www.nationaljornal.com ANALYSIS
America’s Rodney Dangerfield Moment
Obama’s decline, Washington’s dysfunctional politics, and decades of bad advice are undermining U.S. sway abroad.
By Michael HirshFriday, November 12, 2010 | 9:55 a.m.
Comment
There were some high points during President Obama’s 10-day Asian tour, particularly the wildly cheering crowds that greeted him in Indonesia, his childhood spawning ground (a welcome that, unfortunately, will likely only sow further suspicion within the “birther” crowd back home, not to mention among the substantial number of Americans who still believe he’s secretly a Muslim). But for the most part this was a shadow of the president who was awarded the Nobel Peace Prize in 2009 on the mere bet that he would somehow deliver the “old America” back to the world. And along the way, when it came to substantive issues such as trade, capital imbalances, currency policy, and Middle East peace, Obama encountered a faceful of rebuffs from allies and future rivals alike.
Much of the commentary in Washington has focused, predictably, on the devastating midterm election losses suffered by the Democrats, widely interpreted as a repudiation of Obama and his policies. But there is a much deeper dysfunction at work here. The key nations of the international system have grown weary of the political paralysis in Washington that has effectively placed an unelected official, Federal Reserve Chairman Ben Bernanke, in charge of growing the economy; and they are fed up with two decades of bad U.S. economic advice since the end of the Cold War. Consider the evidence:
--Obama was relegated to the position of cheerleader for Bernanke’s plan to purchase $600 billion in Treasuries to boost the economy—known as “quantitative easing”—which set off a roar of foreign disapproval. Bernanke’s move also took the pressure off China, which charged that Washington was hypocritically driving down the dollar as a spur to exports even as it was trying to muster international pressure on Beijing to raise the value of its currency. The result was a muddle, as the G-20 leaders at the Seoul, South Korea, summit agreed to develop a mild set of “indicative guidelines” intended to address large economic imbalances—all of which essentially kicked a very large can down a very long road. Gone was any mention of Treasury Secretary Tim Geithner’s plan to curb current account imbalances. Among those who repudiated Geithner and the Obama administration was Germany Chancellor Angela Merkel, who declared: "To set political limits on trade surpluses and deficits is neither economically justified nor politically appropriate." Merkel’s uncompromising language suggested that Geithner may have botched the negotiations by going in with a full-blown plan, complete with specific numbers, rather than laying the groundwork behind the scenes.
--Seoul may be a solid U.S. ally, but Obama’s South Korean counterpart, President Lee Myung-bak, failed to offer up a key “deliverable”—Washington jargon for an agreement signed during a presidential trip—when he and the U.S. president could not come to agreement on a bilateral trade deal. And despite Washington’s supposed leverage over the U.S. auto industry—a large portion of which the taxpayers now own—Obama could not persuade Chrysler, Ford, and the United Autoworkers Union to relent in accepting the immediate end to a U.S. tariff on Korean cars, a key deal breaker. The further delay in the pact, which has languished since 2007, threw other free trade agreements into doubt, along with hopes of reviving the Doha round of global trade talks.
--Worldwide uncertainty over America’s ability to address its deficit and debt problems is growing, cast into further doubt by the expectation that the midterm election results will only widen the chasm between Republicans and Democrats. The issue abruptly re-emerged back in Washington during Obama’s Asian tour when, taking the White House by surprise, the co-chairs of the president’s deficit commission offered up a credible plan for cutting the federal deficit by $4 trillion—only to see the scheme denounced on both sides of the aisle. Global uncertainty over the "Whither America?" question has also heightened, because so many regulatory rules remain unwritten since this summer’s passage of the financial reform law. A new Bloomberg survey of 1,030 investors, analysts and traders showed that the United States was now ranked behind China, Brazil, and India as an investment opportunity.
--Obama didn’t stop in the Middle East on his trip, but its politics nipped at his heels nonetheless as Israel Prime Minister Benjamin Netanyahu stoutly defended yet another snub to U.S. efforts to revive peace talks with the Palestinians – the latest announcement of new settlement construction in Jerusalem. The tenor of Israeli defiance also raised new questions about whether Netanyahu might decide, sometime in 2011, to attack Iran’s nuclear facilities if Obama’s efforts to gradually ratchet up sanctions pressure continue to bear no fruit.
The backdrop to all of these setbacks has been a gradual loss of prestige. The last decade has seen multiple disasters and missed opportunities emanating from Washington—the diversion away from Afghanistan to Iraq; the long period of fiscal, regulatory, and financial recklessness; and the squandering of global leadership over climate change and the carbon-based global economy. As a result, other countries are no longer looking to Washington as a model, and Obama simply hasn’t done enough to change minds, to deliver sufficient substance to go with his soaring rhetoric. In the years since the 2007-09 financial catastrophe, the G-20 group of nations, which included China and other major developing nations, have won a kind of battlefield promotion. The G-20 is now seen as the world’s preeminent economic forum, eclipsing the hoary Group of Seven (and the G-8, which included Russia). The G-7 had been meeting since the 1970s to decide on interest rate and currency policies for the world. But whereas Washington was clearly first among equals in the G-7—the first meeting actually occurred in the White House library—it has not been able to dominate discussions at the G-20.
Nor is there any sign that Obama or the United States will be able to do so in the future.
