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The state of Obama

interior-obamaThis article was published in the Sunday Herald on January 24, 2010.

The second year of Barack Obama’s presidency is only four days old and his agenda is already in tatters. Health care reform is dead. Climate change legislation is a non-starter. The Democratic party is devouring itself and Republicans will take back the House, the Senate, the country, at the first possible opportunity. Obituary season has begun.

In the greenhouse of political analysis, where overheated opinions grow into received wisdom, Martha Coakley’s shocking defeat in Massachusetts has been interpreted as a referendum on Obama’s leadership. For the third election in a row, following contests in Virginia and New Jersey, he personally intervened on behalf of a struggling Democratic candidate and lost, this time in the bluest of blue states.

“Democrats nationwide should be on notice,” wrote Republican Senator John Cornyn. “Voters are looking for checks and balances, and they are prepared to hold the party in power responsible for their reckless spending and out of touch agenda.” Democrat Evan Bayh agreed. “If you lose Massachusetts and that’s not a wake-up call, there’s no hope of waking up,” he said. The midterm elections in November seem awfully close.

On Wednesday, Obama has a chance to grab the wheel and steer his government out of a ditch. His second State Of The Union address is a pivotal moment. Will he concede ground to his critics? Will he come out fighting? Will the real Barack Obama please stand up.

There are several reasons to believe that his situation is less perilous than it appears, not least the fact that the media loves a crisis. For a start, Democrats still control both houses of Congress by a substantial margin, even if they have found it difficult to make their numerical superiority count. A mocking Village Voice headline nailed the absurdity of it: “Scott Brown wins Mass. race, giving GOP 41-59 majority.”

The Grand Old Party has been incredibly effective at frustrating Obama’s initiatives but has so far offered few fresh ideas to rejuvenate its own severely tarnished image. In a recent Washington Post poll just 24% of respondents trusted Republican politicians to make the right decisions for the country. Democrats fared only marginally better.

Coakley ran an atrocious, complacent campaign. Her many missteps included suggesting that Boston Red Sox pitcher Curt Schilling was a New York Yankees fan. This is like running for a council seat in the East End of Glasgow and saying that Henrik Larsson supports Rangers.

Whatever the reasons for her defeat, the returns made grim reading for Democrats. Between the Presidential election and Tuesday’s ballot, the party somehow lost 850,000 votes. In the towns of Gardner and Fitchburg, selected by Suffolk University as barometers of white working-class sentiment, a 20% Obama majority became a 20% Coakley deficit. If this swing is repeated nationally in November, they are headed for catastrophe.

In exit polls, more than half of the people who voted for Brown cited concerns about health care reform as the most important factor in their decision. It is telling that when he spoke on Coakley’s behalf, Obama barely mentioned the universal coverage that he once hoped would be his signature achievement.

The morning after Brown’s victory, Obama offered his assessment of what had just happened. “The same thing that swept Scott Brown into office swept me into office,” he said. “People are angry and they are frustrated. Not just because of what’s happened in the last year or two years, but what’s happened over the last eight years.” His chief strategist David Axelrod later attributed the result to a “zeitgeist” demanding change.

This passive formulation lets Obama off the hook. Viewed side by side, graphs depicting rising unemployment and the percentage of voters with a negative impression of the president follow similar trajectories, but the high rate of joblessness alone cannot explain the electorate’s loss of faith. Obama’s pragmatic, instinctively cautious style is turning off his most committed supporters, without convincing independents or winning Republican votes in Congress.

Disaffection with both parties is so widespread and so deep that politicians of all stripes are scrambling to present themselves as populist alternatives, irrespective of their formal affiliation. “Scott Brown won this election, the Republican party did not,” said Michael Connolly, communications director of the conservative Club For Growth. “There’s no question that there’s a different kind of party coming. The question is whether the leadership in Washington gets it.”

Obama has alienated left wing populists by appointing an economic team full of Wall Street insiders and doing little to curb the financial industry’s most egregious excesses. He never stood a chance with right wing populists, who see the welfare state as stealing money from hard working families and giving it to the undeserving poor.

“Democrats need to figure out a way to tap this populist anger,” said New York University Politics Professor Stephen Duncombe. “The way to do that is not to hew towards the middle, but to stake out a position on the left or the right. They need to say ‘yes, we understand that the system is broken and we have radical ideas.’”

Thursday’s announcement of tough new banking regulations was a sign that the government has learned something from Coakley’s defeat. The perception that Obama is in Wall Street’s pocket has been doing incalculable damage to his standing, but he only took serious steps to address it after being humiliated in Massachusetts.

It appears that, for once, former Federal Reserve chairman Paul Volcker prevailed over Treasury Secretary Tim Geithner in economic policy discussions. The “Volcker rule” would prevent banks that take deposits from trading in their own accounts or setting up internal hedge funds. This does not go as far as the Glass-Steagall Act that separated investment and commercial banking, but it is a massive about turn from an administration that has, until now, shown no appetite for fundamental financial reform.

“If these folks want a fight, it’s a fight I’m willing to have,” Obama said, leaving no-one in any doubt as to his narrow political goal. He must hope that Republicans can be provoked into siding with the bankers.

There is no such populist fix for health care reform. None of the available options looks palatable in the aftermath of crushing defeat. The Democratic party has adopted its default position, riven with internal divisions, to the point where damage limitation is the best it can do.

Nobel Prize-winning economist and New York Times columnist Paul Krugman reacted furiously to Obama’s proposal to concentrate on “core elements” of the bill, which has been gutted almost beyond recognition during the legislative process. “I’m pretty close to giving up on Mr. Obama, who seems determined to confirm every doubt I and others ever had about whether he was ready to fight for what his supporters believed in,” he wrote.

Krugman’s solution is simple: “Stop whining, and do what needs to be done… the Senate bill is much, much better than nothing. And all that has to happen to make it law is for the House to pass the same bill, and send it to President Obama’s desk.” The leader of the House, Nancy Pelosi, has already said that this cannot happen, because too many representatives are outraged at the compromises on abortion and preferential treatment for certain states that were written into the legislation so that it could pass in the Senate.

The third option is to let health care reform die, by drawing up a version without all the sweetheart deals, forcing Republicans and fiscally conservative Democrats in the Senate to use the filibuster to prevent its passage. As health insurance inexorably gets more expensive and excludes more people, the thinking goes, so those votes against reform will become a political liability.

The problem with this is that far too many Democrats are up for re-election in November. In the House, 49 representatives are defending districts that voted for John McCain in 2008. Senate leader Harry Reid faces a tough battle in Nevada and banking committee chairman Chris Dodd has already announced that he will not stand again.

Republicans need a net gain of 40 seats to take control of the House. Capturing the Senate would require a 10 seat landslide. So it is unlikely, if not quite impossible, that they will emulate their 1994 counterparts, who seized both houses of Congress from Bill Clinton. To do so, they will need to harness the Tea Party crowd’s rage and enthusiasm, without the movement’s demands for ideological purity driving out too many moderates.

Optimists in the Obama camp are no doubt telling themselves that Clinton failed to deliver universal healthcare, took a hammering in his first midterm elections and survived to become a popular two-term president.

One thing is certain: the elections will witness corporate assaults on candidates as never before, following the Supreme Court’s ruling in Citizens United v Federal Election Commission, which effectively strikes down campaign finance legislation, allowing private companies to spend what they like, how they like, to achieve their political aims.

Obama described the decision, carried by a 5-4 majority, as “a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans.” Opponents of health care reform have just demonstrated what unlimited money and dishonest attack adverts can do to worthy legislation. We will soon find out how they can shape an election campaign.