Monday, July 05, 2010

In Which I Proclaim the Obama Presidency a Failure

It's time to face facts. The Obama Presidency is a failure. Banking reforms (assuming they) pass, may be worth something, but even healthcare reform will be worthless if Republicans repeal it after they take control in 2012. And barring extraordinarily self-destructive behavior on Republicans' part (always a possibility), they will win in 2012.

The reason is simple. Presidents are ultimately judged on one criterion and one only; the performance of the economy on their watch. This is not fair. Performance of the economy is often beyond the President's control. Prompt action by the current administration (and other countries around the world) may very well have prevented a full-scale depression. And recovery from a financial crisis as severe as we suffered in 2008 may be inevitably slow.

But none of that matters. The point is, the economy is sinking down, and nothing seems able to stop it. Prognosticators explain that when an economy begins to recover from a recession (or begins to fall into one) is spits out all sorts of contradictory data. But the data is going fast from contradictory to uniformly bad. All the people whose job it is to be reassuring are reassuring us that the economy is not experiencing a double dip. But I am inclined to think we are experiencing something else -- an L-shaped recession, Japan style. Consumer spending is lagging because consumers are worried about high unemployment. Businesses are not hiring because consumer spending is so low. It's a vicious cycle with (seemingly) no way out. Although I believe we have averted the dangers of a catastrophic, depression-like drop, prolonged stagnation seems inescapable.

If the economy is failing, the President's popularity falls. With the fall of his popularity, he loses political capital and the ability to pass his agenda -- anything in his agenda. Furthermore, when a President lacks domestic credibility, his international political capital falls. Foreign leaders lose respect for a leader who lacks respect at home. With the failing economy, the prospects for any international diplomatic success suffer.

There is an old joke that an outgoing President gives the incoming one three boxes, one to be opened each year if the economy is going badly. The first box says, "Blame the previous administration." The second one says, "Blame the Federal Reserve." The third one says, "Prepare three more boxes." Granted, we are only in the second year. But barring some miracle, I see no reason to expect that the next two years will be any better.

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