Published December 06, 2011
Two Audiences, Two Messages for White House on Euro Bailout; Obama, His Presidency Stalled, Invokes TR’s Activism
Geithner Seeks to Reassure Europeans, But Not Anger American Voters
"[The European credit downgrade warning was] prompted by our belief that systemic stresses in the euro zone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the euro zone as a whole."
The French and Germans are trying to drag the drowning southern European nations back to the boat and are asking Britain and the U.S. to jump in and help them pull.
But as Treasury Secretary Tim Geithner tours the continents in a bid to express confidence in the ability of debt-drenched Europeans to save themselves and to restate American promises of support, the political perils for him and his boss, President Obama, are very real.
German Chancellor Angela Merkel is pushing for a new version of the 19-year-old European Union that would give the central government in Brussels more power over the finances of member nations. There are 27 nations in the EU – essentially all of Europe except Switzerland and Finland, who didn’t want in, and the Balkan countries, which couldn’t get in. There are 17 countries that agreed to give up their currencies to join the euro and 10 EU member countries that refused, including Britain, Sweden and much of Eastern Europe.
Merkel is in huge political trouble at home because Germans, who, along with the Dutch, have seen their currency status trashed since joining the euro in 1999 as the Greeks and other spendthrift nations with weak economies have failed. Merkel’s offer to voters is that the Germans and industrious northern peoples would have substantial control over the continents finances – she argues that it can be fixed, but only if the Germans can spank their southern neighbors for fiscal indiscipline.
This new era of Teutonic control appeals to Germans, but perhaps not as much as doing what Brits did off the bat: tell the poorer countries and their funny money to sod off. But Merkel is also feeling the pressure from French President Nicolas Sarkozy, whose country is in a multi-generational economic malaise and much closer to the debt abyss. He can’t stay afloat without Germany and Germany can’t get the fiscal controls it wants without his assistance. Plus, she knows that Germany can only stay solvent for so long if all its neighbors slide back to Second World status.
It was once thought that the Europeans might be able to muddle through in the way that Americans have been doing on debt, but with a weak currency, a much smaller economy and no real central bank or unified fiscal control, that has proven impossible. Europe doesn’t have a currency problem so much as it has an economic problem. With dire forecasts for growth and without the military/geopolitical standing to bluff its way through currency scares, they’re in for hard times no matter what.
What Merkel and Sarkozy are now pitching is for Britain and the rest of the euro refusniks to join in a new treaty that gives the Brussels government greater fiscal control of member state finances with an eye on expanding the number of nations keeping the currency buoyant. That sounds incredibly foolish to Brits who are just now busy congratulating themselves for not going into the euro in the first place.
That would leave the 17 euro nations, or whichever of them agree to cede budgetary control to Brussels – essentially leaving every German and Dutch worker with a half dozen Greek, Italian, Spanish, French and Portuguese debtors on their backs. The trends line is increasingly looking like a checkerboard continents with currency and treaty confusion even worse than before the original treaty. It’s got a Hapsburg kind of vibe.
But as awful as that sounds, not even that outcome is possible unless the Chinese, the U.S. and other nations with the ability to conjure money agree to finance the European reorganization. Consider Merkel and Sarkozy like borrowers looking for another loan at the local bank just ahead of a bankruptcy declaration. Only another loan can prevent failure and a total loss, so a Power Point is assembled and promises of lessons learned and new policies to be implemented are made.
Europe is America’s most important trading partner and our banks are heavily entangled with those of our cultural parents, so the Obama administration is direly worried about the fallout over here if there is a sudden meltdown over there. With the American economy stalled the administration believes that propping up Europe is essential to another round of recession here. As Vice President Joe Biden famously said, once “we have to go spend money to keep from going bankrupt.”
The Federal Reserve has already obliged Europeans by keeping the spigot of cheap dollars open for Europe for another year, essentially allowing Europeans to swap their bad currency for our greenbacks at a deeply discounted rate. This cheered investors until Standard & Poor’s reminded everyone on Monday that Europe was truly hosed, it was just a matter of how soon and how badly.
The bailout package Europe is now seeking would rely on the International Monetary Fund, of which the U.S. is the most important part. So even if Obama does not actually present Sarkozy and Merkel with a giant check on behalf of U.S. taxpayers, he will be putting his country on the hook and increasing the long-term contagion risk. This is like a bailout version of Libya in which he will applaud the leadership of other countries while simultaneously making the whole thing possible and paying the most. It would be like the U.S. co-signing a loan with the 17 euro countries for more cash from China, but knowing full well that the euros can’t make the payments.
This is a good political blame-deflection strategy for Obama, but it tends to leave Europeans and panicky investors confused. So Treasury Secretary Tim Geithner is back in Europe to calm nerves and provide assurances that the U.S. will foot the bill that Obama can’t offer for domestic consumption ahead of an election in which voters are bailout averse and not exactly great fans of European interdependency, or Europe for that matter.
At a moment when the whole European experiment dangles on the thin cord of public confidence in international unity in debt, Geithner’s job is to let everyone know that Uncle Sam is on board, but to say it softly and complexly enough so that American voters don’t hear it.
Obama Tries Another Historical Analogy
“The essence of any struggle for healthy liberty has always been, and must always be, to take from some one man or class of men the right to enjoy power, or wealth, or position, or immunity, which has not been earned by service to his or their fellows.”
-- Former President Theodore Roosevelt in a speech in Osawatomie, Kansas, on August 31, 1910 laying out the “New Nationalism” doctrine that would be the platform for his Progressive Party candidacy in 1912.
Over the years, President Obama has compared himself to Abraham Lincoln, Franklin Roosevelt and Martin Luther King Jr. in a bid to show himself as a historical figure, not just a politician.
(If he ends up facing Newt Gingrich there will be more self-referential historical allusions than at a Renaissance fair.)
But today, Obama adds a new American historical deity to his personal pantheon – Teddy Roosevelt. This is surprising to those who only know that Roosevelt was a Republican who “walk[ed] softly but carr[ied] a big stick,” but not surprising to those who know that by 1912 he was seen as a more liberal option than Democrat icon Woodrow Wilson.
Roosevelt’s brand of Republicanism died of wounds sustained in the 1964 election with the time of death recorded Nov. 4, 1980. There are still a few, like Sen. John McCain and Gingrich who embrace TR, but are careful to talk about his muscular foreign policy and athletic governance, not the strongly socialistic ideas of his later career or the fact that he bolted the GOP and put Wilson in the White House with his solipsistic 1912 Bull-Moose Party campaign.
Republicans now are more likely to reach back to Ronald Reagan, Abraham Lincoln or the Founding Fathers to invoke notions of individual liberty and personal responsibility, not TR’s activist concept of government.
But Obama is attempting today to continue to pressure Republicans to extend his economic agenda or at least make them look like heartless corporate shills for refusing to do so. By heading to a Kansas high school in the town where Roosevelt launched his vision for socialistic nationalism, Obama is hoping that sympathetic pressies will pick up on the line that Republicans have abandoned their Progressive roots and that Obama has now embraced. Trust Power Play, plenty of reporters eat that kind of stuff up. Remember when Time and Newsweek had dueling Obama covers, one comparing Obama to FDR and another making him into Lincoln? Exactly.
But the other reason that Obama is invoking TR is that Obama is desperate to battle the growing idea that he and his presidency have become irrelevant. Like his “we can’t wait” mantra and decision to become personally involved in the bid to extend his payroll tax holiday stimulus program, Obama is trying to avoid a fate for a politician worse than being disliked: being ignored. But that’s the risk in his plan to demonize Washington and Congress because while it deflects blame it is also a tacit admission of defeat.
Obama, who has been bested by Washington and the political process so often, is keen to equate himself with the ultimate activist president whose rambunctious energy and guns-blazing style remade politics. That’s a hard one to pull off, though, when what you’re offering is strictly incremental stuff. You can’t govern like Jimmy Carter, talk like Teddy Roosevelt and expect it to stick.
And Now, A Word From Charles
“Everything [in Egypt] is rewritten if the Salafists and the Brotherhood are in power. You could get outbreak of war which could engulf the entire region.
The problem is the transition has to be over time. We saw the French Revolution, the Russian, and Iranians. The liberals go out in the street and start it, and then it's the ideologues organized like Islamist or communists in Russia who seize power. So you want the military as a stabilizing influence. And we have to hope that it allows the evolutionary process over time.”
Chris Stirewalt is digital politics editor for Fox News, and his POWER PLAY column appears Monday-Friday on FoxNews.com.