Obama tries a Clintonian swerve
By Clive Crook
Published: January 9 2011 20:25
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The White House had hoped to spend this weekend plotting its new economic strategy. Instead the atrocity in Arizona demanded its full attention. The political implications of the murders are unclear, and in a few days the country might have moved on. In the immediate aftermath of the shootings, though, US political divisions seemed capable of becoming even angrier than before. Conceivably, it could complicate the adjustment Barack Obama is considering in the direction of his presidency.
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Mr Obama and his party have come to a critical moment. If the top White House appointments the president announced last week were not calculated affronts to progressive Democrats, they might as well have been. William Daley, who replaces Rahm Emanuel as Mr Obama’s chief of staff, and Gene Sperling, who succeeds Larry Summers as head of the National Economic Council, have credentials to arouse the disgust of every left-leaning liberal.
Mr Obama and his party have come to a critical moment. If the top White House appointments the president announced last week were not calculated affronts to progressive Democrats, they might as well have been. William Daley, who replaces Rahm Emanuel as Mr Obama’s chief of staff, and Gene Sperling, who succeeds Larry Summers as head of the National Economic Council, have credentials to arouse the disgust of every left-leaning liberal.
The new recruits are not actually Republicans. That is about all a progressive could say in their defence.
Mr Daley was a Clinton-era commerce secretary and a champion of the North American Free Trade Agreement. Lately he has been a board member of Third Way, a group of centrist Democrats plotting further outrages. Mr Sperling was an architect of Clintonian “triangulation” – it means betrayal – and a noted fiscal hawk. To complete these perfect New Democrat résumés, both men have been employed at impressive salaries by banks.
One theory, therefore, is that the president has reflected on the Democrats’ midterm drubbing and has decided, finally, to emulate Bill Clinton. He has stopped caring what the left thinks; he will make peace with corporate USA, make deals with Republicans, and pitch his case for re-election in 2012 to middle America.
This would be an excellent plan. So far, it is just a theory.
Remember that Mr Emanuel was also a traitor by progressive lights (he advised against healthcare reform while the economy was weak). Mr Summers was a fiscal conservative, pro-Nafta, a former Clinton Treasury secretary and a Wall Street alumnus. In some ways the new team is not that different from the old team.
Ideology aside, there were other reasons for choosing Mr Daley and Mr Sperling. They are effective political operators. They are clever, engaging and well-liked. They have a way with the press. Wherever Mr Obama decides to go next, these are valuable qualifications.
Certainly, the president has repudiated the notion that to win in 2012 he must stop dithering and steer hard-left. But the key thing is that these appointments will not, by themselves, correct the mistake the president has made up to now: namely, trying to have it both ways. In fact, the new hires may be further instances of that very syndrome.
Mr Obama’s strategy so far has made a virtue of settling for less than he wanted. He hoped leftwingers would respect his principles and moderates would like his pragmatism. As it turned out, leftwingers despise his pragmatism and moderates fear his principles. Instead of being a reluctant centrist, he needs to be a centrist by conviction – and if he cannot mean it, he had better learn to fake it.
This is not just a tactical necessity for 2012. Now that Republicans control the House of Representatives, getting US economic policy back on track – a task that cannot wait two years – demands the same approach. Mr Obama cannot wait for others to meet the country’s long-term fiscal challenge. He and his team must devise a plan, then sell it.
If the president had hoped an improving economy would provide some breathing space, he may need to think again. Last week’s unemployment figures were poor. Mr Obama greeted the drop in the headline jobless rate, from 9.8 per cent to 9.4 per cent – but beneath this lies a surge of discouraged workers out of the labour force. The economy is creating jobs too slowly to match population growth, let alone restore full employment.
Ben Bernanke, Federal Reserve chairman, told Congress it might take five years for the labour market to return to normal. The prospect of sluggish growth compounds the problem overshadowing economic policy: it increases the need for short-term fiscal ease, while worsening the long-term outlook.
Mr Obama and his new team are promising to focus on the economy. Better relations with business are an obvious priority. On jobs, expect lots of small initiatives, amounting to not very much. The real and urgent issue is the hardest: fiscal strategy.
Maintaining fiscal accommodation this year and next requires a credible commitment to consolidation later. This is easy to see, but very difficult to do. Announcing a new focus on the economy, whatever that means, is not enough.
It comes down to this: will Mr Obama and his new team dare to be bold? Will they propose, in the state of the union address later this month and then in the budget, comprehensive and necessarily bipartisan reform of taxes and entitlements, as recommended by the Bowles-Simpson fiscal commission?
I am sure that Messrs Daley and Sperling see a lot they like in the findings of the cat-food commission, as progressives call it. Mr Obama, on the other hand, sees a final and an irreparable breach with his one-time friends and allies.
Copyright The Financial Times Limited 2011.
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