David Gergen | Bio
CNN Senior Political Analyst
Barack Obama last week set forth the most ambitious reform agenda of any president since Lyndon Johnson, and a large majority of Americans have rallied behind him. Yet, as the economy continues its downward plunge, the question arises: in trying to do so many big things at once, is he putting economic hopes at growing risk?
The arguments in favor of his current approach – what might be called a “big bang” – are powerful both substantively and politically. With health care costs exploding – they will average $8,160 per person this year and are estimated to reach $13,100 by 2018 – it is clear that reform of health care is a key to long-term economic strength. Similarly, the embrace of a low-carbon, green economy should be the source of many new jobs and will also protect the planet. In both cases, the earlier reforms come, the better.
Politically, the President is probably at the zenith of his power. He and his team clearly want to seize upon this crisis to reshape the overall landscape, just as FDR did over the years in the Great Depression. At the moment, Obama enjoys the support of some two thirds of the public, and by one survey, Americans by 61-26% say they trust him to do a better job with the economy than Republicans. He also commands large majorities in both chambers of Congress, and history says his party is likely to lose some seats in the 2010 election. And very importantly, massive, rapid change is what he promised voters in the campaign.
So, the argument comes from the White House, damn the torpedoes – full speed ahead!
Yet… yet… yet: It isn’t popular to say right now but there is growing reason to question whether this is the wisest course in terms of our most urgent and pressing challenge: a collapsing world economy. News on the economic front has to be sobering to even the most optimistic among us. Last Friday, we learned that the economy contracted in the 4th quarter by over 6 percent. Over the weekend, Warren Buffett warned that the economy would be in a “shambles” through 2009 and possibly beyond. On Monday, the government issued its fourth bailout for AIG, European ministers rejected a general bailout for Eastern Europe, and the Dow sank below 7,000 – down some 25% since its run-up in January. This Friday economists expect the latest U.S. unemployment numbers to be dismal. Already, the administration’s optimistic economic forecasts for next year look way too rosy.
We are in the midst of a global crisis, one that demands an intense focus and daily leadership by the President of the United States. There is no doubt that President Obama is paying close attention: not only is he receiving a daily economic briefing – new at the White House – and in his first three weeks in office, he secured passage of a massive stimulus bill. Give him ample credit. But there is also no doubt that his ambition for reforms in other areas do not allow him to give the economy his full attention. This Thursday, for example, he will hold a health care “summit” at the White House, as he launches a year-long campaign to achieve what no other president has ever done: a complete overhaul of the health care system. He deserves credit for trying, but in the Clinton years, a similar such effort consumed enormous energy and time by the President and most of his domestic team. And this same White House wants to achieve an overhaul of energy as well this year – a project that is similarly massive and time-consuming. In my own experience at the White House stretching back to the early 1970s, a President and his team can be successful in addressing one big major crisis when they apply laser-like focus, but when juggling two, three or four at a time, they usually bungle one – and often more than that.
His supporters ask: given what President Obama has already done on economic reform, what more would you have him do? Well, for starters, the financial industry is suffering daily blows because there is still no clear-cut set of policies about how the government will rescue banks and to what degree it will take voting control of other banks beyond Citi. The White House needs to be fully engaged and pressing the Treasury and Federal Reserve plus other agencies to bring more clarity on an urgent basis. The President also needs to break up the log-jam on appointments to top economic posts: it is stunning that the Secretary Tim Geithner does not yet have a deputy secretary or any undersecretaries even named, much less on the job. Nor is there a major CEO or market leader in the administration to provide daily advice.
Clearly, the President also must ensure that other efforts are also underway and receive daily attention from the White House, starting with the housing industry and extending to an auto bailout, regulatory overhaul, and – very importantly – a coordinated world-wide approach to ensure that we don’t go over an economic cliff. The White House, too, must oversee the stimulus spending and see if more is needed. It would help as well if the President worked with Congress to get those 9,000 earmarks out of the massive spending bill that the Senate is now considering – earmarks that undercut the administration’s own promise of fiscal prudence. All these and many more economic issues need the attention that only a President can bring.
Does an intense presidential focus on the economy mean that health care reform and energy reform must be put aside? Not at all. They are too important to be sidetracked. But it does mean that the White House should consider putting them on a slower track, perhaps trying to bring health care reform to a final vote next year. The U.S. needs to have a climate change plan for international negotiating purposes late this year, but elements of new energy legislation might also be slowed until next year, too. It is worth further debate whether the President’s budget plan – which many in business saw as an assault on them – is now having a damaging effect upon the very stock market that his team wants to stabilize.
The economy is falling faster than anyone would like. Some economists have now upped the likelihood of a mild depression to one out of four; they also say that the economy is sinking so quickly that it may wipe out the benefits of the President’s stimulus package. In the midst of this economic crisis, the number one, urgent priority for the country is to stop the bleeding. Once the patient is stabilized, we can go on to perform other, vital surgery.