Obama's 'Overleveraged' presidency

Your weekend reading assignment is this superior piece by Fred Barnes at the Weekly Standard who compares Obama's risky policies with risky loans and investments made by a bank. The bank becomes overleveraged and when those loans and investments start to fail, the bank is forced into bankruptcy (or gets a bailout).

Barnes takes Obama's decision to close Gitmo as an example of his risky policies and makes some salient points out how those policies can define a presidency:

So Obama, like a banker who made a bad loan, is confronted with a problem of his own making. The president said Bush acted too hastily in setting up Guantánamo. But Obama's announcement, two days after his inauguration, of a deadline for closing Guantánamo was a rash decision made in even greater haste.

Most presidents propose two or three risky policies in their first year--risky because there's a significant chance of failure to deliver what's promised. In 1981, President Reagan's policies of deep cuts in taxes and spending and aggressively confronting the Soviet Union were dicey. But the economy rebounded 18 months later and the Soviets buckled, though not until Reagan's second term.

Obama has outdone Reagan or any president since Lyndon Johnson, perhaps even since FDR, in risk-taking. He's adopted or proposed eight or nine risky policies (by my count). Re-election doesn't require all of them to succeed. If his policies bring about a briskly growing economy and nothing more, that may be sufficient for Obama to win a second White House term.


The difficulty is that some of his policies are likely to hinder others. Tax hikes, increased energy costs, and new regulations work against the economic recovery that soaring spending and peacetime deficits at historic highs are supposed (by Obama at least) to spur. A more likely result: stagflation, a simultaneous surge in inflation and interest rates.

The train wreck this country is headed for once all this loose money and high spending come home to roost will all be blamed on Bush by the Democrats. It seems incredible but that gambit will likely work unless the Republicans can get their act together and present a coherent, in depth, critique on the economy the same way that Dick Cheney presented one on Obama's national security policies.

Cheney's excellent speech is still being digested by voters and the contrast with Obama's whining defense of his policies is just too obvious to ignore. But critiquing Obama's economic policies will be tougher given the diffuse nature of the subject matter and the sad fact that the GOP has offered few alternatives of its own.

Still, the reality of where Obama is taking us may yet make the Republican's job easier if inflation bites in double digits and interest rates skyrocket, thus cutting off any nascent recovery. At that point, voters will give the GOP their undivided attention. Let's hope they have something meaningful to say.