Obama: Convinced that whatever he proposed would be rejected by Republicans, he has submitted a political document. But how much longer can such a thing go on?
The Oval Office shapes its occupant.
Rarely has this been as clearly observed than in the case of Barack Obama over
the past three years. The man who once campaigned with the promise of “hope”
and “change we can believe in” has now presented the last draft budget of his
first term.
It is a budget full of
illusion. Obama promises change that no one believes in any longer: taxing wealth,
investing in education, industry and infrastructure, and all that with a
deficit of over $1.3 trillion. Equaling 7.5 to 8 percent of total economic
output, the U.S. budget is not all that far removed from Greek conditions.
This is where Obama's presidency
takes on a tragic component. Of course, bringing the system of U.S. taxation
back into balance would be the right thing to do. After all, without raising
taxes, balancing the budget just isn't feasible. It would also be right to
invest in new roads and rail, new distribution networks and air traffic control
systems. And for good reason - pouring billions into America's ailing education
system is also necessary.
But all of these worthy plans
don't have a shred of a chance of passing the Republican-dominated House of
Representatives. And in an election year, the prospect of compromise with the
other side is virtually zero. So above all, the budget is a template for a rather
populist campaign by the White House.
Hanging over everything
remains the deficit and national debt. Obama Chief of Staff Jack Lew is right
when he says, "... the time for austerity is not today." Which means:
The economy is still too weak to endure massive government austerity. Indeed, despite
the deficit, and in part thanks to low interest rates, the financial markets
haven't lost faith in America. That is what makes the U.S. different from
Greece.
Posted
by WORLDMEETS.US
In the first instance,
America is being rewarded for the deficit: The nation avoids recession and
enjoys a moderate recovery. But one shouldn't underestimate the global economic
consequences of this arrangement: thanks to their austerity, Germans have never
been more isolated. Depending on how the euro crisis develops, Berlin will most
likely come under pressure from Washington. Those with money should spend it say
those on Obama's economic team.
Logic Has Been Turned on its Head
But how sustainable is all
this? At the beginning of Obama’s tenure in 2009, the basic strategy seemed
clear: Prevent a decline into depression by spending vast amounts of money;
then prepare for a systematic reduction of the national debt. But this rational
strategy collided with the reality of Washington's party struggle. Everyone
knows that the only way the budget can be restored is through a radical reform of
the pension and health insurance systems for retirees.
However, anyone taking on these
issues is committing political suicide - and presumably not just in Washington.
Anyone asking for sacrifice gets voted out. Therefore, logic has been turned on
its head: The debate that needs to take place about reforming social welfare
isn't talking place. Instead, Republicans are forcing Obama into an absurd race
to cut short-term, usually very meaningful expenditures.
America has lost four years. Can
it regain lost ground? This is what Europeans tend to underestimate: The United
States, despite its decaying infrastructure, is a dynamic and highly productive
economy. It is an economy that can withstand political error more than Europe's;
the U.S. can simply grow itself out of some of its problems. But this capacity
to tolerate error has its limits. The next president must show leadership on
the budget. And given the Republicans who want to be president, one hopes that
he will once again be named "Obama."
