There has been talk that President Obama should be given some slack on his first months as president; that he is in between a rock and a hard place and that should be taken into account rather than with critical harshness. The present reality of the United States is not a conducive situation for an ostentatious hand holding love affair with the President; it is a reality in which a face slap would be more relevant to the future success of both Obama’s presidency and the economic out-look for the United States. There are several points that Obama must address lest his historical term is looked upon with less than favorable memories.
Perception. President Obama is seen not as the Commander in Chief but as a Chairman of the board; in his effort to show that he trusts his appointees, there is the global appearance that he has over delegated the responsibility of running the country. When questioned about the AIG bonus scandal on Jay Leno, instead of stating what he would do, he spent the time reiterating how confident he was in Tim Geithner and what the congress and senate would do. What he should have stated was that the ‘buck stops with him’ and what his actions would be instead of giving the impression of standing at the sidelines. In order to create confidence in the United States for foreign investors and monetary agencies the President has to be seen not as a figure head of America but as America.
The cash flow injection into the domestic auto market. Though Obama’s press release on Monday did state that Ford and the others had six weeks to restructure, this will not be enough. Two of the major stumbling blocks for any success on the part of the auto makers in making their product commercially viable are the current union contracts and the administrative salary structures. The union contracts are not realistic in this economy and with a stead fast refusal to follow the economic trends of the market by rolling back wages, resisting lay offs of redundant jobs, etc, the union is imploding upon the people that it originally sought to protect. The union must be made to step down from its views of standing firm or all will find themselves without a job. Secondly, with the heavy cash flow injection, not only by the American government but Canadian governments as well, the pay structure of the administrative side of the auto makers must reflect the artificial floatability that has been afforded to them; the salaries must be dropped, even on the CEO level, down to reflect the realities of being a current ward of the governments and not based on previous profit margins.
A lesson should have been learned with the AIG bonus scandal of government monies being used for other than the company’s commercial viability. AIG is the largest of the known companies that have received monies from the trillions released, however without transparency all monetary bailouts of financial institutions, though it may not be so, gives people the impression that this is not a rarity but a popular route used with taxpayer’s money. While there are motions for 100% taxability on those monies, the President needed to show that these types of actions were unacceptable immediately rather than have Tim Geithner take the flack, wasting time defending his Treasury Secretary.
To effectively stimulate the economy, investors need to have confidence in the fiscal and insurance institutions they are dealing with. The president’s economic stimulus package does not provide that confidence as investors are unsure which of the institutions are only fiscally salient because of government cash injections. Investors will not risk their personal monies unless they have a reasonable expectation that their returns will be solid. Banks that are no longer stand alone should be publically noted. In the short term the economic slump will dip sharply as these investors in these non-viable institutions fold up because of investor pull outs. However, in the long run the fewer institutions in the market that are fiscally responsible and solid will strengthen investor confidence and cause a gradual increase and stabilize the markets as the willingness to put monies forth in other economic areas isn’t reliant on government artificial stabilization.
The “On Time” bill before the American Senate. This bill legislates an extra import tax on trucks coming from and to Canada and Mexico to be collected at the Border before the trucks enter and leave the United States. Allowing even contemplation of this bill shows a lack of concern for the dependent nature of the United States of goods being purchased and sold in the other two countries. This is an overt protectionist action that will hurt the American economy not only from a manufacturing point of view but from a consumer point of view. If there aren’t the products to be sold, then the store that is supposed to be selling them will not receive their profits or will have to hike the price up because of the increased tax that would be passed along to the consumer. To stimulate an economy the supply must be economical to the consumer to bolster their confidence in the stability of the market.
There needs to be an immediate restructuring of the unemployment and welfare legislation on a nationwide scale. The citizenry of the United States who are collecting the various benefits are turning down minimum wage jobs because of the wage allotment ratio. Minimum wage does not allow a person to pay their bills and the fear that any monies earned by taking a minimum wage job against their welfare or unemployment monies makes people resist those jobs that are still necessary to create a stable job market and spending monies to use in other areas of the economy that stimulate further job growth. By increasing the allowable earnings before the state benefits are cut off or deducted there is there would be more effort into taking jobs that need to be done without people worrying about the damage it will do on their ability to pay their bills by doing so.
These are only a few issues that President Obama needs to deal with if he is to pull the United States out of the recession and instill confidence in the country as a power player once again. Once Obama has proven that he is willing to take responsibility rather than be sate in delegating his presidency then it will be a time for hand holding. For now, Obama needs to step up or step out.