Those who fear a radical Obama miss the point of the lack of maneuverability of the next president. Behind the mortgage crisis looms the credit-card crisis, the student-loan crisis and the car-loan crisis. Sweating this mess out of the system will take two years of zero growth or contraction.
We won’t have a Great Depression, for the government will irrigate our economy with money. But we’ll have stagnation, followed by inflation.
So Obama will take office with unlimited political power but highly circumscribed practical power. He can pass whatever legislation he wants, but will be unable to indulge his ideology.
The economic situation on its own wouldn't necessarily be a problem because it could be used to excuse any and all failings. The main problem for a President Obama is that he ran under the theme of being a moderate while his actual policy proposals were all left wing. Trying to manage that together will likely put him in awful bind. I see very difficult waters ahead on both economic and foreign policy.
1) The economy.
Here is how the head of Moveon.org described Obama's victory and his own organization's expectations.
President Obama will face daunting challenges from the day he takes office. We look forward, however, to being part of the enormous wave of civic and political engagement that his Presidency has inspired and that will enable him to achieve the things that have been on the top of his agenda and ours. We look forward to the change all of us worked so hard to create
Obama won, in part, by promising a lot of goodies: universal health care, after school education, energy independence, tax cuts for 95% of the people, an end to global warming, etc. Imagine a President Obama trying to implement universal health care right after executing the bailout in the middle of a recession. Such an initiative would lead to nothing short of an economic disaster. Our economy can't sustain an overhaul and massive government expansion of health care in the middle of a recession.
What if a President Obama gets into office and realizes that such a plan would be a disaster? The left wing base would turn on him in a second. Moveon.org et al is not afraid to eat its own, just ask Hillary Clinton. If President Obama doesn't deliver in due time his base will turn on him.
His first year should likely be spent unravelling the bailout. There is absolutely no way he could possibly even try to implement universal health care while the $700 billion continues to be spent and monitored. That is a monumental task on its own. The base will likely understand this, but they won't wait past 2010 for universal health care. The base has no use for anything like ECONOMIC REALITIES. They elected Barack Obama to usher in an era of far left policies. They demand universal health care, an end to global warming, and government lead energy independence. If those demands aren't met soon, they will carve up President Obama much like they carved up Hillary Clinton.
In order for President Obama to be successful, he must govern toward the middle. Here there are several problems as well. First, this means taking on the leadership in his own party on spending. Not only is this something he has shown absolutely no interest in doing before (he voted with his party 97% of the time), but even if he did, politically, that would have its own pitfalls. If he governed from the middle, then moderates would love him. Conservatives would tolerate him, but their support would be lukewarm at best. Conservatives would turn on him as soon as he proposed the first liberal idea. Just ask John McCain how politically viable reaching out can be. Yet, his natural base would turn on him and they would eat him up. What kind of coverage from MSNBC would a President Obama get if it is the middle of 2010 and universal health care is still not a reality?
Then, there is the issue of regulations. Barack Obama has promised a "new regulatory framework". Of course, he hasn't actually specified even one actual regulation. A plethora of new regulations in the middle of a recession is pouring gasoline on top of a burning flame. Once a President Obama actually proposes specific regulations, it's likely we will see an unbelievable backlash as business commentators everywhere analyze just exactly how all of these regulations will stunt further economic growth. If any of these regulations are actually implemented, then we will likely see the economy fall further into a depression, and that would also crush his Presidency.
On global warming, a President Obama would call for tax credits for green technology. That would likely do little help but little harm as well. He's also in favor of cap and trade. Can you imagine forcing companies to meet new emissions standards in the middle of a recession? If he actually went through with this, that would crush the economy as well. Here again though, he has a problem. If he doesn't do something aggressive on global warming, the base will not stand for it. Global warming doesn't poll well overall, but it is overwhelmingly supported among the hard left. They won't merely hope for stiff anti globabl warming policies but rather they will demand it. If he doesn't move aggressively against global warming, the base will not be happy. If he moves too aggressively we will go into a depression.
Obama's main problem is his tax proposal. Whether he realizes it or not, raising taxes on the job creators (the capital gains tax, those making $250k and more, corporate tax...in other words all of his tax increases) would put this economy into a depression come 2010. If he were to actually go forward in his first year with his plan, the Congress would be veto proof for the Republicans by 2011. The Republican Speaker and Majority leader would be the de facto leaders as their policies wouldn't be stopped by either their opposition in the legislature or by a President Obama. If attempts to implement the tax proposal any later, the depression will come just in time for his reelection, and the Republicans will have a super majority come 2012.
If he didn't follow through though, the waters would be just as rough. First, his base demands that the wealthy be punished with higher taxes. Second, it would be an admission that his entire platform was nothing more than an empty campaign promise. His reversal would be the subject of attacks ad nausea in 2012. The Republicans would paint a President Obama as a man that can't be trusted to keep his promises.
2) foreign policy
The rest of the world may love Barack Obama now, but that is likely to last only so long. Ultimately, what most of the rest of the world covets is access to our market. Once the rest of the world's leaders realize that President Obama is a protectionist, he will be treated with the same venom as President Bush. Even if a President Obama attempted to be a free trader, that would have different sorts of pitfalls. First, there's no way any new free trade agreements would pass. Second, the unions and his own base would revolt if he attempted any such thing.
President Obama has other pitfalls beyond trade. His main problem will be Iraq. If there are still anything near a large number of troops left in Iraq by the summer of 2010, he would again face a mutiny in his base. Of course, holding to a firm withdrawal date would jeopardize what is now victory in Iraq. Would a President Obama really risk losing in Iraq just to appease his base? What would happen to our relations with Iraq and the Middle East if he insisted on a firm withdrawal timeline? Obama may catch a break in Iraq in that things have turned around so well that his timeline may even be met. If it can't though, he will face a no win situation. If he winds up withdrawing based on conditions, this will also be used as a bludgeon against him in 2012. If he withdraws on a timetable and things fall apart, he will have to send troops back in, chaos will ensue, and his Presidency will be totally tarnished.
The biggest foreign policy threat to a President Obama is likely to be Vladimir Putin. More and more, I believe it will be Vladimir Putin that will be the one to test Barack Obama. If Putin decides to confront Obama in a place like the Ukraine, President Obama will be stuck in no man's land. His base will demand pacificity in an such confrontation. Yet, that's what Putin likely expects and wants. If, on the other hand, Obama strikes a confrontational tone, whether in words or deeds, it is unlikely his opponents will find much comfort. Conservatives simply feel he is a foreign policy novice. Whatever Barack Obama does in a confrontation with Vladimir Putin, conservatives won't be comforted. Putin is an experienced foreign policy player, and it's likely that he would have President Obama for lunch. Furthermore, it's likely he understands this all too well, and is willing to find out.
That's a lot to handle and it will be fascinating to watch a President Obama attempt to navigate these rough political waters.
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