Obama’s 2011 Opportunity
By this time next year we will know whether the Republicans have been able to pull Barrack Obama’s chestnuts out of the fire.
For the record we should note that when the Republicans take control of the House in another week the Democrats have no budget for the current fiscal year, no appropriation bills, no plan to reduce the trillion dollar budget deficit, no chief presidential financial advisor, and nobody with business experience in the president’s inner circle. To be fair, we do have modest 2 to 3% economic growth – low for this point in an economic cycle and well below the world’s developing economies, but stable growth none-the-less. To be more critical, the financial system stabilization program (TARP) was passed by George Bush and Hank Paulson while the Obama Stimulus Plan has been of much more questionable value and unemployment is stuck at a number that would virtually guarantee a Republican president in 2013. Obama must know that he needs help.
But there is a happy convergence in 2011: propelled by the Tea Party movement and before we get into the contention of a presidential election year the Republicans come ready to take the heat for a general roll back in spending to 2008 levels, an apparent willingness to take on entitlements, and in Paul Ryan a lead spokesman who actually has the draft of a plan for financial stability. Amid the howling of the Paul Krugman’s and the Huffington Post there is a chance – I believe a real chance – that Obama understands that financial medicine is badly needed, that the Left will never prescribe it, that he can get a fair share of the credit for having appointed the Debt Reduction Commission, and that he will be able to work with the House leadership.
The biggest obstacle remains Health Care Reform II where a bit of kabuki is required. The Republicans are compelled to attempt repeal which will be defeated in the Senate or vetoed by Obama. For his legacy Obama must retain the expanded scope of coverage in a system where the cost of insurance coverage is split between employers (for most) and the government (for the poor and older voters.) The risk of the Supreme Court eventually declaring the enrollment mandate unconstitutional and the continuing escalating costs of coverage (what, we can’t cover 30 million more people and reduce the total cost?) provide an incentive to compromise and Obama would probably like a way out of the cost containment deals that he made with the hospitals, doctors, nurses, drug companies, trial lawyers, insurance companies, and equipment manufacturers. A few people in a closed room without lobbyists could probably figure out how both sides can win.
So, 2011 can be the Year of the Grand Deal. It certainly doesn’t escape notice that Newt Gingrich’s Contract With America in 1994 brought financial discipline after Bill Clinton’s first two years, that the Republicans overreached, and that Clinton would be broadly acclaimed for his economic management – even if the Republican House forced it upon him and he benefited from Al Gore’s invention of the Internet.
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