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Ken Hirano

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Precepts of Difficulties in Obama's "Change"

Ken Hirano
Associate Professor, Faculty of Commerce, Chuo University
Area of Specialization: American Economy

Issues that the Obama Administration Has Faced

The issues that Obama faced when he became president in January 2009 can largely be broken down into three. The first was to bring the panic that struck in the fall of 2008 under control and lead toward economic recovery. The second was to take back America's international prestige by making a shift from the unilateralism of George W. Bush's Republican administration to a multilateral approach. The third was to bring America out of the economic structure characterized by both poverty and bubbles, which was apparently the cause of the panic.

The first issue signified the succession from the previous administration, and the second and third issues signified "change". The frenzy of the Obama supporters during the presidential election of 2008 illustrated vividly how eager the American people were to see the change. However, there were also forces with strong clashing interests when it came to this change, and particularly the third issue. They were the big banks, multinational corporations, insurance companies, the pharmaceutical industry, and the wealthy class at the top 1%, which had made huge profits through the existing economic structure. The Republican Party, which speaks for them, was in agreement with Obama on the first issue, but opposed him on the third.

The Job of the Obama Administration in Two Years

When Obama became president, his job was to first recruit members of the Republican Party with great influence to form a unified government, to bring the panic under control, and to implement economic measures. This meant the succession of the bailout of big banks (700 billion dollars) through the infusion of public funding raised by George W. Bush's previous administration, and government spending (878 billion dollars) newly introduced by Obama as a measure for stimulating the economy. The panic was brought under control to some degree as a result, but the financial deficit had increased largely. This transition was made while employment was not increasing and economic recovery was still fragile.

He also worked on healthcare insurance reforms and financial system reforms in 2010. These issues would normally have been expected to meet head-on clashes of interest, but Obama adopted a form of government administration that placed emphasis on consensus building with the Republican Party. As a result, the reform bills could be enacted, but they were watered down due to compromise and concession.

The Public Verdict During the Midterm Election

The public verdict on Obama's job during these two years was an extremely sharp one during the midterm election of November 2010. The reformists who had enthusiastically supported Obama during the presidential election had turned away in disappointment saying that he was doing too little. The Republican Party, on the other hand, said that he was doing too much even with the watered-down reform bills and relentlessly accused him of being a socialist. What was particularly evident during these times was the spreading of a grass-roots conservative movement known as the Tea Party. It is easy to understand why big banks, major corporations, and the wealthy would want to attack the Obama reforms. However, the central figures in the Tea Party Movement were middle-class citizens, and they were the ones who had suffered the greatest loss of assets during the two bubbles over the previous twenty years. So what made them criticize Obama so strongly?

Traits of the Tea Party Movement

The Tea Party Movement is composed of various elements, but at the core lies the middle class (particularly whites, the highly educated, and the middle aged) who have worries and doubts about Obama's huge government spending, and see it as comparable to theft. The following are what created this perception. (1) Obama emphasizing reconciliation with the Republican Party to concurrently bail out big banks (those who started the bubbles) and the middle-class and the poor (those who got caught up in the bubbles). This is what gave Obama's "big government" the impression of being the advocate of evil. (2) The aggravation and anxieties over the economic recovery not progressing as well as expected projecting into concerns and suspicions that huge government spending would eventually lead to tax increases. (3) The Republican Party and right-winged controversialists are keenly alert about the fuel for such distrust, concerns, and suspicions being built up and lit it with the flashpoints of fierce incitement, provocative words and actions, and image manipulation.

Precepts of Obama's Defeat

The cause of Obama's defeat just may have been avoiding confrontations with big banks, major corporations, and the wealthy, and trying to bring about reforms in a conciliatory and unified manner with the Republican Party. What would have happened if government spending was implemented only on bailing out the middle-class and the poor, and not on bailing out the big banks? And what would have happened if no concessions were made in healthcare insurance reforms and financial system reforms? The panic would have definitely been widespread and the reform bills may have been withdrawn. However, the financial resources that could have been used for those suffering in the panic would have doubled and it would have been clear in overall composition whose interests are clashing with whose, which side Obama is on, and who is interfering with Obama. Therefore, if he had won in the midterm election, he probably would have been able to carry out his reforms in the way he wanted.

This certainly may be just a case of taking chances, but when looking back, the grass roots conservatives that supported the Tea Party Movement are the ones who were clearly opposed to the bank rescue plan of 700 billion dollars that George W. Bush's previous administration raised. Would it be reckless to say that Obama should have learned more and been encouraged after seeing the intense devotion of the citizens who did not even fear the intensifying of the panic if it meant honoring one's word?

Ken Hirano
Associate Professor, Faculty of Commerce, Chuo University
Area of Specialization: American Economy
Born in 1962. Graduated from the Faculty of Economics, Kyoto University in 1987 and completed the Doctoral Course of the Graduate School of Economics, Kyoto University in 1992, Appointed to his current post after serving as Assistant Professor at the Institute of Social Science, The University of Tokyo in 1993, as Assistant Professor at the Faculty of Economics, Fukushima University in 1995, and as Assistant Professor at Chuo University Faculty of Commerce in 2003 (Associate Professor as of 2007).
Principal achievements: Readings: Supplier System, (coauthoring and editing by Takahiro Fujimoto, Toshihiro Nishiguchi, and Hideshi Itoh, Yuhikaku, 1998), Modern American Economics [Gendai America Keizai] (coauthoring and editing by Shinjiro Hagiwara and Satoru Nakamoto, Nippon Hyoronsha, 2005), New Developments in the American Economy - After New Economy [America Keizai No Shin Tenkai - After New Economy] (coauthoring and editing by Hiroshi Inoue and Akira Isoya, Dobunkan Shuppan, 2008), Structural Analysis of Global Capitalism [Global Shihon Shugi No Kouzou Bunseki] (coauthoring and editing by Akira Ichii, Chuo University Press, 2010), etc.