Barack Obama's reality gap

Godfrey Hodgson
27 February 2009

Barack Obama performed mightily in his first address to a joint session of Congress on 24 February 2009. But all the fluency and command of a powerful speech, intended both to evoke the gravity of the United States's economic predicament and to persuade its people that his huge spending proposals would begin to deal with it, left the words of TS Eliot hanging in the air: "Between the idea/And the reality/Between the motion/And the act/Falls the Shadow." Godfrey Hodgson was director of the Reuters' Foundation Programme at Oxford University, and before that the Observer's correspondent in the United States and foreign editor of the Independent. His books include The World Turned Right Side Up: a history of the conservative ascendancy in America (Houghton Mifflin, 1996); More Equal Than Others: America from Nixon to the New Century (Princeton University Press, 2006), and A Great and Godly Adventure: The Pilgrims and the Myth of the First Thanksgiving (PublicAffairs, 2007)

Among Godfrey Hodgson's openDemocracy articles:

"Barack Obama: at the crossroads of victory" (11 June 2008)

"A game of two halves" (15 July 2008)

"Welcome to the party: American convention follies" (18 August 2008)

"America's foreign-policy election" (28 August 2008)

"America's economy election" (17 October 2008)

"Yes he can!" (6 November 2008)

"Change?" (2 December 2008)

"An end and a beginning" (5 January 2009)

"Barack Obama: don't waste the crisis" (6 February 2009)

The idea has been entrancing. In great part it has been and still is about Obama himself - a gifted newcomer to the national political scene, a fresh and virtuous hero who has come to lead America back to the true path. Some at least of the new president's aura and moral capital continues to draw on this projected and shared understanding. But the shadow - in the form of reality, political as well as economic - is indeed falling.

It is far too early for President Obama to give up on the hopes he offered to the American people: a national plan for access to healthcare, a revival in public education, a serious effort to reduce America's dependence on imported energy, acceptance of the danger of climate change. His speech - a state-of-the-union address in everything but name - reaffirmed them while acknowledging the scale of the financial crisis. The budget he introduced to Congress on 26 February also seeks to combine hard policy with the promise of better things.

The problem is, again, the gap: for the realisation of the promise can in the best of circumstances only be far off, while the current morass is deep and near all-consuming. The president is trying to bridge it by using the tools, including the rhetorical tools, which have brought him this far. There is a question over how long he can continue to rely on them.  

The money that swears

For the reality is indeed terrifying. The financial catastrophe dwarfs the resources the president has to combat it. There is a suspicion that the accountancy of his proposals is not as transparent as he has promised it to be. Moreover it is simply not clear - his decisive electoral mandate, and marginal improvements in the Democrats' position in Congress notwithstanding - that he can get what he wants and needs from the legislative branch.

President Obama has promised to halve the budget deficit by the end of his first term. Yet the deficit in 2009, he told Congress, will be $1.75 trillion. "It is easy to halve the deficit", says a sarcastic conservative commentator, "if you have just quadrupled it". Indeed, the stimulus plan he has persuaded a grudging Congress to pass accounts for $897 million of that; and the first instalment alone of the health reforms will cost an estimated $634 billion.

How to begin to close the budget gap? Obama claims that his administration has already identified $2 trillion in "savings". But on close inspection many of these are either uncertain, unlikely to pass Congress - or are tax increases. He intends, for example, to increase taxes for those with incomes of more than $250,000 a year, cancelling out some of the gifts George W Bush handed out. That would be good social policy - but will members of Congress, in both parties, be sanguine about hurting the feelings and pockets of the wealthy donors they depend on for campaign contributions? 

The president mentioned four worthy candidates for saving expenditure. He hopes to save $170 billion by withdrawing from Iraq, and specifically targeted "sweetheart" contracts for US companies. But a saving of that magnitude will only come once; and it depends on the war ending and stability in Iraq becoming entrenched. There is, too, the prospect of rising expenditure to cope with the conflict in Afghanistan and the security situation in Pakistan.

Obama pledges to end education programmes "that don't work", probably a reference to George W Bush's vaunted "No Child Left Behind". He counts on huge direct payments to big agribusiness firms (good luck with the House of Representatives' agriculture committee on that one...). He says he can close down cold-war weapons-systems that are no longer needed; an excellent proposal (but will the House armed-services committee go along?).

In addition, Obama is relying heavily on passing a "cap-and-trade" bill that would oblige corporations to pay for excess pollution. Many environmentalists are doubtful that this will reduce carbon-emission levels by as much as is needed. In any case, the bill will certainly encounter tough opposition on Capitol Hill, from some Democrats as well as from most Republicans.

There are problems of politics as well as numbers in all this. It might be expected that a Democrat-controlled Congress with a new and popular Democratic president in the White House would be mobilising all its energies to help the White House's new incumbent and the country to escape a deep trough. But it doesn't work like that.

For Congress is lukewarm about many of Obama's best ideas. The Republicans have made a point of demonstrating that they cannot be relied on for the slightest help. He gave them tens of billions of dollars in concessions to vote for the stimulus package. They took it all and still voted against the bill - unanimously in the House, and with only three exceptions in the Senate.  

In general, congressmen do not believe that the country is in such a dire situation that they must abandon their cherished habits - which include voting on a narrow interpretation of their own financial and electoral interests rather than according to party loyalty.

Also in openDemocracy on Barack Obama's presidency:

Simon Maxwell, "Global development: Barack Obama's agenda" (20 January 2009)

Pervez Hoodbhoy, "Obama's triple test" (21 January 2009)

Fred Halliday, "The greater middle east: Obama's six problems" (21 January 2009)

openDemocracy, "Barack Obama: hope, fear... advice" (19-23 January 2009) - reflections from thirty-seven of our worldwide authors

Simon Critchley, "Barack Obama and the American void" (22 January 2009)

Ruth Rosen, "American women's stimulus: voice, agency, change" (18 February 2009)

Jim Gabour, "The redemption game" (20 February 2009)

Plus - regular comment on openUSA

The members of the Senate and House of Representatives are, after all, acutely sensitive to the special interests that raise the money they need every two years to run for re-election. That money comes, for some, from defence contractors; for others, from agribusiness; for a diminished few, from unions. Yet others appropriate billions in "earmarks" to named special interests. Such reciprocities often speak louder than party alignments - let alone national recovery, or political support for a president.

The hour that calls

It is one thing for a president, even one as popular and able as Barack Obama, to say that he wants "so much" to stimulate the economy, "so much" to neutralise toxic assets, or "so much" to make healthcare free for all. It is quite another to squeeze those billions through the machinery of Congress - which was after all designed by the omniscient vision of the founding fathers to make it as difficult as possible for the president to do anything much at all.

The president's budget awaits passage. It is a wish-list, the basis for lengthy and acrimonious negotiations about what will be in the Congress's budget. Each item of expenditure must be authorised, which is chiefly the business of the House. Then it must be "appropriated", by each house. Each item of appropriation has to be written into draft legislation when the bill is "marked up" in committee; then amended; then voted out of committee; then passed or amended or rejected on the floor of each chamber. At the end, if there are differences between the House's version of a bill and the Senate's, they have to be resolved in what is called a conference committee (in effect a third chamber of Congress). 

The federal budget the president presents to the Congress indicates his intentions and his hopes. But he is not in a position (something it can be hard for people in parliamentary democracies to understand) to make sure that these become law. Barack Obama now faces a daunting obstacle-course. Some in Congress appreciate the desperate state of the banks and of the public finances. But many don't: they suspect that the emergency is being exploited to pass socialistic legislation that they viscerally detest.

The political obstacles are serious; the financial reality inexorable. Many economists - including Democrats like Alan Blinder, the Princeton professor who was a member of Bill Clinton's Council of Economic Advisers, then vice-chair of the Federal Reserve - believe that the $800-billion stimulus bill will not be nearly enough.

In any case, no one really knows what to do about the cloud of "toxic assets" that clog American banks' balance-sheets. Some advise that they be consigned to "bad banks", like a virus shunted into a vault; others think government insurance is a better way to enable banks to draw a line under these loans and securities that are so hard to evaluate.

The times are bad, the hour is late. If any president can persuade Congress simultaneously to pass crisis-legislation that will expand the federal deficit to even dizzier heights before it can come down again, and bold measures of fundamental reform in healthcare, education, energy policy and the environment, it is Barack Obama. But he stands at the very beginning of an epic political struggle of the kind Washington has not seen since the civil-rights efforts of the mid-1960s. It is going to be a bumpy ride.

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