Monday, August 8, 2011

Shifting power from the WH to Congress will result in Obama embracing foreign policy ...

The settlement reached with regard to the debt ceiling has, as we expected, left no one satisfied. Instead it – and the subsequent downgrade of the US credit ranking by the rating agency Standard and Poors – has deepened the challenges facing the Obama Administration. The Republican Party feels energized by achieving a settlement much on its own terms. Obama’s Democratic supporters feel that he did not defend their interests strongly enough. Obama now faces an uphill task to persuade the country that his Administration has the right policies to address a weakening domestic economy. Obama has engaged in some sustained economic diplomacy with his European counterparts on the crisis in the Eurozone. However, as one senior Democratic strategist explained to us: “Obama faces a wave of skepticism from friends and adversaries alike that he knows how to tackle our economic woes. Unless he succeeds in riding this out, his election prospects are dimming.” Whether Obama is able to do this remains an open question. Some of his close economic advisers express private concern. An official at the National Economic Council commented to us: “Rather than disputing the S+P decision, we would be better engaged in putting into place policies for growth. We are losing valuable time on an argument no-one understands.” A principal outcome of the debt settlement will be a relative shift in political power from the White House and the Executive Branch to the Congress. Traditionally, when this has happened to former presidents, their instinct has been to embrace foreign policy. This is not Obama’s main field of interest. Nor are the opportunities for easy success readily apparent. The recent setbacks in Afghanistan and the uncertain way forward in Syria indicate the difficulties. US officials are more hopeful of a successful outcome in Libya...

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