Export Opportunism

President Barack Obama finished his first State of the Union address last week with the same vigor and rousing rhetoric that helped win him the presidency 15 months ago. But politics were on bright display and there seemed to be little 2010 doubt that, despite Obama's calls for congressmen to set politics and ambition aside to do what their electorate sent them to Washington to do, political impasse would be the name of the game in a year of midterm elections.

The speech has been President Obama's most useful tool in tackling a political crisis. When it came to selling the health care bill or troop surge in Afghanistan, the slumping president has looked to his rhetorical skills to remind everyone how inspiring he is and why a large majority of Americans liked him in the first place.

In practical policy, however, Obama has numerous challenges he ambitiously set forth in his speech last week, the most peculiar of which is his goal to double exports from the United States in five years. It is a seemingly innocuous pledge in a sea of promises that define state of the union addresses, however, it is much more puzzling considering that doubling exports is a keystone of his strategy to repair the American economy.

The United States has run a trade deficit every year since 1975, and contentious squabbles over the reasons why have dominated American international economic policy debates ever since. In the 1980s, it was Japan who bore the brunt of American criticism for weakening the yen and boosting exports at the expense of Michigan auto workers and other Rust Belt industrial firms. In the 1990s, the post-NAFTA "sucking sound" from Mexico was the scapegoat for another swath of American manufacturing job cuts and a drop in the number of things we consume that are produce at home.

The 2010 rhetoric signals that the United States will either enhance protectionist measures against foreign imports, or, more interestingly, take on the Chinese and pressure the world's fastest growing economy to halt its alleged currency devaluation, allowing the dollar to depreciate, boosting exports and reducing the trade deficit.

Either strategy would go contrary to the international economic policies that are in the country's best interest in the short term. The former would only jeopardize any hard-earned progress on recent trade negotiations, and the latter would further alienate the single most important country to America's economic future, in terms not only of trade but of finding a willing lender to finance America's massive debt-driven recovery. Or, it could just be a matter of semantics: the U.S. might well double exports in five years' time, but it might also double its imports, only worsening its untenable current account deficit.

Each of these potential reasons signals very little economic policy creativity; though it will be no small achievement if the United States can actually double its exports in five years.

The Lame Congress

When looking at President Barack Obama's tanglings with the Democratic leadership on Capitol Hill, one can start to see some virtue in Obama's predecessor's desire to consolidate executive branch power, even when he had a Congressional majority for much of his 8 years in office.

Congress just gets in the way.

The so-called "genius" of American democracy is the so-called well-functioning legislative branch. Unlike many traditional Parliamentary systems such as that of the Brits, however, the United States has a powerful lower house AND upper house. In time of political and economic struggle, this body of legislators has proven itself increasingly beholden to special interests.

Two of the most significant legislative breakthroughs in the current generation - health care reform and a commitment to greenhouse gas emissions reductions - are on the horizon. The Copenhagen meetings are moving ahead this week and health reform is in the United States Senate will a more-than-50-percent chance of passage.

On both accounts, however, President Obama is dramatically weakened by a gridlocked, polarized Congress. Right-wing Republicans, fearful of losing their party base in midterms next year, are holding ground on their "conservative" values of small government ($700 billion bank bailouts) and personal responsibility ($700 billion bank bailouts). Meanwhile, Democrats are doing more to hurt their own chances with a weak leadership at the helm (Pelosi and Reid).

The result is depressing. The Democrats have dropped the public option - the primary innovation in health reform - from the negotiations, and Obama will arrive in Copenhagen empty-handed and with only an argument that his Congress won't change the status quo no matter how much the United States is to blame for climate change.

President Obama has barely been in an office for about 11 months. While his potential for achievement is great, his Congress will likely have more to say about that.

G-20 Wrapped Up

Just got out of President Obama's press conference, which effectively concluded the major proceedings of today's G-20 summit. The president was clearly the main event, and used it as an opportunity to reassert American leadership - his press conference was not only significantly longer than that of Summit host Gordon Brown, but his was the last to finish it off.

The G-20 established a communique, some of it specific, most of it broad, to address the financial crisis. The highlight is the effective tripling of the International Monetary Fund's resources thanks to Japan, the European Union, and other unnamed donors -- it is unclear how much China or Saudi Arabia have provided, but it's likely they're a big part of it. In the words of IMF Managing Director Dominique Strauss-Kahn, "the IMF is back."

Partially due to recent economic data but also because of the apparent success of the Summit, stock markets in Japan, Europe, London and the United States rallied. Is this the end of the crisis? Will this improve confidence in the world economy? And will this help the poorest in the world?

This writer is skeptical. The Communique as such lacked meat on several key issues such as climate change, poverty reduction and corporate governance - it will be interesting to see if the 20 governments involved also will be to ratify or enact key parts of the deal. Agreeing to agree may not be enough.

Press conferences

After sighting Robert Gibbs, President Barack Obama's press secretary, I was able to find eke out a few more details on events at the G20 from the uncooperative, tight-lipped media team at the G20.

4pm - The European Union/European Commission will hold a news conference
4:30pm - President Zapatero of Spain will hold a news conference

The Most Trusted Name in Pseudo-News

It made for good comedy on "The Daily Show," but Jon Stewart's awe-inspiring, go-get-'em tirade against CNBC points to a larger, serious issue of integrity in the most important vein of the news media at the moment: the financial press.

Information is the lifeblood of efficient financial markets, and as a primary relayer of market-sensitive information, networks like CNBC have, above all, a journalistic responsibility to provide no-spin, accurate information on the daily intricacies of the world of finance, a world constantly in flux. CNBC's constant forward-looking, speculative, CEO-cheerleading, Wall Street-friendly analyses of economic policies before and since the outset of the crisis send a flagrantly incorrect impression to the American public that government policy can and will be effective only if it passes a Dow Jones Industrials Average litmus test - the up or down movement of the DJIA - and that government policy can only be effective if Wall Street thinks so. In any case, the current financial crisis and resulting government bailouts should be enough evidence that Wall Street does not always have the public's interest at heart).

Because CNBC, The Wall Street Journal, and other specialist business news outlets are now watched and read by more members of the average American public than ever before, the corporations that own these outlets are under pressure to "dumb down" business news. The result has been networks like CNBC moving toward the mainstream cable news model of opinionated talking heads running "news" shows at the expense of the boring, mundane, intricate, black-white-AND-gray, dynamic thing people used to call, "journalism."

This is unethical and too dangerous a risk when the investments of pensioners, workers, parents and others are on the line.

Transatlantic handshake, Day 1

UK Prime Minister Gordon Brown began his highly symbolic visit with President Obama Tuesday. The unelected Mr. Brown became the first European leader to meet with the new president, beating out formidable opponents in Angela Merkel of Germany and Nicolas Sarkozy of France. Here are some thoughts:

1. We didn't get much of a chance to hear from the prime minister - his formal news conference with President Obama was canceled because of snow in the White House garden (isn't there an indoor spot for news conferences??) - but he and Obama struck all the right notes of cooperation between the traditional Allied powers in a toned-down "pool spray" news conference, pledging to coordinate fiscal stimuli and financial sector re-regulation.

I can't help but think PM Brown, who as Tony Blair's chancellor presided over the UK's financial sector deregulation and expansion of financial services as a hub industry, is in a sticky spot partnering with a president who is farther to the left on the political spectrum and whose criticisms of financial sector regulation could easily apply to Mr. Brown himself.

And for once, a U.S. president dismissed the whims of the stock market. Obama said:

"What I'm looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics. It bobs up and down day to day, and if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong."

I for one am tired of seeing day-to-day stock market fluctuations covered as "economic" news. The stock market is obviously a good indicator of long-term growth. But markets respond to information and the perceived implications of that information - so when the markets fall, it is due to more than one factor than merely the state of the economy at any one given moment.

2. The electoral effect - How will Brown's new relationship with Obama improve the Labour party's electoral prospects? Certainly Britons may want a leader who can mesh well with the new president, and we already know Obama isn't too impressed with the prime minister-in-waiting, David Cameron.

3. Brown challenged Obama to a tennis match while conceding he'd probably lose to Obama in basketball. The duo will meet again in less than a month at the G/20 summit in London - Obama should pack his racket.

Brown will address Congress Wednesday night - tune in here for a recap of Day Two.

Pay to Play?

In his speech to a fully assembled Congress Tuesday night, President Barack Obama spoke of Leonard Abess, a Miami bank executive who, upon departing his job, received a massive separation bonus. Instead of pocketing it all, however, Mr. Abess shared it with the hundreds of people who work and used to work for him.

There's no doubt this was a great act of kindness, but was Mr. Abess's prominent placement in the new president's first "state of the nation" address a result of his political loyalty over the years?

It turns out Mr. Abess is a significant donor to the Democratic Party, amassing $25,000 in "soft money" contributions on top of more than $137,400 political contributions, according to a search of Federal Election Commission records. Try the query here.

Not sure this is anything to cry about, but in this age of cynicism about politics, it's hard not to think that he got props in a major national speech as some sort of reward for his financial support of (mostly) Democratic candidates - although he did contribute to George W. Bush's re-election campaign.

Wanted: An Asian Miracle

On her first crack, Secretary of State Hillary Clinton has been making one of the most symbolic American diplomatic tours in recent memory. Indeed, it is a harbinger for the major shift of economic and political power from West to East currently in progress.

As the elastic thinker has previously insisted, any solution to future solution to the economic maelstrom of the day must include Japan, the world's second largest economy, one of the United States' primary trading partners and a key bulwark against nuclear North Korea and rising China. The Obama Administration is making a shrewd, no doubt intentional, move by hosting Japanese Prime Minister Taro Aso as his first visiting foreign head of state.

Clinton's visit also highlights the urgent imperative of engaging Japan in addressing the current global recession. Japan itself is due to experience the worst economic conditions it has ever experienced post-WWII -- mostly riding on the decline of the export-driven manufacturing sector. And unlike other countries that are currently suffering the brunt of recession -- namely the U.S. and United Kingdom -- Japan has the dual misfortune of having a strong/appreciating rather than weak/depreciating currency, exacerbating its poor economic prospects due to an already precarious reliance on exports.

By inviting Mr. Aso to the White House, President Obama is making it clear that not only is Asia the new center of political and economic gravity (even it's not centered in Japan). He will also likely seek advice from Japanese authorities on how to prevent an American version of Japan's "lost decade of growth." Sadly, Japan has its own issues to worry about - and this could indeed be Mr. Aso's first and only visit as prime minister; he is due to call for elections before September, and the Democratic Party of Japan is waiting to seize control.

Enough Said...

I need not write anything more, other than to quote one of President Obama's responses to a reporter at his first primetime news conference as head honcho:

"When it comes to how we approach the issue of fiscal responsibility, again, it's a little hard for me to take criticism from folks, about this recovery package, after they presided over a doubling of the national debt. I'm not sure they have a lot of credibility when it comes to fiscal responsibility."

I'd like to thank the prez for finally pulling a little punch on the obstructionist senators who are dragging their feet. It's not quite a knockout uppercut, but a slight jab from the Illinois southpaw.

Transparency or "Obama 2012"?

Today I received an e-mail addressed from David Plouffe, President Obama's campaign manager, on behalf of BarackObama.com. He asks me to watch a YouTube clip of the president's nationally televised plea for Americans to support his economic recovery plan. An abbreviated screen shot of the e-mail:


Note that it is signed by Mr. Plouffe, as Mr. Obama's campaign manager. So, what exactly is Mr. Plouffe's role in the Obama Administration? Obviously, having engineered one of the most effective (and expensive) presidential campaigns ever, Mr. Plouffe undoubtedly has won the president's loyalty. But with such an e-mail, who is Mr. Plouffe representing (especially when, at the e-mail's end, a statement reads that it was paid for by the Democratic National Committee)?

Ultimately, I think this e-mail is fairly innocuous - and it reveals the president's desire to communicate directly with constituents (or those who signed up to an e-mail list) in a direct, seemingly transparent fashion - but is this e-mail an item of electioneering? Or is it the president communicating with his constituency? I think Mr. Obama should be careful in such messages, as they could be construed as an ongoing re-election project, rather than factual communication on public policies currently being debated.

Time for the Dems to Grow a Pair

The honeymoon of the Barack Obama presidency lasted about as long as a Britney Spears nuptial. As America got back to business after the euphoric day of January 20, several large corporations announced layoffs, unemployment claims rose, the GDP shrank, and Citigroup held off (at least for now) its plans to buy a multi-million dollar corporate jet. These are just a few of the ridiculous headlines to remind us that, yet again, the little guy pays while the big-wigs suffer minor setbacks (the folks at Merrill Lynch might afford only one vacation to southern France, instead of three).

Mr. Obama's approach to the economy has, in my view, sent mixed signals. First, his recently-confirmed Treasury secretary (Timothy Geithner) irresponsibly sounded the battle cry of a trade war with China, outwardly stating the obvious but unspeakable - that China manipulates its currency to boost its export-drive economy (at the expense of American industry). This, ironically, before the passage of a massive spending bill that will need to be financed entirely by parties other than the debt-ridden U.S. government, namely the Chinese central bank. Not to mention the even more devastating consequences to China's economy if it were to revalue its currency further, an event that is not in anyone's best interest and least of all China's biggest trading partner, the United States. Japan is already hitting a wall with the yen at its strongest level in years.

On the domestic front, we have quickly found out that Mr. Obama's admired approach to building consensus may not be a match for the intensity of the current economic crisis and the political fault lines that have become clear this week. We need not look further than the fact that the House of Representatives passed President Obama's $819 billion stimulus bill without a single Republican supporter.

So what does all this mean? I respect Mr. Obama's desire to hear both sides of the issue, but ultimately, he is the boss that the American people elected. Somehow, the Democrats have such an inferiority complex and manage to bungle even those times when they have unequivocal legislative power - it is time to create the policies that the American people overwhelmingly demanded in the November election, not watered down, ineffective policies that attempt to bridge some sort of political chasm. It's time to ignore Republican obstructionism and faux consensus building and play hard, cold politics, if Mr. Obama is to get anything done for the economy in a swift manner. And I have faith that he will.