Analysis: Barack Obama the underdog

Extract from The Times (UK), 28 January 2010

By Giles Whittell in Washington

Barack Obama has had to come down from the Olympian heights to recast himself as a street fighter, even an underdog - and he did it well.

His political task last night was to gloss over a thin record of accomplishment and chart a course towards midterm elections in November that a deeply demoralised Democratic party is starting to dread.

He admitted he and his team had made mistakes in their first year even if most of the errors were left unspecified other than a failure to communicate his aims for health reform.

But he did not abandon his big goals on health, financial reform or climate change and made the Republicans look like the party of "no".

And the key line from the speech was one of defiance: "We do not give up. We do not quit. We don’t allow fear or division to break our spirit.”

Few of his supporters would have forecast such a shrunken agenda a year ago, when Mr Obama’s sweeping promises of change still seemed equal to the monumental challenges posed by a collapsing economy. Since then recovery has been sluggish, unemployment has been stuck at 10 per cent and Republican efforts to sabotage health, financial and energy legislation have been relentless.

But aides said Mr Obama had lost none of his ambition and still planned to change the way Washington does business – but in reality he is more dependent than ever on the 535 members of Congress who crammed into the House of Representatives last night.

Read the article in full here.

Obama's State of the Union speech

Extract from BBC News Online

US President Barack Obama has said in his first State of the Union address that creating jobs must be the nation's number one focus.

Mr Obama accepted Americans were "hurting" and that his election pledge of change had not come quickly enough.

He defended his healthcare reform efforts and bank bailout policy, but said there would be a spending freeze from 2011 to tackle the budget deficit.

Bob McDonnell, for the Republicans, criticised the expansion of government.

The Virginia governor said the federal government was "simply trying to do too much".

'Devastation remains'

Mr Obama was given the traditional warm welcome by all sides of Congress and received several standing ovations.

He opened his address by saying the US had to "answer history's call".

On the issue of employment, Mr Obama said: "People are out of work. They are hurting. They need our help. And I want a jobs bill on my desk without delay.

"Jobs must be our number one focus in 2010."

Read a full transcript of Obama's speech here.

Obama announces dramatic crackdown on Wall Street banks

Obama's 'new Glass-Steagall Act' will prevent banks with customer deposits taking risky investment bets

Extract from the Guardian (UK), 21 January 2010

by Jill Treanor

President Barack Obama today declared his intent to take on Wall Street by announcing plans for stringent rules on the banking sector that prompted comparisons with the draconian regulations introduced after the Great Depression.

In the boldest move taken by any government around the world to respond to the financial crisis, Obama told banks they would no longer be able to take risky bets with their own capital to make money on the financial markets.

Banks which take deposits will not be allowed to use their own money to take bets on markets, run hedge funds or make private equity investments through what he called the "Volcker rule" after former Federal Reserve chairman Paul Volcker.

He also wants to prevent further consolidation of the financial system in the US and will ban takeovers and mergers among American firms in the sector.

Obama said the new proposals would keep taxpayers from being "held hostage" by banks that have become "too big to fail" and that pose a risk to the entire financial system.

Wall Street was nervous ahead of the announcement, with the Dow Jones Industrial Average down more than 160 points before he spoke and then falling a further 40 points once he had finished. The FTSE 100 index in London fell sharply in afternoon trading as the markets feared the impact on UK banks such as Barclays and RBS.

"We simply cannot return to business as usual," said Obama.

Click here to read the article in full

What a week this anniversary

Mark Mardell, BBC News Online, 22 January 2010

What a week. This anniversary of the president's year in office was always going to be a time for reflection.

The victory of Scott Brown in Republican-resistant Massachusetts turned it into a time for urgent reassessment for the president's party. The word "pivotal" has been used

a fair bit. That's right. After twelve months the President has swung on his heel.

This may be, as many commentators contend, the beginning of the end for a one-term, flash-in-the-pan President. This is the third victory in a row for Republicans and they are on a roll. It certainly hints to sweeping Republican victories in November's mid-term elections.

But it may be just the kick the president and his party needed. After that stunning victory and the adulation that followed, he assumed his popularity gave him political invincibility. Although he has been accused of governing from further left than some expected, at heart he's a pragmatist.

He got his head down and got on with the new, serious, difficult and no doubt fascinating business of running the most powerful country in the world.

This week may have reminded him that these days, and especially in America, the political campaign can never stop. The most important thing about power is what you do with it. But a very close second is making sure you keep it.

There have been immediate changes. Whether they like it or not, the Democrats' number one priority, health care, has just slipped dramatically down the agenda.

Scott Brown's election left them with few options. The two main ones have now been ruled out. The president has said the plan must not be pushed through the Senate before Mr Brown takes his seat. Nancy Pelosi has said the Senate bill won't get enough votes in the House.

This surely means that healthcare reform, as currently proposed, is finished.

They deny it is dead, but it is certainly in a coma, only to be wakened if some Republican senators have an unlikely epiphany.

This will be very disappointing for some who voted for Obama. But many on the left thought the plan was too watered down to be worth much.

The opinion polls suggest a more complex picture than simply people hating the idea of any reform, but the current plan had become politically toxic.

The two bills are just too confusing, and the Democrats haven't tried to sell them clearly. I heard a fascinating piece on NPR this morning, an economist trying to convince a union member that taxing her Cadillac plan wouldn't hurt her.
His argument rested on the belief that her company would raise wages if it was forced to adopt a less expensive plan. Not surprisingly, she wasn't convinced.

Then there is the president's radical plan for the banks. This looks like a dramatic policy shift. The White House says it was signed off before Christmas, so I'll just observe that by an amazing coincidence it is a perfect fit for this week's narrative.

The president has christened the new plan, so offensive to many big banks, the Volcker rules after former chairman of the Federal Reserve Tall Paul. This is kind of the president because by all accounts Paul Volcker had all but given up on his plan ever being adopted. Treasury Secretary Tim Geithner was apparently opposed. Now it seems he's been overruled.

The president knows getting this through congress will be hard. But this isn't a messy vote loser in the country. This is a populist clarion call.

He's predicting a swarm of lobbyists will descend on Capitol Hill and he's doing a good impression of a man relishing the scrap ahead.

He'll hope the American people will be cheering him on. He has called on Republicans to join in designing common sense rules to protect ordinary Americans.

They may well deride his plan as another example of government interference, but they are in a sticky position and they know it.

One senator has dismissively said he is creating a "bogeyman". But I bet it is a bogeyman that frightens many of his voters.

The Supreme Court ruling raises another spectre. Banks that feel threatened can spend their money running ads against the new laws.

There may be a torrent of them. But they will have to put their names on them, rather than saying "This advert was paid for by Americans for a nicer America" as happens at the moment. They will have to be very clever adverts to avoid public distain.

The White House no longer seems complacent in the face of bad opinion polls, disastrous elections and a re-invigorated Republican party. Late in the day, they are accepting the battle is serious and returning to the fray.

Mark Madell's article was originally published here.

"Change we can't believe in"

Extracts from Mehdi Hasan's article from the New Statesman (UK), Oct 8 2009.

"Barack Obama promised a sharp break from the Bush era, yet he seems to have stepped into the shoes of his disgraced predecessor. As the anniversary of his election approaches, Mehdi Hasan investigates what went wrong".

"The distance between Obama and Bush on a host of policies is not as great as many people might hope or have expected - and it appears to get narrower by the day. This should not, perhaps, come as a huge surprise. One reason for continuity between US presidents - even those who are, on the surface, as different as Bush and Obama - is the nature of the modern imperial presidency, at the apex of a bloated national-security state. As the historian Garry Wills pointed out recently in the New York Review of Books, the president 'is greatly pressured to keep all the empire's secrets . . . he becomes the prisoner of his own power . . . a self-entangling giant'".

Click here to read the article in full.

Obama sets tight auto aid terms

Extract from BBC News online, 30 March 2009

US President Barack Obama has given US carmakers General Motors (GM) and Chrysler strict deadlines to restructure before getting more aid. General Motors will be given 60 days and Chrysler just 30 days to submit new plans for recovery.

Soon after ordering the resignation of GM chief Rick Wagoner, Mr Obama said bankruptcy protection could speed up the restructuring process. But he also offered conditional assurances about the industry's future.

"We cannot, we must not and we will not let our auto industry simply vanish," said Mr Obama.

"But our auto industry is not moving in the right direction fast enough to succeed."
He said the car firms had run into trouble because of a "failure of leadership - from Washington to Detroit".

Restructuring plans may "mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger", he said. This could make it easier for the firms to "quickly clear away their old debts that are weighing them down so they can get back on their feet and on to a path of success".
Mr Obama said this would not have to involve breaking the companies up.

"My administration will offer GM and Chrysler a limited period of time with creditors, unions, and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars."

The president also said he would work with Congress on a programme to encourage consumers to replace old, less fuel-efficient cars with newer, cleaner vehicles. Germany and others have adopted such schemes, thus boosting vehicle sales.

"Obama's budget sweeps away Reagan's ideas"

from the International Herald Tribune.

by David Leonhardt

"The budget that President Barack Obama proposed on Thursday is nothing less than an attempt to end a three-decade era of economic policy dominated by the ideas of Ronald Reagan and his supporters.

The Obama budget — a bold, even radical departure from recent history, wrapped in bureaucratic formality and statistical tables — would sharply raise taxes on the rich, beyond where Bill Clinton had raised them. It would reduce taxes for everyone else, to a lower point than they were under either Clinton or George W. Bush. And it would lay the groundwork for sweeping changes in health care and education, among other areas.

More than anything else, the proposals seek to reverse the rapid increase in economic inequality over the last 30 years. They do so first by rewriting the tax code and, over the longer term, by trying to solve some big causes of the middle-class income slowdown, like high medical costs and slowing educational gains.

After Obama spent much of his first five weeks in office responding to the financial crisis, his budget effectively tried to reclaim momentum for the priorities on which he campaigned.
His efforts would add to a budget deficit already swollen by Bush's policies and the recession, creating the largest deficit, relative to the size of the economy, since World War II. Erasing that deficit will require some tough choices — about further spending cuts and tax increases — that Obama avoided this week."

But he nonetheless made choices.
He sought to eliminate some corporate subsidies, for health insurers, banks and agricultural companies, that economists have long criticized. He proposed putting a price on carbon, to slow global warming, and then refunding most of the revenue from that program through broad-based tax cuts. He called for roughly $100 billion a year in tax increases on the wealthy — mostly delayed until 2011, when the recession will presumably have ended — and $50 billion a year in net tax cuts for the nonwealthy.

(Click here to read the article in full)

"Green budget"

From la Repubblica, Italy

WASHINGTON - "Higher tax for the well-off, a medium term fund for healthcare reforms, 'green' revenues from the trade-off of C02 emissions to fund tax relief for the low and middle classes. These are some of the core points of the budget as unveiled today by President Barack Obama. Along with the pledge to halve the deficit, which is expected to reach $1,750 bn in 2009, 12,3% of the entire US economy: the highest level since WWII. Obama hasn't denied the severity of the ongoing recession and stated that he intends "to offer transparency on the way each single dollar from the taxpayer is being spent".

(More here)

Obama hails 'fastest' US tax cut

from BBC News Online, 21 February 2009

President Barack Obama has said US tax bills will begin to fall from April, hailing a tax cut he called the fastest ever to take effect.
In his weekly radio and internet address, President Obama said the typical American family would gain by at least $65 (£46) a month.
He also pledged to cut America's trillion-dollar deficit.

The tax cuts announced on Saturday are part of a $787bn stimulus plan approved by Congress earlier this week.
The stimulus plan, aimed at reviving the US economy amid a global economic crisis, is split into 36% for tax cuts and 64% percent allocated for spending on social programmes.
Mr Obama said the US treasury had already begun directing employers to reduce the amount of taxes claimed from pay cheques.

The savings will reach 95% of American families, he said.
"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," the president said.

(Click here to read the article in full)

Obama's housing plan to help 9m

From BBC News Online, 18 February 2009

President Barack Obama has revealed a long-awaited plan to tackle the US housing crisis, aiming to help up to nine million families.

The plan will provide refinancing to four to five million "responsible homeowners" on the verge of defaulting. A $75bn (£53bn) fund will also aim to help reduce monthly payments for a further three to four million people, to no more than 31% of their income.

President Obama unveiled the details in a speech at an Arizona high school.
He stressed that the plan focused on helping families who had "played by the rules" and would not help lenders or borrowers who had acted irresponsibly.
The announcement came one day after President Obama signed into law a $787bn (£548bn) economic stimulus package.

Help for homeowners

Falling house prices have been at the heart of the problems in the financial sector.
More than one million people in the US have lost their homes in the housing crisis, and President Obama said a further six million homes were at risk of foreclosure.
"All of us are paying a price for this home mortgage crisis," he said.

The plan is designed to assist "underwater" homeowners - those who owe more on their mortgages than their homes are now worth, as well as those on the verge of foreclosure.
President Obama said it could provide a buffer of up to $6,000 against declining values on the average home.

He also revealed a further $200bn in Treasury funding to mortgage giants Fannie Mae and Freddie Mac, which underwrite more than half of all US mortgages.
Fannie and Freddie would also have to change their policy on refinancing, he said.
Currently they will only refinance borrowers with mortgages up to 80% of the value of their home.

This plan abolishes that rule though, so that "underwater" homeowners could now refinance.

Mixed reaction

"By addressing the foreclosure crisis directly, the administration's housing plan finally begins to plug the holes that cause the problem," the Center for Responsible Lending said in a statement.

However, others were less optimistic.

"[The plan] seems to offer little help to borrowers whose loan exceeds their property value by more than 5%," said John Courson, chief executive of the Mortgage Bankers Association.
US markets closed flat as investors greeted the plan with caution.
Earlier, official data showed the rate of construction of new homes in the US fell to a 50-year low".

Obama caps executive pay

Fat cats pay on bailout businesses to be limited.

by Taronja, Hagley Road to Ladywood

It's what millions of people would want to hear from the British government. It's the natural course of action for those banks who were bailed out from the taxpayer to the tune of hundreds of billions. But whereas in Britain they're still tiptoeing about, in the US Barack Obama is going straight to the point.

After dubbing the Wall Street culture of bonuses in times of crisis "shameful", the new President revealed "details of new rules limiting executive pay to $500,000 [still a level that you or me will never understand through our entire lifetime -ed] a year for firms getting a US taxpayer bail-out".

The BBC reports that "here was public outcry over $18.4bn in bonuses paid out in 2008 at a time when taxpayer money was propping up the financial system"."If the taxpayers are helping you, then you've got certain responsibilities to not be living high on the hog," Obama said. As the Reuters agency notes, "the White House aims to hold banking executives accountable for the money they receive from government coffers with the new rules, which were presented as being in the interest of shareholders and taxpayers alike".

Interestingly, while this is front page news in the US, you'll struggle to find any mention in the UK press. Instead, all the headlines are for Obama "screwing up" the nomination process. The question is: why? Could it be that our lovely bankers may want to shield people from overexcitement with ideas of fairness and accountability?

"Obama urges action on economy"

Article by Steve Schifferes, BBC News (UK), 8 January 2009

US President-elect Barack Obama has called for "drastic action" to prevent the US economic situation worsening.
In his first major policy speech since being elected, Mr Obama urged Congress to act quickly to pass his $800bn (£526bn) stimulus plan.
"I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible," he said.
"If nothing is done, this recession could linger for years."

(read the full article here)

Obama's priorities for 2009

Extract from an article by Max Deveson, BBC News online, 5 Jan 2009

Barack Obama enters the White House this month with a wide-ranging agenda for change.
The BBC's Max Deveson considers which issues he is likely to tackle head on - and which he may be tempted to put to one side:

Economic stimulus
Healthcare reform
Climate change
Iraq/Afghanistan
Closing Guantanamo
Engaging with the world
Labour relations
Backburner issues

Read the whole article here.

Obama 'to rebuild crumbling US'

Extract from BBC News, 6 Dec 2008

US President-elect Barack Obama has promised to invest in infrastructure on a scale not seen since the 1950s, when the US highway system was established.
He used his weekly address to outline that the spending would be part of his plan to create at least 2.5m new jobs in the ailing US economy.

He also spoke of the need for expanded access to high-speed internet and the modernisation of school buildings.
Unemployment rose by more than 500,000 during November, figures have shown.
That was the biggest monthly rise in job cuts since 1974, and it drove up the jobless rate to a 15-year high of 6.7%, up from 6.5% in October.
The figures came less than a week after the National Bureau for Economic Research said the US economy had been in recession since late 2007.
Mr Obama, who takes office on 20 January, has previously said that his incoming team will be tasked with generating 2.5m new jobs by 2011.

Read the whole article here.

"The first glimpse of Obamanomics"

An extract from an article by Stephen Foley, The Independent, UK, 25 Nov 2008

"Obamanomics will be forged, not in the first crisis-busting phase of the new president's administration, but later. And even then, a glance at the people with whom Mr Obama is surrounding himself, and a listen to the chatter of the economists he favours, suggests that his economic philosophy is one of pragmatism rather than ideology".

Read the article in full here.

Obama seeks to create 2.5m jobs

Extract from BBC News, UK, 23 Nov 2008

"US President-elect Barack Obama says he wants his economic team to find ways to generate 2.5 million new jobs during his first two years in office.
In a weekly address on the internet, Mr Obama said he wanted to sign the plan soon after taking office on 20 January. The message came as unemployment claims rose by 540,000 in the US, taking the total to 1.2 million jobs lost in 2008.

Mr Obama, said to have chosen Timothy Geithner as treasury secretary, is due to name his economic team on Monday. Mr Geithner, currently chairman of the Federal Reserve Bank of New York, has been deeply involved in the efforts to cope with the current financial crisis.
He previously worked in the Bill Clinton White House, where he worked through the fallout of the Asian financial crisis of the 1990s.

US shares rose sharply on Friday as word spread of Mr Obama's reported choice, calming investor fears.

Building jobs

Talking about his desire to put job-creation at the heart of the economic policy of the incoming administration, Mr Obama said new unemployment figures reinforced the impression of an economic crisis of "historic proportions".
He hailed congressional approval of a boost in unemployment benefits, adding that the latest gloomy figures had only reinforced his determination to revitalise the economy.
"We must do more to put people back to work, and get our economy moving again," the president-elect said.

He said his economic priority would be a two-year, nationwide effort to "jumpstart job-creation in America and lay the foundation for a strong and growing economy".
Ageing public infrastructure would be rebuilt, Mr Obama said, adding that his administration would look quickly at developing and building sources of renewable energy, such as wind farms, designed to "free" the US from its "dependency" foreign oil.

He suggested he would need cross-party support to get his plan through, despite his Democratic party holding a majority in both houses of Congress.
"Right now there are millions of mothers and fathers who are lying awake at night wondering if next week's pay check will cover next month's bills.
"There are Americans showing up to work in the morning only to have cleared out their desks by the afternoon. These Americans need help and they need it now," Mr Obama said".