The president will be condemned by history for a U.S. credit rating collapse.
July 26, 2011 - 12:00 am - by Richard Pollock
President Barack Obama’s record on the debt crisis hasn’t been a profile in courage. On Monday night, as he spoke from the White House East Room, the president stood exactly where he was at the beginning of debt negotiations: detached, alone, and an outsider.
For those of us who have watched the torturous day-to-day descent of this crisis, the president’s detachment and absence have been obvious. On Monday, Politico’s Glenn Thrush reported: “Obama was barely visible for much of the weekend.”
As the president faced the nation on Monday evening, he knew his economic legacy was on the line. Historians will judge him for his economic stewardship.
The assessment will not be good. Going deep into his presidential term, he presides over a country that suffers from high unemployment, record home foreclosures, and a no-growth economy. But when the most pivotal issue of our decade emerged — a $16.8 trillion debt crisis — where was the “Obama plan”?
The sad truth is there is no Obama plan and there never has been a plan. The president gingerly approached the debt crisis as he has approached other issues: intellectually, coolly, passively, and with great detachment.
What terrifies President Obama now and has animated him in the last week is that he could be the first president to preside over a national default.
Politico’s Thrush identified this key vulnerability on Sunday when he wrote:
Can anyone envision a more devastating line than “Barack Obama, the man who lost America’s AAA credit rating — and brought you 9 percent unemployment”?
In April the credit rating agency Standard & Poor’s estimated that the federal deficit problem was severe enough to downgrade the U.S. credit outlook to “negative.” Last week it further warned that even a stopgap deficit reduction plan could still result in a downgrade from AAA to AA.
On July 15, John Chambers, S&P’s chairman, explained in an interview with Reuters that a small agreement would not be enough. “If you get a small agreement, that will lead to a downgrade,” he said. He said the downgrade could come as early as October of this year.
The president’s response to the crisis? His proposals have been handled as if they were some kind of state secret. No one, including most members of Congress listening to his speech on Monday night, knows his actual proposal.
Certainly there are plenty of plans, including Senator McConnell’s plan, the famous “Gang of Six” plan, the “Cut, Cap and Balance” Act passed by the House, and even a joint Senator McConnell-Senator Reid plan. On Monday night, the president casually supported elements of Senator Reid’s plan, but he rejected its central feature that called for a waiver of new taxes.
None of the plans being debated today have the imprimatur of the Oval Office. At a moment when presidential leadership is so vital, President Obama has been passive. Passivity also was the hallmark of his approach to his other signature blockbuster initiatives: the TARP bailout, ObamaCare, and the financial services initiatives.
This of course makes perfect political sense for Obama. The only currency here in Washington is political currency. In Washington, make-believe numbers over dollars and cents are the tradition of both parties.
So as a stalemate approaches, the only question of substance is: Who lost America’s credit rating? The president can answer that Congress did, or the Tea Party did, or Speaker Boehner did. But the truth is there is only one president of the United States. There is only one national leader. And at the end of the day that’s how he will be judged.
There is also the overt politicization of the debt crisis. In February, the president coyly asked to raise the debt ceiling by $2.5 trillion through 2013. The timing was not an accident. It was designed to allow the credit limit to expire after the next presidential election. Clearly there also was the stink of politics behind the timetable.
Economists have estimated that if our indebtedness continues on its current glide path, the debt ceiling will balloon to $26 trillion by 2020, or 100% of our gross national product.
Presidential leadership is essential at a moment of high peril.
Certainly high unemployment, a disastrous housing market, and a stagnant economy are national tragedies that occurred on the president’s watch. But these economic woes may be footnotes in the face of a debt-swollen government that ultimately kills American creditworthiness and long-term prosperity.
Richard Pollock is the Washington, D.C., editor for Pajamas Media and the Washington bureau chief of PJTV.
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