Obama's Plan Is Good, but …

It is still too early to offer a definite judgment about Obama’s speech, in which he announced a US$470 billion plan to reduce American unemployment, which is at a record 9 percent today.

The proposed plan is to spend $200 billion through investments in infrastructure and to offer $270 billion in subsidies, which essentially consist of tax cuts for companies that increase their number of employees under certain conditions.

Although the volume of this bill is a little higher than half of the financial package passed at the end of 2008 to rescue broken institutions in the Lehman Brother’s collapse, it is still a good amount of money. It’s also a different in terms of the nature of its operation. In the first case, it was an attempt to stop the growing crisis from reaching other banks, which could produce an even more serious crisis. Now, the government is attempting to raise a fallen economy.

Will it work?

The plan has even received compliments from Nobel Prize winner, Paul Krugman, who is one of the most coherent and harsh critics of Obama’s economic policy. In his column today, he confesses that he was “favorably surprised” with the proposed plan, and that it is “significantly bolder and better than I expected. It’s not nearly as bold as the plan I’d want in an ideal world. But if it actually became law, it would probably make a significant dent in unemployment.”

Major executives have said the same. Many of Obama’s traditional allies in the Democratic Party and in the American socialist movement can’t hide their disappointment with the president’s performance in the past. Overall, they want to know: Why has he taken so long to act? Why should we believe again?

We all know that Obama reached the White House with no clarity whatsoever about the real path he would have to take to face the worst crisis in the capitalist world in 80 years. He spent most of his term wasting popular support in the name of a peace agreement with his adversaries. He imagined he could defeat the crisis from successive capitulations without confronting the powerful interest groups that launched the country toward rock bottom. He cultivated enemies with measures that seemed pleasant from a political standpoint, but were destructive for economic recovery, leaving him abandoned halfway through his term by the same people who made his campaign a success.

Cannibalized by his adversaries, Obama lost his majority in the House of Representatives and is now trying to save his chances of winning a second term next year.

His plan has two real problems. He has wasted time, producing a loss of credibility with institutions, like the Federal Reserve, that could now be showing more muscle. Publicly blackmailed by Republican candidates who wish to take back the White House in 2012 and who have made threatening speeches against initiatives favorable to employment, the FED chairman, Ben Barnanke decided to hide in a corner and repudiate the very ideas he had backed in his academic papers.

Will he now shake of the lethargy? Or, in a perverse demonstration of the so-called central banks’ autonomy, will he stay hidden among the 14 million unemployed in the hopes of protecting just one job, his own?

The other problem is the rebirth of the conservative Tea Party, the ultra-right wing movement that has developed a decisive role in manipulating votes by Republicans and the House of Representatives. Neither Obama nor any one else should expect any gesture of greatness from this side. Their goal is to bring Obama to his knees and to open a path to facilitate a victory in next year’s election. And that requires imposing more sacrifices and suffering on the population.

As Martin Wolf mentioned yesterday in the column I commented on, the American policy is also placed between two options: the foolish one, which believes that it will be possible to grow without a new stimulus, and the immoral one, which believes that sacrificing others is a good thing.

So, Obama’s plan represents an effort to break through the stalemate of defeated plans.

All that’s left now is to find out if, after having done everything to erase the promise for change that he made during the 2008 campaign, President Obama will be able to mobilize the country to pass the majority of his plan against unemployment.