Wednesday, December 3, 2008

Obama faces the toughest challenges since Franklin Delano Roosevelt

By Adam Hug. Source: Public Servant

As the celebrations die down, and the ticker tape is cleared away, the political reality of Barak Obama's transition is becoming clearer. Pundits argue with some accuracy that President-elect Obama will enter office with a daunting in-tray, perhaps as tough a set of problems as any new leader has faced since FDR. Two unresolved wars, a financial crisis, an economic slump, an unstable trade deficit and large portions of US debt owned by China and other countries, not exactly top of the US's Christmas list, are just some of the challenges the new administration has to look forward to. However, he faces these challenges with a level of goodwill internationally that has no recent comparison.

After years when even committed Atlanticists have nervously tried to keep their distance from a politically toxic Bush Administration, with British ministers such as Lord Malloch Brown announced that the incoming Brown Government would be 'no longer joined at the hip' to the Americans, politicians from around the world are now jostling to stand as close as possible to the President-elect.

One of Obama's first challenges is to translate his political capital into European troops on the ground in Afghanistan where he is committed to a 'surge'-like policy of increased troop deployment and political engagement of Pashtun groups previously sympathetic to the Taliban. This at a time when there are growing calls for the deployment of an EU force in the DRC and with the countries who have already made significant deployments such as Britain are facing overstretch.

Similarly, following the inconclusive G20 talks, there will be the need for the new US administration to take a leading role in coordinating the fiscal stimulus packages and overhaul the global financial architecture. This will involve swiftly building a strong working relationship with Gordon Brown who has taken unofficial leadership of the global response to the crisis as Bush fades away. Promisingly, Obama and Brown share favourite tools. Obama's pledge to cut taxes for 95% of Americans by reversing Bush's tax cuts, likely to form the major plank of any Obama fiscal stimulus, will in fact largely be driven by tax credits, the Clintonian mechanism heavily favoured by the Prime Minister.

The choices Obama makes on his economic team will be critical not only to the response to the economic and financial crises. The protectionist language used on the campaign trail by Obama and his fellow Democrats have given some cause for concern that the US may seek to pull up the drawbridge in an attempt to save US jobs. While there is likely to be a cooling of support for free trade, particularly in light of the current economic situation, the centrist track records of all names floating for senior roles at Treasury or on the Council of Economic Advisors such as Tim Geithner, Jamie Dimon, Larry Summers, Robert Rubin and Paul Volker would suggest that a radical retrenchment is unlikely.

Similarly the international community will hope that the Poznan Climate Change Conference in December marks the swan song of an obstructionist US position on climate change and that the incoming administration will join the race to a final deal to replace the Kyoto Protocol at next winter's Copenhagen Summit. It has yet to be seen if the economic crisis will limit some of Obama's ambitions for tackling climate change but there are encouraging signs in some of the strangest places. The proposed $25 billion bailout for the motor industry would be tied by Democrats to helping the US car giants to develop new fuel efficient vehicles, looks like an example of how Obama will try to use fiscal stimuli to support the development of green technology as well as kick start the economy.

Given the bailouts for the financial services sector and Detroit, commentators have been questioning the ability of the new administration to deliver the comprehensive package of healthcare reforms it campaigned for. Many of the proposed mechanisms in the Obama healthcare plan are familiar to British observers: an overhaul of IT systems including the transfer of medical records from paper to computer, publishing performance data and encouraging competition between providers. However the more radical element of the plan is to enable universal coverage through the creation on a National Health Insurance Exchange, offering a new state backed insurance scheme based on the Federal Employees Benefits Programme used by members of congress alongside existing insurance packages. This would be supported with a range of tax credits for families and small businesses and requirement on larger firms to provide insurance or contribute to the costs of the national plan. DC chatter sees campaign co-chair and former Senate Majority Leader Tom Daschle as the front runner for the position as the new administration's Secretary for Health and Human Services. It will need an experienced hand such as Daschle to manage the legislative obstacles likely to be thrown in the path of reform by the health insurance industry and manage expectations with the likely delays to elements of the package enforced by the economic crisis.

The challenges Obama faces are grave but the combination of international goodwill, a promising team of built from Obama's savvy campaign operatives and experienced Clinton hands and a sense of purpose borne from adversity gives hope that these challenges can be met.


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