Bad Times Could Get Worse for Obama

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 percent 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

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-Qaida is exceeded only by hatred for the
U.S., democracy and women's rights.

This war will not come cheap. The U.S. 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

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.

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