John Buell

Bad Times Could Get Worse for Obama

In a world where economic insecurity virtually trumps all other issues, Obama has staked his political future on health care and winning the war in Afghanistan.

The Obama administration faces the midterm elections in the vortex of forces that might impale it. Does President Obama recognize the magnitude of the risks?

Even if the great recession is statistically over, unemployment will likely continue to exceed 10% for many months. Double figure unemployment has a resonance with wide sectors of the population. Beyond the ugly numerical symbolism, most people now know friends who have been laid off and enjoy little prospect of a job: “Am I going to be next?” is the inevitable reaction. The attendant insecurity in turn makes consumers unwilling to exceed barest necessities and businesses reluctant to invest.

Bad as this situation is, it could easily become worse. The mere reduction in the rate of job loss is cited by Wall Street conservatives, the Blue Dog Republicrats and establishment media to suggest that a rebound is under way. They will hound the Fed to raise interest rates and pressure Congress for a whole range of budget-cutting initiatives. Should they succeed, the possibility of a so-called W-shaped recession becomes more likely.

In a world where economic insecurity now virtually trumps all other issues, Obama has staked his political future on health care and winning the good war in Afghanistan.

Though the health care legislation most likely to pass will insure more Americans, it lacks cost containment for the currently insured. Even provisions to prevent insurance companies from denying coverage of pre-existing conditions will likely be met by company increases in premiums and-or deductibles and co-pays. The New York Times cites recent studies that Big Pharma already is increasing prices to establish a higher base from which future price reductions would be calculated.

Obama faces a tenuous job market, growing foreclosures and rising health insurance premiums. Meanwhile, investment banks reap huge bonuses by taking taxpayer-backed bets on stock in companies that most aggressively “downsize.”

One indication of whether Obama recognizes the risks in these converging factors will be the guest list for the jobs summit. He should invite Paul Krugman and Dean Baker, both of whom predicted the real estate collapse and highlighted the inadequacy of the first Obama stimulus package. Both have detailed proposals for market-friendly tax and spending policies that would create new jobs.

Obama’s good war will likely amplify left and right distrust of the president. And these amplifications cross several registers. War aims remain unattainable. “Counterinsurgency” runs afoul of two considerations. If any large portion of the country is to be even partially protected the doctrine itself implies a need for vastly more troops than even Gen. Stanley McChrystal is proposing.

The government the U.S. endorses is neither honest nor democratic. Much of the country will remain in the hands of the Taliban and warlords whose distrust of al Qaeda is exceeded only by hatred for the US, democracy and women’s rights.

This war will not come cheap. The US already spends nearly $200 billion yearly in Iraq and Afghanistan, a figure sure to grow if the president accepts any current escalation strategy. The budget hawks give little consideration to the effects of wartime spending on the deficit or long-term economic growth. Several credible econometric studies show that military spending is a poor job creator in comparison with education and alternative energy programs.

Yet when increases in these domestic initiatives are proposed, the size of the current deficit suddenly becomes an insurmountable barrier. Programs that would increase jobs and make us more able to cope with unstable energy supplies and a world of rapid global change become unthinkable.

Is Obama to be drowned in a choir of who lost Afghanistan, tanked the budget and the economy? We should not wait to find out. The California Democratic Party has just passed a resolution asking the president to withdraw forces and commence multiparty peace talks in Afghanistan. Democrats in Maine and other states should follow.

The steelworkers union has just entered a partnership with Spain’s Mondragon worker co-op to explore how workers here can become direct owners and managers of the plants that are lying idle. These struggles can be connected. Activists need to encourage mutually reinforcing programs and enthusiasms to counter the angry mixture of xenophobia and hatred of all things public that is brewing.

John Buell lives in Southwest Harbor, Maine, and writes regularly on labor and environmental issues. Email jbuell@acadia.net.

From The Progressive Populist, December 15, 2009