Obama’s real test begins now

It is hard to imagine that Barack Obama has not been President of the US forever.

Written by Meghnad Desai | Published: February 8, 2009 1:18 am

It is hard to imagine that Barack Obama has not been President of the US forever. In New York last week,I saw everywhere how much people have taken him for granted. There is still enthusiasm but now it is life as usual. One question is being asked again and again. Here is a man who was not from the Establishment. Can he work the system,roll with the punches and still come out on the top like Bill Clinton or John Kennedy? Or will he be like Jimmy Carter—an idealist who was also naïve and failed to break the Washington DC world. Being a nice man is not enough in politics anywhere; in American politics,it could be a positive disadvantage.

Obama has already had his setbacks. He lost Bill Richardson whom he had wanted as Commerce Secretary before taking office. His nomination for Treasury Secretary Tim Geithner just managed to get his nomination through confessing to some tax payment lapses. Now he has lost Tom Daschle. Yet he has proved his point that his insistence on clean politics is real. Daschle had paid up his tax but in arrears. He had to withdraw from his nomination for that fault. The scrutiny that Cabinet nominees go through in the US is exemplary. How many countries can boast of that level of transparency?

But Obama has already tasted opposition. The Republicans in the House of Representatives unanimously voted against his stimulus plan. The Senate is examining it closely and soon Obama will have to start bargaining line by line for his plans. He has challenged Wall Street by proposing a cap on CEO salaries,so far only for those banks which will get support in the future. All the banks which have been given billions already have escaped but this is going to be a real battle. There is a distinct feeling that this may end up as an empty gesture.

The problem is that the recession is proving to be much tougher than anyone expected even three months ago. Despite hundreds of billions spent in recapitalising the banks,credit is still frozen. Cutting interest rates as the Fed has done aggressively is not restoring the confidence in the banking system,which has seized up. Somehow Obama has not altered the climate as FDR did in 1933 by his bold Inauguration Address. Obama disappointed in his address by being low key and long winded. Some green issues apart,the address lacked real punch.

Obama still has seventy per cent support,which is a record even for a new President. He has the goodwill,and his wife Michelle is proving to be an asset. Yet,he will be swiftly judged,and,if he falters at the start,his path will become more and more uphill. Getting elected requires very different skills from performing well in office. In his case,the meltdown in the economy is a bigger challenge than any other incoming American President has faced since 1933. So far nothing novel has come out from his economic team. It would be easy for him to succumb to protectionist sentiments in such troubled times.

This will be the test. If he stands up to Congress then he will make his mark globally. The US has to stay on the side of free trade. For ten years the US has run a large deficit but imported freely from Asia,which has sustained a long boom. Now the need is to revive the spending and let the world know that all can gain by keeping the system open. There is after all still the task of fixing the international trade and finance architecture. If US goes isolationist or protectionist,then the recession will become a long Depression.

Obama has raised expectations among the poorest and the most deprived around the world. But he can only deliver on his promises if he can stand up for certain core principles. It is best to face up to a challenge at the outset while he is still popular. Every week that goes by will make his task more,not less difficult. He talked of the audacity of hope. It is audacity,which is now called for if he is to give hope to all.

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