“Concealed acts concern God and overt acts are for we the people and our children.” (Deuteronomy 29:28)
Israelis often ask Americans to explain the “real” Obama. Does he have Israel’s best interests at heart? Will he try to impose his own version of a peace agreement? Are he and his advisors anti-Semitic? Is the president a Muslim? I certainly don’t know the answer to these questions. I do know that on Friday the 13th, he hosted an elaborate iftar dinner at the White House commemorating Ramadan. Like last year, he even invited a few Jewish leaders, including the Israeli ambassador. Not everyone was pleased by that decision but the “offensive” guests weren’t able to attend this year’s party anyway, as it was conveniently scheduled on Shabbat.
We should note that President Obama has also hosted Passover seders at the White House - and no one has ever accused him of being Jewish. Moreover, while he did bow obsequiously when greeting the King of Saudi Arabia, he bowed even lower to Emperor Akihito, who, admittedly, is much shorter than the Saudi king.
Wall Street saved
Instead of judging him by these subtle gestures, I suggest we look at what President Obama has done since taking office. Both his domestic policy priorities and his foreign policy strategy follow a similar approach and teach us much about the president’s general modus operandi.
Less than a month after entering the White House, Obama signed into law the largest economic-rescue effort in US history, expanding the Bush bailouts and extended them to additional sectors.
Yet there was no structured process tracking how this taxpayer money was being spent. A lot of it was used for executive compensation. The rescued banks were not forced to inject needed liquidity back into the economy, and tens of billions of dollars were invested overseas. A chorus of critics highlighted these issues, but most of America applauded the Obama plan that saved Wall Street. Check the box.
Team Obama also essentially rewrote the creditors’ rights rules in order to rescue GM and Chrysler. Labor unions were handed large stakes in the reconstructed companies at the expense of bondholders. Obama single-handedly fired GM’s CEO. While these unprecedented exercises had no constitutional basis, it was broadly conceded that the president saved the auto industry. Check the box.
Take two aspirin and give your grandchildren the bill
Comprehensive health care legislation eluded many former presidents. President Obama signed a bill that completely ignored tort reform, did little to curtail abuses by the insurance industry and preserved the perverse disconnect of doctors and patients from the product, its pricing, its delivery and its maintenance. Moreover, it gave billions of dollars to states for projects having nothing to do with health care in order to persuade recalcitrant legislators to vote in favor. It also created over a hundred new agencies to administer the new legislation. Do most people know that? No. Will those burgeoning infirmities have a major impact on the president’s scorecard? No. What the world knows is that he got it done. Check the box.
Obama next embarked on the most sweeping overhaul of the US financial services industry since the Great Depression. The industry would have destroyed itself but for the government bailouts discussed above. However, in some respects, the bailouts worked too well. By the time Congress got around to proposing a bill, most of the major firms were back on their feet, earnings had recovered, and the bonus culture returned in the blink of an eye. But Wall Street wasn’t spending all its money paying itself. It also supported armies of lobbyists to prevent the proposed legislation from ever seeing the light of day.
Yet the president also had a few tricks up his sleeve. It’s no small coincidence that Goldman Sachs, perhaps the most obvious example of the sector’s rebound, quickly found itself under investigation by the SEC. On the morning of July 15, 2010, the firm paid a record $550 million fine (though equal to merely two weeks of the $13.4 billion profit that Goldman reported in 2009) and the matter was settled. That afternoon, Congress passed the Financial Reform Bill.
Detractors contend that the Act leaves many decisions to the same federal regulators that missed the warning signs of the crisis, creates a bigger, more intrusive government, undermines the competitiveness of the US economy, and strangles credit just when we need it most. Fortunately, the legislation is almost twice as long as the very long Health Care Reform Act, so few people will ever read it, including most of the legislators who passed it. The public generally admired the president for standing up to Wall Street, establishing a consumer protection agency, and ensuring that the abuses which had infected the mortgage industry will no longer be tolerated. Check the box!
Comrade in arms
On the foreign policy front, Obama is similarly achievement driven. The Strategic Arms Reduction Treaty (“START”) had defined US-Russia relations since 1991, and many believe it signaled the end of the Cold War. It expired in December 2009. In April 2010, Presidents Obama and Medvedev renewed it.
Once again, the critics found the weaknesses, crying that the New START is a give-away to the Russians. It treats them as though they have negotiating leverage equal to that of the US, or even greater, and comes at an enormous cost to America’s relations with its central and eastern European allies. The treaty also fails to account for Russia's enormous tactical nuclear arsenal - which might be up to ten times larger than America's. However, despite these objections, the New START is almost certainly likely to be ratified by the US Senate in due course. Check the box.
The carrot and the noodle
Since assuming office, President Obama has been encouraged to apply “crippling sanctions” against Iran. The president preferred the diplomatic approach. He offered the mullahs carrots, confident he could charm the obstinate theocracy into embracing his view of the world. He went to Cairo, reminding the Muslim community that he feels their pain. That engagement failed, yet the prevailing wisdom in Washington was that effective sanctions required the participation of the UN. The Russians and the Chinese were courted and, by June 2010, ultimately came on board.
Israelis and the global Jewish community followed all this very closely. They knew that both the House and Senate had passed much stronger bills, and that the law signed by the president contained a significantly softer set of penalties. They heard Secretary of Defense Robert Gates warn months earlier that the US “really doesn’t have an effective policy to deal with a nuclear Iran.” But most of America and the rest of the world did not. They saw a successful, coordinated process by which all the major powers agreed to punish any companies that do business with Iran. They saw a president able to recruit allies and apply serious sanctions against a defiant, hostile state. Check the box.
How will this approach to problem-solving play out in the Middle East? As president, Obama has already visited most of Israel’s neighbors, but has yet to come to Jerusalem. Nevertheless, he hasn’t minced words regarding the Israeli-Palestinian conflict and how it should be resolved. The process seems to be taking a bit longer than he expected, but I suspect that he is motivated to persevere. Obama knows that if he foists a deal upon the Middle East, regardless of how messy the consequences might be, not only will he be able to check the box, he may even win the Nobel Peace Prize. Oops. Been there, done that!
Published by Globes [online], Israel business news - www.globes-online.com - on August 19, 2010
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