President Obama's Legacy

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How will the president handle the federal debt?

President Obama has been in crisis mode ever since he entered office about three years ago. The financial system imploded shortly before the 2008 election, triggering the deepest recession in decades. Inflated home prices began to plummet, triggering a massive foreclosure crisis that would cause prices to drop even further, the construction industry to crash, more people to walk away from their homes, and the nasty feedback loop to spiral. Two wars inherited from the previous administration still lingered, with the looming threat of another September 11th style attack looming on Americans’ minds. And in addition to these ongoing difficulties, the President has also been confronted with periodic disasters, revolutions, and crises: the BP oil spill, earthquake/ tsunami in Japan, Arab Spring, and European Debt Crisis.

All things considered, I am surprised that the American economy is not in worse shape. And in recent months, there have been signs that we may be finally turning the corner. Many companies have been reporting strong profits, the DOW recently hit 13,000, unemployment has been gradually dropping, and even the still struggling housing sector has been showing some signs of life. Still, most economists would argue that the recovery is slow and fragile, with potential trends and events, both domestic and international, threatening to drag us back into the abyss: high gas prices; the Greek bailout falling through; a deteriorating situation in Iraq, Afghanistan, or Syria; or a military confrontation in Iran. But assuming that nothing catastrophic occurs and that recent trends continue, President Obama’s bid for reelection seems secure. Neither Mitt Romney nor Rick Santorum has demonstrated much of anything in terms of innovative ideas or personal charisma, so only a reversal or significant slowdown of the economic recovery between now and November seems likely to carry one or the other to the White House. Whether fair or not, this election will ultimately be a mandate on President Obama’s handling of the economy.

Just as with Franklin Roosevelt’s handling of the Great Depression, people have passionately debated about President Obama’s role in the economic recession and recovery. Some have argued that his policies only made things worse, while others give him credit for stopping the bleeding and putting the nation back on the right path. Personally, I think that we tend to give presidents too much credit for the performance of the economy, and many people tend to look for evidence to back their ideology. If you want to believe badly enough that Obama has been either a success or failure, there is plenty of “evidence” to back either premise.

I suspect, however, that my ultimate judgment of Obama’s performance will not be based on what he has done so far. Instead, assuming that he wins in November, it will be based on his leadership in his second term. For while the economy has stabilized and improved under his watch, his personal role in this improvement, whatever that may be, has come at a high cost. The President has supported expensive bailouts for the financial and auto industries, the extension of tax cuts for the overwhelming majority of Americans, hundreds of billions of dollars of infrastructure and social services spending under the stimulus package, and the extension of unemployment benefits. Partly as a result of these policies, the federal government has run annual deficits well in excess of one trillion dollars for each of his three years. And in the end, his handling of our nation’s long-term debt problem, rather than his response to the short-term financial crisis and recession, may be his ultimate legacy.

So far, I have been willing to cut the president some slack when it comes to his federal debt record. It is ridiculous, after all, to blame it all on him. Much of the increase in debt resulted from a financial crisis that was years in the making and was well under way before his inauguration. The deep recession resulted in a significant drop in tax revenue, revenues that had been inflated for years due to the financial bubble. Most of the rest of the debt can be attributed to the increasing costs of Medicare and Social Security as our population continues to grow older (on average) and as the first wave of baby boomers hits retirement age. The unfunded tax cuts of the early 2000’s and expansion of Medicare benefits to include prescription drugs have also piled on debt, but many Americans, who have grown used to these policies, do not want to give them up. So even if the President supported a federal government running on auto pilot – which he has done in many ways – an explosion of federal deficits was inevitable.

An economic crisis is not the best time to get the financial house in order. During bad times, major spending cuts and/or tax increases will, in the short-term, only make matters worse. And without economic growth, tax revenues will only decrease, leading potentially to more deficits. This is why I would argue that Obama has been wise to focus more attention on economic recovery than debt reduction. But like all economic downturns, this one will eventually come to an end, and as I stated earlier, there are signs that it is already ending. The big question, then, is what the president will support once the crisis appears to be over.

Since this is an election year and the economy is still fragile, I do not expect the president or anyone in Congress to push for any radical deficit reduction plans (or much of anything else). Tax increases and major spending cuts do not tend to win politicians a whole lot of votes, especially when times are tough. But if the president wins reelection –as I suspect he will – and if the economy is on a firmer footing in 2013 – as I suspect it will – we will find out what kind of a leader Obama really is. Will he call for the sacrifices, in terms of both federal spending and tax increases, which are necessary to get the federal deficit under control? Or will he play it safe, calling only for tax increases on the wealthy and for minor decreases in spending? For anyone who thinks that we can come close to closing the budget hole purely through tax hikes or spending decreases is delusional. Cuts must be made where most of the money is spent: Medicare, Social Security, and defense. The eligibility age for receiving benefits must quickly go up, people with high incomes should probably be declared ineligible for Social Security, and we must rethink our role as the world’s policeman. And we must also face the reality that tax increases on only the wealthiest Americans will not be enough to make a significant dent in the budget deficit.

Come 2013, the old excuses, many of which have been legitimate, will start to wear thin. The president will no longer have the financial crisis, the policies of his predecessor, or his need to get reelected to explain the circumstances that he faces or the actions that he takes. In a sense, it can be easier to govern during a crisis and clean up someone else’s mess than it is to provide real leadership when times seem to be good. And since he cannot run for a third term, he can theoretically push for what he believes and for what is best for our country over the long-term rather than worrying about opinion polls fixated on the here and now. But if he fails to seize this opportunity, this voter will be less inclined to cut him some slack, and I will be looking carefully in 2016 for a leader (of whatever political party) who shows even a hint of the willingness to tell the American people some hard truths.

In the end, however, even if the president were to stand up and lead, his powers are rather limited. Congress controls the purse strings, and the people who serve there do not face term limits. And these Congressional representatives know that in a democracy, thinking about the long-term and calling for shared sacrifice is not a great electoral strategy. In my view, and apparently in the opinion of many Americans, Congress is the most dysfunctional of the three branches. This is why we face the same systemic problems, decade by decade, that have brought us to this situation in the first place. So if the president wins reelection and shows some real leadership in facing our fiscal situation head-on, I hope that Americans of all political persuasions will face up to reality and pressure their partisan, self-interested, bickering, rhetoric-spewing Congressmen and Congresswomen to look beyond their personal political careers and the electoral success of their particular party. Sure, the president needs to lead. But if he has the balls to go out on a limb and be more than just another self-interested, partisan, “realistic” politician, then the public has two choices: either follow this real leader or accept (and stop bitching about) politics as usual. Ultimately, all of us are passing on a legacy to the next generation. The president can only make the choice of either pointing us in a better direction or telling his particular faction what it wants to hear. And if a president chooses the latter, then it’s time to go searching once again for a politician that wants more than a legacy of successful elections.



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Comments 14 comments

adjkp25 profile image

adjkp25 4 years ago from Northern California

Glad to see some people still acknowledge all of the problems that were already present prior to Obama taking over.

My opinion is that we would basically be in the same spot if McCain had won in 2008. One term was not enough to address all of the problems that were sitting there waiting for a new President.


christopheranton profile image

christopheranton 4 years ago from Gillingham Kent. United Kingdom

I accidentally clicked funny for this. It is not a funny subject,

Your political commentaries should be syndicated throughout The U.S, as you always seem tyo get through to the heart of the problem.

Keep up the good work.


Freeway Flyer profile image

Freeway Flyer 4 years ago Author

adjkp, I agree. A financial mess like the 2008 debacle could not be fixed by anyone overnight. We had to pay an inevitable price for years of rampant stupidity.

christopheranton, I wish. Thanks for the always encouraging comments.


American Romance profile image

American Romance 4 years ago from America

Your instincts are correct! Common sense says if you do NOTHING to stimulate the economy then you don't get the luxury of taking credit for it! Giving aways billions in unsecured loans to Solyndra and their brethren didn't do it! Shovel ready jobs never showed up! GM is giving their employees bonuses while we still own billions of their stock they should be buying back etc! The oil industry that Obama hates is doing more than any industry at the moment to keep us afloat! Many industries are changing the way they do business and leaving states that neglect their free work status or picking up and moving overseas to get free of burdensome regulation and taxation! Americans want to prosper, they will do it with or without a willing president!


Andy 4 years ago

I wish that the 3 branches of our federal government would obey the Constitution. It's pretty clear. The president has only limited powers to fix anything. Same with Congress. There should be no Dept of Energy in the first place (so no Solyndra-type debacles). Same with many other federal departments that are forbidden in the Constitution. (powers not granted to the federal government ... by the Constitution are reserved to the States or the people). So our president (or any president) shouldn't have many of the powers that have been exercised, or that people wish he'd exercise.


adjkp25 profile image

adjkp25 4 years ago from Northern California

Did I read that right that the oil industry, in some opinions, is doing what they can to keep our economy going? By what, exporting portions of the oil we domestically produce or by shutting down refineries because they aren't profitable enough?

Yep big oil really cares about the little people in our country, at least our wallets.


JON EWALL profile image

JON EWALL 4 years ago from usa

Freeway Flyer

''I agree. A financial mess like the 2008 debacle could not be fixed by anyone overnight.''

''even if the president were to stand up and lead, his powers are rather limited. Congress controls the purse strings,''

Kudos to the president? JUST another side of the issues.

WASTE

The Senator Coburn report '' WASTE IN GOVERNMENT'' http://coburn.senate.gov/public/index.cfm/rightnow...

THE FACTS

'',considering what he inherited'' Wake up hubbers. In 2006 the Democrats were elected to control (run the government ) the House and the Senate of which Senator Obama was in the Senate. For the President to continue using '' what he inherited is disingenuous and untruthful because he and his party controlled government spending, The Republicans were unable to control anything.

One must try to get by the propaganda that the mainstream media and the President have been feeding the public.

Check it out!

END of 2006, unemployment was 4.6%. From 2007 to 2008 unemployment was 7.6%. Obama with a SUPER Majority Democrat Congress managed to get unemployment to 10%, even after spending $800 BILLION plus stimulus taxpayer money. In 3.5 years the Obama Administration has spent and raised the national debt $4.5 trillion. The CBO recently projected that the 2012 deficit will be $ 1.25 trillion. The Senate has not passed a budget in 4 years, wonder why?

Somehow some people think Obama is doing a GOOD JOB. OBAMA promised jobs, he hasn't delivered as yet. NOTE! The Democrats have had 2/3’s control of our government from 2007 up to the present. The President refers to Congress holding up his legislation, follows up by blaming the Republicans (2011 to the present ).The truth is that the Democrat controlled Senate is holding up his legislation. The HOUSE has APPROVED 23 JOBS BILLS waiting to be voted on in the Senate. That’s a FACT.

http://jon-ewall.hubpages.com/


Freeway Flyer profile image

Freeway Flyer 4 years ago Author

I think that it's too simplistic to hold politicians responsible for all of the ebbs and flows of the economy. It's even more simplistic to hold the current politicians fully responsible for current circumstances. Political policies, when they have much of an effect at all, can take many years to have a significant impact. So whatever happens with the 2012 elections, I doubt that it will have much of an economic impact in the short term.

The apparent prosperity of the early 2000's was largely an illusion, fueled by a borrowing frenzy and a real estate bubble. I do not, however, hold the Bush administration fully responsible for this situation. People of both parties bought into the delusion that financial "innovations" could make the American Dream of home ownership achievable to almost everyone. It took many years for this bubble to form, and it will take many years to unravel. President Obama was unfortunate enough to start his presidency when the consequences of the stupidity were finally felt.

But as I tried to explain in this hub, he cannot use the financial emergency as an excuse for massive deficit spending forever. I suspect that he will only be remembered as an effective leader if he attempts to lead our country toward the inevitable sacrifices that must be made. Unfortunately, if he (or someone else) does this after the 2012 election, I suspect that Congress will find a way to sabotage these efforts.


JON EWALL profile image

JON EWALL 4 years ago from usa

Hubcom32112 reinvade

Freeway Flyer

''suspect that Congress will find a way to sabotage these efforts.''

The fact is that 1/2 of the so called ""CONGRESS'' is actually doing their job, that's the HOUSE. The House has passed 23 jobs bills that have been held up by Senator Reid '' puppet of the master puppeteer'' denying our elected officials to debate, amend and to vote on the JOBS BILLS. President Obama mentions that Congress isn't doing the job. Have you ever heard him chide Senator Reid for not having a budget in 3years or complain that the SENATE is holding up jobs bills? NO not yet.

One must open their eyes and ears and try to get by the propaganda of the whitehouse!

Check it out. JOBS JOBS

Oil Workers Protest Obama Visit in Cushing, Okla.

Another Hollywood production

http://nation.foxnews.com/keystone-pipeline/2012/0...

http://jon-ewall.hubpages.com/


Freeway Flyer profile image

Freeway Flyer 4 years ago Author

If the situation was reversed, and Democrats controlled the House while Republicans had the majority in the Senate, then I suspect that the opposite would be happening. It is easier for the majority to get bills through the House where you only need a simple majority vote. But in the Senate, the minority can filibuster practically everything. So Republicans keep passing bills that they know the Senate will reject, and the Democratic majority in the Senate cannot play the same game.

I agree with the general assertion, however, that Congress is the primary problem with our federal government at the moment. For too many elected officials, ideology and partisanship trump everything else. And in my view, bills in the Senate should pass by simple majority, just like in the House, as the Constitution framers intended.


JON EWALL profile image

JON EWALL 4 years ago from usa

Freeway Flyer

3/21/12

Senate DELAYS Vote on Start-Ups Bill

‘’Jump-start Our Business Start-ups,’’

http://www.nytimes.com/2012/03/22/business/senate-...


JON EWALL profile image

JON EWALL 4 years ago from usa

Freeway Flyer

‘’It is easier for the majority to get bills through the House where you only need a simple majority vote.’’ Note that the Republicans have only had control of the House since Jan. 2011.The Democrats took control of the House and the Senate in 2007 and 2008.Obama was in Congress too. Than in 2009 the Dems had 100% control of our Government, a super majority control until June of 2010.

‘’But in the Senate, the minority can filibuster practically everything. So Republicans keep passing bills that they know the Senate will reject, and the Democratic majority in the Senate cannot play the same game.’’ FF that’s a half truth about filibuster. Wake up and open your eyes. Here’s a FACT, SENATOR REID CONTROLS what bills come to the floor, if a bill don’t get to the floor our elected officials are DENIED their legal right to debate, amend or vote. There is no REJECTION if the bill is not put on the floor. President Obama controls Senator Reid who is not going to allow bills passed by the House to BE voted on. There are 23 jobs bills being held up by the Democrats in the Senate. The House passed a 2012 budget that Senator Reid would not allow the budget process to go forward by keeping the bill off the floor.

‘’my view, bills in the Senate should pass by simple majority, just like in the House, as the Constitution framers intended.’’ the Constitution and Senate rules have held up for many years until the Obama Administration came along to disregard them and the laws of our country! The mainstream media don’t report too much about what Obama does that is opposite of what he says.

Now remember if Obama complains about Congress not doing the job of passing jobs bills, the Republican House is doing the job, it’s the Democrat Senate holding up the show. Somehow the Republicans are always called out by Obama as playing politics and delaying his plans to turn the economy around.


Freeway Flyer profile image

Freeway Flyer 4 years ago Author

And speaker Boehner controls which bills come to the House floor. So if a Democratic House member proposes a bill, it won't go anywhere. Now Reid can bring up Democrat-supported stuff for a vote, but without a super majority, it won't go anywhere. And even if he brings up Republican-supported stuff passed in the House, he knows that these bills won't go anywhere either. So both sides can make a legitimate complaint that the other party is holding up what they would like to get done. That's just how the system works - or, much of the time these days, doesn't.

The Democrats didn't have much of a super majority in 2009-2010. They are not a monolithic entity, and some of those Democrats who won in 2008 only came into office because they were pretty conservative Democrats. So they did not give unyielding support to Obama or to the more liberal Democrats in the Senate.

One of the fundamental problems that we face is that we have so many partisan people who want to blame everything on the other party, and many on each side seem to care more about jockeying for political position and winning elections than on getting much of consequence done. So if you want to continue with the delusion that all of America's problems are caused by the damn Democrats, go right ahead. Just don't be surprised if future Republican success in elections fails to change things very much.

And you keep mentioning the mainstream media over and over. I listen to so-called liberal NPR all of the time, and I've heard many people on that station criticize Obama over the last four years. This notion that all of the media is in love with Obama is a bit of a joke. (And as this hub indicates, I'm not infatuated with him either.)


JON EWALL profile image

JON EWALL 4 years ago from usa

Freeway Flyer

NPR is a liberal slanted news media. Try watching C-Span sometimee and you will notice the difference in how the news differs.Our governent is corrupt and the American people are being cheated. Not to allow our representatives to vote on important legislation is criminal and unforgiving in these troubled times.

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