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Paying for it all

By James Goldsborough

You have to search deep into history to find other presidents who had to face up to so many problems with so few resources. President Obama is trying to do three big things at once at a time when economic stagnation, deficits and debt make it hard to do any one of them.
We just recently learned what he plans to do in Afghanistan, the problem the Bush administration short-changed while taking its fatal trillion- dollar detour into Iraq — with the unintended consequence of turning Iran into the monster of the Middle East. This month we will learn what Congress intends to do on guaranteed health coverage, the issue that will define the Obama administration.
And some time in the New Year we will learn whether the fortune the government is spending to help end the Great Recession did what it was supposed to do. We already know it hasn’t kept us from 10 percent unemployment, or kept the Big Three from becoming the Big One and a Half, or kept residential mortgage defaults from rising (Deutsche Bank predicts that 50 percent of all U.S. residential mortgages will have negative values before the end of next year), or restored faith in Wall Street.
Paul Volcker, a former Federal Reserve chairman and one of the few Wall Street financiers to emerge clean from the 2008 collapse, says the solution to the crisis is to return to the Glass-Steagall era when investment and commercial banks were separated by law, and I think he’s right.
Obama, guided by his own Wall Street guy, Treasury Secretary Timothy Geithner, doesn’t agree, and he’s the one who counts.
It’s no mystery why Obama has fallen to 50 percent in approval ratings. Any one of the problems he faces would bring down approval numbers, but three at once make for a gray Christmas at the White House. The opposition comes equally from left and right on all three of the issues. The left wants more health care, more money for economic recovery and less for Afghanistan. The right wants the exact opposite.
The 50 percent of the people who are withholding approval from Obama should ask themselves whom they agree with on that.
You have to go back to Franklin Roosevelt to find a president facing a worse economy than the present one, but unlike Obama, FDR had no wars to fight or finance in his first year. He had a big health care project in mind, Social Security, but also had bi-partisan support for it, and the bill he signed in 1935 had some 20 percent of congressional Republicans behind it.
The only president in the past half century who faced Obama’s situation of simultaneous war, recession and health care issues was Lyndon Johnson. The effects of tackling all three for Johnson, which weren’t fully apparent until he left office, were disastrous: We lost the war, the economy sank into stagflation and the dollar collapsed. LBJ succeeded only with Medicare, passed by a bi-partisan Congress, some 20 percent of Republicans voting along with Democrats.
Obama confronts the same three issues Johnson did with no Republican support, which says a lot about how the GOP has evolved over the past 40 years.
Given his problems, it’s hardly surprising Obama is down from the 65 percent approval of a year ago. Since World War II, only Gerald Ford and Ronald Reagan have fallen as fast, though Reagan recovered thanks mainly to the policies of Fed Chairman Volcker that ground out the inflation caused by Reagan’s Laffer Curve tax cuts.
December 2009 was the most important month of Obama’s presidency. His Afghanistan strategy — a surge in military and civilian assistance to Kabul but with putative time constraints — is surely closer to the hearts of Republicans (though they would never admit it) than to Democrats. Most Democrats would have foregone any troop increase, much less one of 30,000 troops.
Given the alternatives, I like the strategy. The status quo is unacceptable and given the present NATO troop commitment, cutting U.S. force levels would be worse. The idea is to give Kabul time to strengthen itself and defeat the Taliban, the brutal, obscurantist group that took power in 1989 when the Russians withdrew and never gained popular support. We’ll give Karzai time to see what he can do. If he fails, Obama has promised we won’t do it for him. No more Vietnams. No more Iraqs.
Beyond Afghanistan, Obama’s success or failure will be determined on the two big domestic issues he faces: health care and the economy. Health care belongs to him, but the Great Recession is a legacy of Bush and the Republican fetish for deregulation and small government. Volcker was fired as Fed chairman by Reagan (and replaced by Ayn Rand acolyte and anti-regulator Alan Greenspan) for being insufficiently supportive of Reagan’s deregulation policies. Modern economic history would look very different had Volcker remained on the job.
Though he’s at 50 percent poll approval, things could be worse for Obama. Bush fell in the polls from the day he was elected in 2001, only to be saved for a while by 9/11. From 52 percent approval in August 2001, Bush rose to 89 percent the following month. From there he began the steady decline that took him to 24 percent approval just before the election last year, tying him at the all-time presidential low with Harry Truman and Richard Nixon.
Obama will get a health care bill of some sort, for Democrats know that without it he would be a one-term president. It is the signature issue of his government — just as Medicare would have been for Johnson without Vietnam. It’s a shame he can hope for no more than a couple of Republicans to support health care, but that is a symptom of how badly the GOP has lost its way. It has become a party that would rather win than govern, and voters have noticed.

James Goldsborough is a distinguished foreign affairs writer, winner of the Edward R. Murrow award for foreign affairs reporting and a former columnist for The San Diego Union-Tribune.

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