In the next week the action moves from Wisconsin to Washington, where the deadline looms for a possible government shutdown over the federal budget. President Obama has to take a more direct and personal role in that budget battle – both for the economy’s sake and for the sake of his reelection. But will he? Don’t count on it.Here's the real sickness in the American economy and Obama is doing nothing to address this:
Worried congressional Democrats say the President needs to use his bully pulpit to counter defections in Democatic ranks, such as the ten Democrats and one allied Independent who on Wednesday voted against a Senate leadership plan to cut $6.2 billion from the federal budget over the rest of fiscal year 2011. They want Obama to grab the initiative and push a plan to eliminate tax breaks for oil companies and for companies that move manufacturing facilities out of the country, and a proposal for a surtax on millionaires.
Most importantly, they’re worried the President’s absence from the debate will result in Republicans winning large budget cuts for the remainder of the fiscal year – large enough to imperil the fragile recovery.
But Obama won’t actively fight the budget battle if the current White House view of how he wins in 2012 continues to prevail.
From this [the "success" of Bill Clinton's move to the centre post 1994], many in the Obama White House have concluded that the president should follow Clinton’s campaign script — distancing himself from congressional Democrats, embracing further deficit reduction, and seeking guidance from big business. If it worked for Clinton, it must work for Obama — or so it’s supposed.
The superficial logic that so often passes for thought in Washington typically sees causation where there’s only correlation. In fact, there’s no reason to believe that Clinton’s lurch rightward at the start of 1995 is what won him re-election the following November. He was re-elected because of the strength of the economic recovery.
The richest 10 percent of Americans, who own about 90 percent of all financial assets, are buying again (sales at Neiman Marcus and Tiffany’s are way up). But most Americans still have little purchasing power. Under a huge load of debt, worried about meeting mortgage payments, and seeing their major asset — their home — continue to drop in value, they’re holding back from the malls.The US is in the throes of a Great Recession. It needs fiscal stimulus. The Federal Reserve is pushing on a string with its monetary stimulus. Obama has failed the American people by not pushing to get an appropriate fiscal stimulus. The Republicans have destroyed and their current "policies" will continue to destroy the American economy. But they are backed with so much billionaire money they will be able to sell their slick "program" of lies and continue to do well in elections because Americans vote their pocketbook and for the bottom 90% that pocketbook is hurting.
A strong recovery cannot be sustained by the richest 10 percent. Before the Great Recession, the top 10 percent received about half of total income, but they accounted for only about 40 percent of total spending. Forty percent of spending isn’t enough to convince businesses to invest in new capacity and jobs, which is why corporations are still sitting on $1.4 trillion of cash.
So many jobs have been lost since Obama was elected and so many people have entered the workforce needing jobs that even if job growth were to match the extraordinary pace of the late 1990s, year after year, the unemployment rate wouldn’t fall below 6 percent until 2016. That pace of job growth is unlikely, to say the least.
If Republicans manage to cut federal spending significantly between now and Election Day while state outlays continue to shrink, the certain result is continued high unemployment and anemic growth.