Obama's Risk Free Real Time Leadership
April 15, 2011
By Bob Hennelly
Throughout his political career, President Obama has been a master of "real time delivery" when it comes to leadership, No point in being out ahead and taking the heat it will just make you sweat. Wait for everybody else to take a whack at it, see how that goes, clear your throat and float in above the fray.
Earlier this week, more than halfway through his first term, President Obama put forward his vision for how we handle the long term debt test. Everybody else had already turned in their exam, so the calibration was a snap.
For the first part of his term, he sub contracted out work on this national challenge to the U.S. Deficit Commission. They did their work and took the lumps for their findings. This helped buy time for the president to celebrate his inner Republican. He did not have to put anything at risk and appeared to be doing something at the same time.
Meanwhile, President Obama and the House Republicans were busy making the deficit deeper by carrying forward the Bush tax cuts for the nation's wealthiest households. That decision only continued to make America an increasingly Feudal New Age State where the concentration of wealth continues unabated. Even before President Obama took office, he has been critical to helping the Republicans with the heaviest lifts. Back in the Fall of 2008, it was candidate Obama's support of Treasury Secretary Paulson’s multi billion dollar bank bailout that made that huge wealth transfer possibile from the taxpayers to the banks.
Wall Street donors responded accordingly. The genius of the President's Chicago Mercantilist wing of the Democratic Party is its ability to use the language of social change, while at the same time protecting a status quo that produces growing economic inequality. Obama can feign to be feeling your pain, while pursuing policies that make the pain worse. We can now see the winners and losers of the bank bailouts. The bailouts saved the status quo, making the banks that were already too big to fail even bigger. Meanwhile relief for millions of families facing foreclosure never seemed to materialize and the ranks of the long-term unemployed continue to swell.
Of course the nation's over reliance on debt cannot be ignored just because the recovery has failed to materialize except on Wall Street. No doubt the costs of paying for Federal borrowing will squeeze out other vital priorities. This year servicing the debt is about $185 billion dollars. The real fun starts in 2015 when it hits $554 billion dollars, close to the Department of Defense budget for this year. But so far, all of the debt reduction scenarios, with the exception of one just released by Congress's Progressive caucus, seem to overly rely on rescinding, or seriously downsizing, the existing social contract with the poor and middle class. There's no doubt that Social Security and benefits like Medicare should reflect the reality that we are on average living longer than when the programs were originally created.
But if we are going to factor in those kinds of demographic shifts, we also need to account for some other major changes to the political economy. The mobility of capital and the ability of multi national corporations to put their wealth beyond the jurisdiction of US taxation and regulation has revolutionized global business. Right now, there is a trillion dollars in stranded U.S. multi national profits sitting off shore because the corporations don't want to pay the current 35 percent tax rate to bring that money home.
Meanwhile the cost of the United States making the world safe for those corporations continues to escalate. Military missions to places like Iraq never seem to end see Secretary Gates recent comments about the possible long term presence of US troops in Iraq. When U.S. Corporations take an address in the Cayman Islands or some other tax haven, they are transferring the cost of defending their interests abroad to the average American.
There is still time for the President to lead on this one. But it will be risky, out there all alone without his Republicans.