One Man, One Message: If Barack Obama Is to Save His Presidency, He Must Speak Up and Persuade Americans That His Policies Are Designed to Make the Market Work for Them
Cassidy, John, New Statesman (1996)
The debt blow-up in Dubai, coming as Barack Obama and his colleagues in the White House were preparing to gobble down their Thanksgiving turkeys, provided another untimely reminder that the global financial crisis has not yet been consigned to history. Despite a resumption of economic growth, unemployment in the US is hovering above 10 per cent, and the administration is facing calls for a second stimulus package to boost job creation. Meanwhile, other elements of the president's domestic agenda, including health reform - on which Obama has staked much - a shake-up of financial regulation and proposals to tackle global warming, are mired in Congress.
According to the latest Gallup poll, the Republicans have taken a handy lead over the Democrats, and the president's personal approval rating has fallen below 50 per cent. Of recent Oval Office occupants, only Gerald Ford and Bill Clinton have had their popularity sink so rapidly. Barely a year after his historic election triumph, it is too early to write off Obama as a one-term president. Clinton's early setbacks were much more serious, and he bounced back. But the former Illinois senator faces a dangerous pincer movement: Conservative Republicans accuse him of covertly promoting "socialism" and liberal Democrats charge him with temporising and lacking a coherent philosophy. Vocal defenders of Obama's policies are thin on the ground. If the US economy enters a "double dip" recession, or even if it continues to expand modestly, but not rapidly enough to reduce unemployment, next year's midterm elections could well prove disastrous for the White House.
Inheriting an economy that was in virtual free fall, Obama was always going to face big challenges, but by failing to provide a coherent narrative for his presidency he has not helped himself. Contrary to what the critics say, his domestic agenda does reflect a consistent and far-reaching world-view - not socialism, but a moderate reformism based on the proposition that free markets sometimes fail, and that governments can fix them by employing taxes, subsidies, regulations and other policy tools. Although they haven't impressed the left, the White House's policy proposals amount to the most significant effort on the part of a Democratic president to shift the United States in a progressive direction since the 1960s.
But rather than spelling out its reformist philosophy and seeking to elevate the policy debate into a broad discussion about where free-market economics reaches its limits, the White House is fighting each policy battle individually - presenting one set of arguments for health-care reform, another for financial regulation, and a third for the stimulus package. At times, Obama sounds like a populist critic of Wall Street and the health-care industry; at others, he resorts to bromides about the power and creativity of private enterprise. Often, this cognitive dissonance is evident in the same speech. Speaking in downtown Manhattan in September, he declared: "We will not go back to the days of reckless behaviour and unchecked excess ... at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses." A few minutes later, he added: "I have always been a strong believer in the power of the free market. I believe that jobs are best created not by government, but by businesses and entrepreneurs willing to take a risk on a good idea ... For we know that it is the dynamism of our people that has been the source of America's progress and prosperity."
These statements are not necessarily contradictory, but the only way to render them consistent is to get into detailed arguments about why certain markets malfunction and others do not. In short, it is necessary to embrace publicly the economics of market failure, which is hardly a new concept. More than 200 years ago, Adam Smith warned about the dangers of unregulated banks and recommended strict financial regulation. …