Will Obama’s Year-end Challenges Define His Presidency?

As we enter the final quarter of a historic but tumultuous year, I can’t think of a better time to review the complexities and challenges of the Obama Presidency. I know it seems like every week, one pundit or another reviews the 100-day mark of one of the administration’s initiatives or the president’s popularity rating. But there is much agreement among most analysts, regardless of the political persuasion, that the recent confluence of events will prove to be telling.

His inauguration nine months ago ushered in a spirit of enthusiastic promise yet restless anticipation. His brand of executive leadership, marked by cool-headed pragmatism, focused engagement and continuous communication, has given comfort to many quarters of American society. Depending on your financial standing, personal situation or political allegiance, however, his transformation of government into an activist tool has been met with a wide range of responses–wholehearted praise, cautious optimism, head-scratching pessimism and vitriolic rage.

As we look at the myriad of issues confronting President Obama–a number of which need to be fully addressed before year’s end–it’s important to assess what the administration has accomplished. The facts barely match the latest Saturday Night Live skit that Obama has nada to show for his efforts. He led his economic team to develop a series of policies that snatched America, as Secretary Timothy Geithner asserted, from “the edge of the abyss.” There’s no argument that the popping of the housing and debt asset bubbles last year had nearly led to the implosion of the global financial system and came close to plunging the world into Depression 2.0. In fact, David Axelrod, the president’s senior advisor, told veteran broadcast anchor Charlie Gibson at The Atlantic Monthly‘s First Draft of History Conference I attended last week that “we didn’t know how bad things truly were” until the very first presidential economic briefing.

The Administration’s use of the $700 billion Troubled Asset Relief Program, or TARP, stabilized many of the nation’s “too-big-to-fail” banks as well as steered GM and Chrysler clear from joining a heap of wrecked leviathans–a massive business failure that would have taken millions of jobs, auto dealers and suppliers with it. The $787 billion American Reinvestment Recovery and Reinvestment Act served as a lifeline to large numbers of the unemployed in danger of losing benefits as well as created a number of jobs and opportunities through weatherization projects, public school renovations and other such programs. Over the past few months, Obama has signed legislation, among others, that seeks to enforce equal pay among workers and reauthorize children’s health insurance. Moreover, he has elevated America’s stature within the world community.

There have been issues that the President continues to grapple with though. His administration has yet to find the right military solution in the Afghanistan-Pakistan region. Despite across-the-aisle overtures, he has not been able to change Washington and turn it into a civil, bi-partisan forum where policy is placed above politics. Even though administration officials will seek to further its ecological agenda at the Copenhagen Energy Summit this December, Energy Czar Carolyn Browner concedes that passage of a comprehensive climate change bill is unlikely this year.

So in the months ahead, he must confront a number of major challenges that many have opined as “the defining moments” of his presidency.  Whether the next few months will fully characterize his first term is still anyone’s guess but supporters and critics alike correctly note their enormity and scope. Here’s what he faces:

The Economy. With Friday’s unemployment figures, the President admitted that economic recovery will come in “fits and starts.” The jobless

rate has jumped to 9.8%–15.4% for African Americans–with 15.1 million people looking for work. In fact, Lawrence Summers, director of the National Economic Council, at the First Draft of History Conference maintained that “we’re looking at a period of several months before we start seeing employment creation.”

Among the most challenged segments of the economy is small business. I asked Obama’s economic guru why financial institutions continue to be skittish in providing companies with much-needed financing when guarantees for the Small Business Administration‘s 7(a) loans had been increased to 90%. His response: “It will continue to take time for banks to become confident about lending to any of their customers.” As for America’s Recovery Capital program, he maintains that only time will determine its impact on giving small businesses an extra cushion.

The Obama administration continues to struggle with the employment issue. Summers has characterized “second stimulus” and “double-dip recession” as “Washington talk.” But Obama is considering additional stimulative measures including giving employers a tax break for hiring employees.

Healthcare reform. It continues to be among the most contentious issues within and outside Washington. The heart of the issue is whether Obama’s plan will reduce health-care costs or cause the deficits to balloon to unfathomable levels. The president argues that health care reform is not only a moral issue but a fiscal one. He maintains his administration can wring out savings by making Medicare and Medicaid more efficient and apply such measures as taxing large insurers on expensive “Cadillac” health plans. One of the biggest fights between conservatives and progressives has been over the public option–government-sponsored insurance that liberal Democrats assert will be the only way to ensure that insurance companies offer competitive rates while congressional conservatives maintain will wreck the insurance industry and push the nation into “a single-payer system.” Thus far, the public option has been rejected by the Senate.

Over the past few months, Obama has allowed five congressional committees to draft bills based on his guiding principles. All parties agree that some measure of health care reform will become law this year but he must play an even greater role in pushing the debate, shaping legislation and reducing the type of congressional horse-trading that can water down his initiative.

Financial stability. The panelists of a Congressional Black Caucus panel I served on a few weeks ago summed up the state of the financial industry as “a time of transition.” As many financial institutions are reimbursing TARP money that was used to keep them buoyant last year, the U.S. Treasury Department is seeking to gain billions from healthy banks to replenish the FDIC’s fund that insures up to $250,000 of deposits from their customers. Also, Obama faces another legislative battle in passing a mammoth financial reform package that seeks to increase capital reserves of institutions; expand the Federal Reserve’s powers to avert “systemic risk”; and form the Consumer Financial Protection Agency to ensure individuals don’t fall prey to “exotic” financial products, creative mortgages and derivative investments. Critics maintain that the measure over-regulates the financial industry, curbs innovation and diminishes the profitability of financial institutions through higher capital ratios. Obama appears vigilant in making sure consumers gain maximum protection and the nation avoids the same type of crisis it faced in 2008.

Foreign policy. The next several weeks will make an even more fine distinction between the Bush-era doctrine of unilateralism and Obama’s policy of engagement. At the conference, United States Central Command Chief Gen. David Petraeus reviewed the administration’s biggest military challenges: unwinding military presence in Iraq;  the decision on whether to deploy 40,000 troops to Afghanistan as Americans grow

weary of a war entering its ninth year; and diffusing a possible nuclear threat from Iran. In fact, the administration today received increased pressure from Congress to impose sanctions on Iran in response to last week’s discovery of a secret uranium enrichment facility within the country. Obama has yet to endorse a new set of sanctions from Congress, opting to push Iran’s compliance with United Nations’ resolutions and multilateral support, including the country’s chief trading partners Russia and China.

As you can see, Obama faces most critical challenges as the year winds down. As he once told the White House Press Corps in an earlier news conference, while some presidential administrations have face two to three daunting tests, he has confronted almost thrice that many. But true to form, he says his administration will need to “stick to it and keep working at it.”

His critics will continue to pounce–that’s evident from the reaction of his failed pitch to bring the 2016 Olympics to his adopted hometown of Chicago last week. But 2010 will be a critical year for the administration–and the country. Congressional decisions will grow more political as members eye re-election bids.

If it’s true as Axelrod says that Obama will continue to not govern by the latest poll then the president will continue to manage the nation’s affairs from the head instead of the hip. From the outset, he asserted that there were no quick fixes to America’s problems. So as the administration continues to work with persistence, the nation will be forced to exercise patience to wait and see whether Obama’s policies will have a lasting, positive impact–despite the pain felt by many in the short term. That more than anything will define the Obama Presidency.

Derek T. Dingle is the editor-in-chief of Black Enterprise Magazine