July 30, 2010
by Peter Nicholas & Janet Hook
If Ronald Reagan was the classic Teflon president, Barack Obama is made of Velcro.
Through two terms, Reagan eluded much of the responsibility for recession and foreign policy scandal. In less than two years, Obama has become ensnared in blame.
Hoping to better insulate Obama, White House aides have sought to give other Cabinet officials a higher profile and additional public exposure. They are also crafting new ways to explain the president’s policies to a skeptical public.
But Obama remains the colossus of his administration — to a point where trouble anywhere in the world is often his to solve.
The president is on the hook to repair the Gulf Coast oil spill disaster, stabilize Afghanistan, help fix Greece’s ailing economy and do right by Shirley Sherrod, the Agriculture Department official fired as a result of a misleading fragment of videotape.
What’s not sticking to Obama is a legislative track record that his recent predecessors might envy. Political dividends from passage of a healthcare overhaul or a financial regulatory bill have been fleeting.
Instead, voters are measuring his presidency by a more immediate yardstick: Is he creating enough jobs? So far the verdict is no, and that has taken a toll on Obama’s approval ratings. Only 46% approve of Obama’s job performance, compared with 47% who disapprove, according to Gallup’s daily tracking poll.
“I think the accomplishments are very significant, but I think most people would look at this and say, ‘What was the plan for jobs?’ ” said Sen. Byron L. Dorgan (D-N.D.). “The agenda he’s pushed here has been a very important agenda, but it hasn’t translated into dinner table conversations.”
Reagan was able to glide past controversies with his popularity largely intact. He maintained his affable persona as a small-government advocate while seeming above the fray in his own administration.
Reagan was untarnished by such calamities as the 1983 terrorist bombing of the Marines stationed in Beirut and scandals involving members of his administration. In the 1986 Iran-Contra affair, most of the blame fell on lieutenants.
Obama lately has tried to rip off the Velcro veneer. In a revealing moment during the oil spill crisis, he reminded Americans that his powers aren’t “limitless.” He told residents in Grand Isle, La., that he is a flesh-and-blood president, not a comic-book superhero able to dive to the bottom of the sea and plug the hole.
“I can’t suck it up with a straw,” he said.
But as a candidate in 2008, he set sky-high expectations about what he could achieve and what government could accomplish.
Clinching the Democratic nomination two years ago, Obama described the moment as an epic breakthrough when “we began to provide care for the sick and good jobs to the jobless” and “when the rise of the oceans began to slow and our planet began to heal.”
Those towering goals remain a long way off. And most people would have preferred to see Obama focus more narrowly on the “good jobs” part of the promise.
A recent Gallup poll showed that 53% of the population rated unemployment and the economy as the nation’s most important problem. By contrast, only 7% cited healthcare — a single-minded focus of the White House for a full year.
At every turn, Obama makes the argument that he has improved lives in concrete ways.
Without the steps he took, he says, the economy would be in worse shape and more people would be out of work. There’s evidence to support that. Two economists, Mark Zandi and Alan Blinder, reported recently that without the stimulus and other measures, gross domestic product would be about 6.5% lower.
Yet, Americans aren’t apt to cheer when something bad doesn’t materialize.
Unemployment has been rising — from 7.7% when Obama took office, to 9.5%. Last month, more than 2 million homes in the U.S. were in various stages of foreclosure — up from 1.7 million when Obama was sworn in.
“Folks just aren’t in a mood to hand out gold stars when unemployment is hovering around 10%,” said Paul Begala, a Democratic pundit.
Insulating the president from bad news has proved impossible. Other White Houses have tried doing so with more success. Reagan’s Cabinet officials often took the blame, shielding the boss.
But the Obama administration is about one man. Obama is the White House’s chief spokesman, policy pitchman, fundraiser and negotiator. No Cabinet secretary has emerged as an adequate surrogate. Treasury Secretary Timothy F. Geithner is seen as a tepid public speaker; Energy Secretary Steven Chu is prone to long, wonky digressions and has rarely gone before the cameras during an oil spill crisis that he is working to end.
So, more falls to Obama, reinforcing the Velcro effect: Everything sticks to him. He has opined on virtually everything in the hundreds of public statements he has made: nuclear arms treaties, basketball star LeBron James’ career plans; Chelsea Clinton’s wedding.
Few audiences are off-limits. On Wednesday, he taped a spot on ABC’s “The View,” drawing a rebuke from Democratic Pennsylvania Gov. Edward G. Rendell, who deemed the appearance unworthy of the presidency during tough times.
“Stylistically he creates some of those problems,” Eddie Mahe, a Republican political strategist, said in an interview. “His favorite pronoun is ‘I.’ When you position yourself as being all things to all people, the ultimate controller and decision maker with the capacity to fix anything, you set yourself up to be blamed when it doesn’t get fixed or things happen.”
A new White House strategy is to forgo talk of big policy changes that are easy to ridicule. Instead, aides want to market policies as more digestible pieces. So, rather than tout the healthcare package as a whole, advisors will talk about smaller parts that may be more appealing and understandable — such as barring insurers from denying coverage based on preexisting conditions.
But at this stage, it may be late in the game to downsize either the president or his agenda.
Sen. Richard J. Durbin (D-Ill.) said: “The man came in promising change. He has a higher profile than some presidents because of his youth, his race and the way he came to the White House with the message he brought in. It’s naive to believe he can step back and have some Cabinet secretary be the face of the oil spill. The buck stops with his office.”
October 12, 2009
The International Forecaster
The number of Americans filing first- time claims for unemployment benefits fell last week to the lowest since January, a sign the labor market is deteriorating more slowly as the economy emerges from the recession.
Applications fell by 33,000 to 521,000, lower than forecast, in the week ended Oct. 3, from a revised 554,000 the week before, Labor Department data showed today in Washington. The total number of people collecting unemployment insurance dropped in the prior week to the least since March.
While the figures indicate improvement, government data last week showed more job cuts than forecast for September and a rising jobless rate. President Barack Obama pledged to “explore any and all additional measures” to spur growth, as last week’s report underscored that gains in consumer spending may be hard to sustain once stimulus programs expire.
“The pace of job losses has slowed,” Steven Wood, president of Insight Economics LLC in Danville, California, said before the report. Even so, he said, mounting unemployment will mean “sluggish economic growth over the next year.”
Economists forecast weekly claims would drop to 540,000 from a previously reported 551,000, according to the median of 45 projections in a Bloomberg News survey. Estimates ranged from 530,000 to 560,000.
Continuing claims dropped by 72,000 to 6.04 million in the week ended Sept. 26 from 6.11 million in the prior week.
Nationwide, the number of long-term unemployed people hit a record 5.4 million in September, or 35.6% of the jobless.
The U.S. House approved $82.8 billion for federal nutrition programs ranging from food stamps to school lunch on Wednesday, including a plan to compensate poor families for lunches missed during flu epidemics.
The money is part of a $121 billion funding bill for the Agriculture Department and the Food and Drug Administration for the fiscal year that began Oct 1. Nutrition spending would rise by $6.6 billion from fiscal 2009, a reflection of the recession. [Pure socialism]
Measured in euros, U.S. per capita GDP is down 25% since 2000. Bond buyer Bill Gross of the Pimco fund summed up the situation nicely in a recent CNBC interview. Asked whether low interest rates will weaken the dollar, the influential allocator of global capital said: “I think that’s part of the administration’s plan. It’s obviously not announced—the ‘strong dollar’ is always the policy, so to speak. One of the ways a country gets out from under its debt burden is to devalue.”
Investors have been playing this weak-dollar trade for years, diverting more and more dollars into commodities, foreign currencies and foreign stock markets. This is the Third-World way of asset allocation.
Corporations play this game for bigger stakes, borrowing billions in dollars to expand their foreign businesses. As the pound slid in the 1950s and ’60s and the British Empire crumbled, the corporations that prospered were the ones that borrowed pounds aggressively in order to expand abroad. Though British equities rose in pound terms, they generally underperformed gold and foreign equities. At the end of empire, the giant sucking sound was from British capital and jobs moving offshore as the pound sank.
From the euro perspective, the S&P peaked at 1700 in 2000, finally re-attained 1100 in the 2007 bubble, fell below 600 in March and now stands at 700 (see nearby chart). With most of the market capitalization of U.S. stocks held by Americans, the dollar devaluation has caused a massive decline in the U.S. share of global wealth.
The U.S. Commerce Department launched an investigation Wednesday into whether to impose antidumping and countervailing duties on imports of certain seamless steel pipes from China.
The State of Illinois’ pile of unpaid bills has grown to a record-breaking $3 billion. The comptroller reported corporate income tax receipts down $77 million for July through September; sales tax receipts, down $244 million; personal income tax receipts, down $251 million.
It appears destined for a taxpayer bailout in the next 24 to 36 months,” said Edward Pinto, a consultant who was chief credit officer from 1987 to 1989 for Fannie Mae.
In a sign that more banks are under great pressure from the recession, 34 financial institutions did not pay their quarterly dividends in August to the Treasury on funds obtained under the Troubled Asset Relief Fund (TARP). The number almost doubled from 19 in May when payments were last made, and also raised questions about Treasury’s judgment in approving these banks as “healthy,” a necessary step for them to get TARP funding.
“Perhaps the Treasury made assumptions that were a little bit too rosy,” says Walter Todd, who invests in banks at Greenwood Capital. “My question is also whether the Treasury is staffed adequately to handle this tremendous undertaking.”
The U.S. government ended its 2009 fiscal year with a deficit of $1.4 trillion, the biggest since 1945, the Congressional Budget Office reported.