November 11, 2010--Political Capital

When Barack Obama was elected president by a significant majority and perceived to have done very well with almost all segments of the population, it was assumed he would enter office with considerable political capital. There was then a great deal of speculation about how he would spend it--what would his priorities be and when necessary, to get unpopular things done, how would he spend down some of that capital.

We now know that he spent nearly all of it to advance his health care reform agenda. Even though he could never get even half the public to support this effort, since he saw it to be of benefit to all, including opponents of the plan, and claimed that it needed to be done to slow down the growth of spending on mandated programs such as the popular Medicare, nonetheless it continued to be resisted by all Republicans in Congress and the majority of the public.

Thus, to get it passed, he cashed in most of his political chips. He gambled that once it became law and the benefits began to phase in, people would see it to be a good thing after all and begin to restore some of his political currency.

This of course did not happen. Or hasn't happened yet. In the meantime, the economy has continued to falter, Obama is increasingly seen to be ineffective in leading the effort to turn it around, and in political capital terms he has fallen into a form of political deficit.

After fewer than two years in office he is perceived to be a lame duck and the Republicans who are about to wrest congressional power from the Democrats are already seeing him to be a one-term president.

This loss of standing has happened before to both Republican and Democrat presidents.

When they got trounced in midterm elections, they did one of two things--worked in a bipartisan way to get significant things accomplished as Clinton did with Newt Gingrich (they agreed to eliminate welfare as it had come to be known since New Deal days) or, like Ronald Reagan, they turned to foreign policy as the arena in which to rebuild their credibility and amass more political capital. Reagan worked successfully with Mikhail Gorbachev to end the Cold War.

Perhaps this is why Obama sped off to Asia right after Election Day. Since he knew Democrats were going to lose control of Congress and that Republicans would see their top priority to do all they could to make sure he is defeated in 2012 (Mitch McConnell said this very thing even before Obama boarded Air Force One), he realized that since it will be impossible to work with Republicans in a bipartisan way, rather than follow the Clinton approach he took a lesson from Reagan.

So how is that foreign policy agenda working for him?

Ten days after the mid-term elections--not very well.

But it appears that Obama has also lost most of his international political capital.

Earlier this week, Fed Chairman Ben Bernanke announced that he would in effect print nearly a trillion new dollars in an attempt to weaken the dollar so that American products would be easier to export and thus jobs would be created. The Fed has already reduced interest rates to almost zero and that hasn't worked so this is his final, last ditch effort to contribute to revitalizing the economy.

Bernanke is not a member of the Obama administration. The Fed operates autonomously, but Treasure Secretary Geithner endorsed the Fed's action as did the president himself when questioned about it in while in India and Korea.

As a result of coming to Bernanke's defense the politically weakened president was criticized by most of the world's finance ministers. From Germany to China. And they did so in blunt and dismissive language rarely heard in public or polite company. They appropriately pointed out that this sort of currency manipulation not only doesn't work (it can actually make things worse) but it is the very sort of practice that Obama and his administration have criticized when countries such as China refuse to allow their currencies to float with the market.

And also while Obama has been abroad, the Israeli government took the opportunity to announce the construction of 1,000 new housing units in Arab or East Jerusalem. Just the sort of thing to derail what is left of the "peace process."

Obama immediately condemned this, saying that "This kind of activity is never helpful when it comes to peace negotiations."

Without missing a beat, Prime Minister Netanyahu snapped back, lecturing Barack Obama, "Jerusalem is not a settlement; Jerusalem is the capital of the state of Israel." In other words, "Thank you very much but don't tell us what to do in our own country."

We are here witnessing the end of the grudging respect Netanyahu has felt compelled to pay to the American president whose country continues to be responsible for Israel's ultimate security. There is no way he would have spoken this dismissivly if Obama and the Democrats had done better at the polls last Tuesday.

In fact, as the New York Times reports (article linked below), while in America this week, Netanyahu has spent most of his time celebrating with Republicans.

So with little hope of any cooperation from the GOP to work on the economy and with world leaders enjoying the opportunity to reject U.S. assertions of power, Obama has to think again about how to proceed. His cooperative words and glossy foreign trips will not get the job done. This is a real problem for him and for America.