Why Obama Has a Tricky Tightrope Act to Pull Off in His Big Speech

As the Democratic Party convenes in Charlotte, President Obama faces a complex challenge: how to craft an effective campaign message given a weak economy, his own record and his half-hidden commitments.

At first glance, one might think, it should be easy. Governor Romney is a vulture capitalist with an undisclosed tax history, running on a platform whose economic planks include the fantasy of a return to the gold standard and whose running mate, Representative Paul Ryan, is an avowed supporter of the destruction of Social Security, Medicare and Medicaid, America's bulwarks against poverty for the middle class. The Romney-Ryan claim is that by “cutting government” the long-dormant genie of economic growth will at last be aroused.

But if Romney is the Sheriff of Nottingham, Obama is not exactly Robin Hood. In 2008 his most generous single group of funders were the employees of Goldman Sachs. His key economic players were almost all close to Robert Rubin, by then a senior adviser to Citigroup. His Treasury Department saved the banks but failed to save almost anyone else.

One might think that Obama would bury Romney under a full-throated defense of social insurance. But that issue is muddied by the politics of deficits, and the nearly universal elite commitment in the US to what is called “entitlement reform” – a euphemism for creeping cutbacks in old-age healthcare and retirement security. Obama has never been a New Deal/Great Society Democrat and he clearly plans to compromise if possible on these  programs, so elderly voters distrust him. For political purposes, “I'm bad but the other guy is worse,” is not a compelling theme.

Obama has achievements: A brilliant new book by Michael Grunwald of Time magazine, The New New Deal,  tells of the remarkable work still underway under the American Recovery and Reinvestment Act, Obama's quickly enacted and widely derided 2009 “stimulus” program. But practically no one knows anything about that. And there is the Affordable Care Act, which extended health insurance to almost the whole population. But for the most part the ACA hasn't yet taken effect and politically it is likely to hurt more than it helps.

Above all there is the surpassing problem of economic growth. On this Obama is the victim of his economists, whose professional blinders led them repeatedly to underrate the slump and overrate the recovery. And not only of his own economists, but of all economists – of the entire pool on which he might draw for advice – who have practically an enforced viewpoint on the feasibility of renewed growth and cannot conceive of a world in which it does not occur.

Thanks to them, Obama continued Bush's save-the-banks strategy for the economy, while the stimulus was advertised as filling the gap before bank credit started “to flow again” – a vast task for which it was far too small. Thanks to them, his administration pretends to believe that normality consists of a return to the full employment of the late 1990s – that there is some formula out there that will achieve this, and that the debate is over how to do it, and not whether it can be done.

But the whole population can see that the financial sector has no interest in restarting credit flows. In a debt-deflation banks make money through commodity-speculation, short-selling and foreclosures – and not by risking capital on long-term business ventures –  even if businesses wished to invest, which they largely do not. The banks are not merely a colossal fixed cost that underpaid depositors and overburdened taxpayers must bear; they are an active force in driving the economy down. Yet, having saved the banks, Obama has repeatedly staked his presidency – most recently in his state of the Union earlier this year – on springtime “green shoots” that turned brown in the summer sun.

Americans love optimists. And politicians have not yet forgotten how the sunny Ronald Reagan rolled over dour Walter Mondale in 1984 on the slogan, “Morning in America.” Yet voters also punish those who promise but do not deliver, and that is Obama's problem now. Against him, stand Romney and Ryan with their untested platform of magical thinking and snake-oil jingoism – and it would not be the first time that the American people have fallen for that.

Can the president win? Of course he can, and he may still. His intellect and rhetorical talents are unimpaired, and his opponent – plainly – is an oaf. But for starters, as the president prepares to deliver his acceptance speech at the Bank of America Stadium in Charlotte, North Carolina, he might pause to pray for the kind of storm that just bypassed the Republicans at Tampa – and that might oblige him to give his speech somewhere – anywhere – else.


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