Obama's False Dilemma

The worst thing that can happen to modern-day leaders is that circumstances — or worse, the opposition — impose upon their agenda. This is the first step to losing control over the variables at their disposal. With this strategy, Republicans have managed, in a pre-election year, to set the terms and conditions of a debate from which Obama will inevitably emerge a loser.

Persistently bad unemployment figures are the main problem facing Americans today. Last week, the president presented a plan to Congress regarding this issue. The fiscal deficit, on which the Republican opposition has placed so much emphasis, is the main obstacle to the anti-recession tools at Obama’s disposal. Worse than this for both him and the American economy, are the consequences of the previous poorly managed debate on the debt ceiling and its impact on the confidence and expectations of those who buy goods and create jobs.

It has not been sufficient for Obama to point to the effects of what he has called a “political circus” that the opposition has designed and in which they have been happy to participate. Nor has it served him to recall that the deficit has its roots in his predecessor’s actions and a crisis generated by an irresponsible banking system. After such debacles, government excuses without results are not valued. The president has played the worst part in this, despite, as his adversaries recognize, his eloquent speeches and intentions. The opposition is categorizing him as a good orator and person, but a bad leader. By permitting the game to play out on his opponents’ terms, he appears to be conforming to the role he has been assigned in the web of messages. Frankly, Obama has been placed in a defensive position.

In theory, the discussion seems to be moving in circles. For the president, the solution lies in a federal stimulus that promotes hiring employees and increasing public spending, while for the opposition this is impossible because it would mean increasing the deficit. They also argue against imposing new taxes, which would deter investment by preventing the generation of new jobs.

In reality, measures that lower competitiveness or raise the cost of production in America do not offer favorable conditions to investors. This results in businesses moving to China or other locations where profitability is higher, thereby reducing the American labor force and generating unemployment.

What will be impossible for Obama, or for anyone, is indefinitely replacing lower productivity and lack of competition with permanent production stimuli. This is an artificial scheme that cannot be maintained for long, even with the cost of capital nearing zero, according to the Federal Reserve. Meanwhile, the commercial deficit with China is growing along with the rate of unemployment.

Beyond this economic reality, political decisions will survive and have social implications. The latest polls report that 60 percent of citizens are in favor of eliminating the fiscal stimuli that former President Bush granted to big investors. Only 37 percent agree with reducing the deficit by solely reducing spending and without raising taxes, as Republicans propose.

Although it is not too late for Obama’s dreams and for many Americans to have a second opportunity, they will have to use what is left to make governmental decisions that, despite the deficit, create jobs and resolve the false dilemma of spending to reduce spending. The government’s job is to govern; its role does not include instigating arguments. At the end of the day, it isn’t possible to serve both God and the devil, unless one presents it for what it is: a contradiction aimed at occupying the president’s seat.