President Obama's off-the-cuff remark that the "private sector" is "doing fine" wasn't so much a misstatement as a rare admission that despite his anti-Big Business rhetoric, White House policies to date have brought record profits to Wall Street and corporate America while leaving most of Main Street dangling on a string.
His remark -- and his awkward attempt hours later to "walk it back" -- also reflect a deep underlying tension between the progressive and conservative wings of the Democratic party and a corresponding tension in the way that the White House is positioning Obama in a neck-and-neck political race with GOP candidate Mitt Romney that culminates in fewer than 150 days.
On the one hand, Obama wants to convince mainstream American voters -- the nation's beleaguered "middle class" -- that he's on their side, and that the nation's economic problems, including widening income inequality, are a reflection of the staunchly pro-business policies favored by his Republican predecessor and the current GOP.
On the other hand, Obama also wants political credit for having staved off a second Great Depression and for having restored a favorable domestic investment climate -- even if he largely accomplished these feats by pursuing economic policies even more "pro-business" than those of George W. Bush.
Can the president really have it both ways?
Perhaps, but only if Main Street is seeing benefits on par with Wall Street. But with job growth sputtering, and the jobless rate still hovering well above 8 percent, time is running out. Obama now faces the bumpiest road to reelection of any incumbent president since Jimmy Carter in 1980. And the entire Democratic party is teetering on the edge of panic, with some former high-level supporters defecting to the GOP, while a string of top surrogates, from Newark mayor Cory Booker to former president Bill Clinton, speaking out in thinly-veiled defiance.
How "pro-business" a president has Obama turned out to be? Corporate after-tax profits, at $1.7 trillion, already far exceed the historic high ($1.3 trillion) reached under George W. Bush in 2007. And Wall Street banks, whose unregulated speculation precipitated the stock market crash and drained the nation's wealth, are booming again. Obama not only bailed out the banks, on generous terms, but at the urging of Treasury Secretary Timothy Geitner he failed to extract significant concessions, squandering his enormous leverage.
Partly as a result, even the Dodd-Frank bill, touted as a major step forward in financial regulatory reform, provides only limited added transparency and does little to restrain the banks from future excess, leading experts to predict that another major financial crisis could be only a matter of time.
Obama, despite his populist rhetoric, also backed a private sector approach to health care reform. Not the completely "privatized" survival-of-the-fittest reform agenda advocated by Republicans, of course, but not the fully socialized single-payer "public option" strategy advocated by his base, either. Obamacare's biggest economic winner is the private health care industry, especially insurers who managed to convince the president to embrace the individual mandate, which guarantees insurers millions of new health care consumers -- and with them, the opportunity to reap millions of dollars in new profits.
Won't most Americans also end up with cheaper, more affordable health care? It depends. In the short term, probably. But once market forces really come into play starting in 2014, people with employer-based coverage may well lose it, and insurance premiums could well rise, not fall. Over time the cost of health care for the middle class could actually rise, vitiating one of the chief rationales for Obamacare. Either way, private industry will end up the big winner.
Another area of massive Obama support to the business sector is energy. Here again, GOP rhetoric, attacking Obama as a "big government," "anti-free market" president, has tended to obscure the reality of the president's policies. For example, "big oil," a favorite Obama target of late, has never had it so good. Domestic oil production has expanded dramatically since Obama took office, including vastly expanded offshore drilling and unprecedented new explorations into the hitherto sacred Arctic Reserve.
Obama has certainly tried to balance his pro-oil policies with greater concern for their environmental costs, as well as a greater reliance on "renewable" energy sources, including solar and wind power. However, he has also dramatically expanded bio-fuels and natural gas exploration, in effect, vastly expanding the energy private sector. One recognized expert, writing in the Houston Chronicle last year, called Obama "our most pro-energy president in decades."
And finally, let's not forget Obama's enthusiastic embrace of free trade. The historic US-South Korea free trade agreement passed last year easily rivals the NAFTA agreement of 1993 in its potential scope and importance. On paper, the agreement suggests that South Korea will be buying a lot more US automobiles -- and, in fact, the US auto industry, thanks to Obama's 2009 auto bailout, is booming again, with GM recording record profits.
However, the effect of the new free trade agreements on US labor over time could well be devastating. When Obama secured the bail out, he saved 1.4 million jobs -- but to secure the deal, labor bargained away most of its rights, and real wages -- which are continuing to decline nationally -- are likely to fall in the auto sector, too.
It's not clear what the president's high-level critics would have him do, but the message seems to be that Obama's "class warfare" anti-business rhetoric is antagonizing potential financial backers and undermining Obama's ability to break through with suburban independent voters. It's also weakening the position of House and Senate Democrats facing their own tough re-election battles, so much so that a growing number are distancing themselves from the president.
Obama seems increasingly trapped politically. By alternately extolling and lambasting the business sector, he's left himself vulnerable to GOP. charges that he's "anti-business." He's also ceding the mantle of successful economic stewardship and forward-looking vision that his record, on balance, reflects.
If this keeps up, don't be surprised if more voters turn to Romney's breezy optimism and hollow constancy as a welcome relief from a president who seems besieged and adrift, and increasingly confused about what his real message is.
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