Obama's Minor Role at Cannes

The United States is frightened by the effects of the Euro crisis and continues to block a global financial transaction tax.

What Barack Obama really wanted to do was continue campaigning in Cannes. But almost exactly one year before the 2012 election, he was seldom the center of attention on the French Riviera.

In view of the crisis in Greece and the turbulence surrounding the Euro, Barack Obama — recently re-crowned “World’s Most Powerful Man” by Forbes magazine — had to settle for a supporting role on the G-20 summit stage. “The Obama administration would like to focus on a U.S.-led global growth agenda,” said Heather Conley, former deputy assistant secretary of state in the Bureau for European and Eurasian Affairs and currently director and senior fellow with the Europe Program at the Center for Strategic and International Studies (CSIS). Her colleague, Professor John B. Taylor, concurred, saying, “With a weak recovery — retarded by new health care legislation and financial regulations, an exploding debt and threats of higher taxes — the U.S. is in no position to lead as it has in the past.”

With a growing mountain of debt and a sinking credit rating, the global influence

of the world’s supposed last superpower is declining as the Occupy Wall Street protests concerning social imbalances in “God’s Own Country” mount by the day. Obama’s plans to decrease the national debt and institute new economic stimulus programs can’t make it through a Congress dominated by Republicans elected in 2010.

But as with the Toronto summit last year, Obama is finding few sympathizers for his ideas of a global stimulus program. In return, Obama again opposed the idea of a worldwide financial transaction tax on dangerously speculative financial dealings as supported by the French and German governments following recommendations made more than 10 years ago by the Association for the Taxation of Financial Transactions and for Citizens’ Action (ATTAC). The proposal is buried in the closing remarks of the G-20 report. The United States instead supports additional fees on the liabilities of major financial institutions. Nevertheless, Obama indicated his willingness to place stricter regulations on financial traders and to take stronger measures against so-called shadow banks, such as hedge funds, that function as banks but are not subject to current banking regulations.

Nariman Behravesh, chief economist for IHS Global Insight, said, “The European debt crisis is the single biggest threat to the U.S. recovery and the global recovery.” Actually, the economic interdependency between the United States and Europe is closer than anywhere else; some seven million jobs in the U.S. depend on the daily $3.8 billion U.S.-EU trade volume. Because of this, a European recession could have negative effects on the U.S. economy and accelerate the American economic crisis as well. Fed Chairman Ben Bernanke just reduced his predictions for U.S. growth this year from 2.9 to the 1.6-1.7 percent range. In election year 2012, growth could be as low as 2.5 percent rather than the predicted 3.7 percent. Even worse: The unemployment rate could remain relatively high, at 8.5 to 8.7 percent. That is potentially fatal for Barack Obama. It has been generations since any U.S. president has been reelected when the unemployment rate stood above 7.2 percent.