Obama’s good ship Recovery runs aground on BP crisis
Published 21/06/2010 | 11:48
Oil-soaked wildlife aren’t the only unfortunates mired in the goop plaguing swathes of America’s Gulf Coast.
Barack Obama is also fully ensnared, forced to divert his energies toward the crisis just as concern grows over the potential for a dreaded double-dip recession that could deal a hammer-blow to his 2012 re-election dreams.
Obama’s televised address to the nation was widely panned as another missed opportunity by a man capable of inspiring millions with his oratorical skill, but who too often chooses the tempered tones of the conciliator instead.
Americans are furious at BP. And that’s not because it’s British, as some Anglo pundits have ridiculously claimed.
It is because BP is but the latest mega-corporation whose ineptitude and greed has wreaked havoc on the American economy. And, as with many Wall Street villains, BP has rubbed salt in the wound by trying to mask the magnitude of its foul-up.
Republican howls of outrage over Obama's delayed reaction on the spill come across as blatant political point scoring.
Nevertheless, they’ve got him on the defensive and the Gulf now preoccupies Obama at a time when recent economic smoke signals suggest that the good ship Recovery may soon hit turbulent seas again.
On June 17, vice-president Joe Biden trumpeted how successful the Obama administration has been in averting a Great Depression re-run. He claimed that “somewhere between 2.3 million and 2.8 million jobs were either saved or created” via the $620bn doled out thus far from last year’s $787bn stimulus package.
America has seen three straight quarters of GDP gains. But unemployment still stands at 9.9%.
There are more than 15 million people without jobs. Of them, seven million haven’t had a job for more than six months, five million have been jobless for over a year, and one million have been unemployed for more than two years.
The number of long-term unemployed who’ve quit looking for work grew by 36% over the last 12 months, to 1.1 million.
These are the worst such |numbers recorded since the US began tabulating them in 1948. This is all devastating enough in purely human terms. But, given that consumer spending accounts for 70% of America’s economic activity, the empty pockets of the legions of jobless will also severely hamper prospects of a speedy and sustained recovery.
Underscoring the point, the US Commerce Department has said that, in May, retail sales saw their biggest decline in eight months. Then there is the housing sector. In spite of a spike in building and sales earlier this year (spurred on by time-limited tax breaks for homebuyers), the most recent housing numbers aren’t rosy.
A Federal Reserve report this month showed housing starts dipping 10% in May (after the expiration of the tax breaks). Added to that, the Commerce Department reported that single-family home starts saw their biggest drop-off since 1991.
All the while, the mortgage foreclosure crisis rumbles on with little sign of respite.
The Mortgage Bankers Association has reported that more than 10% of mortgage holders missed at least one payment during the first three months of this year — a record rate of delinquency.
Roughly five million homes have been foreclosed on since 2006, and there are estimates that another three million will occur by the end of 2011.
Of course, all of this is not President Obama’s fault. He inherited the economic meltdown courtesy of the lax regulatory sins of the previous two administrations.
And he didn’t ask to be saddled with wars in Iraq and Afghanistan, which suck $12bn from the country’s coffers each month.
But the fact is, for his $400,000 annual salary (and the five-star digs, travel and meals), President Obama is expected to juggle a lot of balls at once — and do it well.
Fair or not, he’ll continue to take heat for BP’s mess until the crisis is finally resolved. But if he gets too distracted and drops the economic recovery ball in the process, Republicans could make even greater than expected gains in November’s Congressional contests.
And, if that happens, the only meaningful ‘change’ Obama may be able to deliver in the time ahead will be that of his own address in 2012.