President Obama and the Debt Crisis: Detached, Alone, and Passive
The president will be condemned by history for a U.S. credit rating collapse.
July 26, 2011 - 12:00 am
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.