My main concerns are in two broad areas: the "wars" and the economy.
In Iraq and Afghanistan, Obama is keeping too much of the status quo in place. His commitment to Afghanistan would have been noble six years ago, but now it threatens to lead to Vietnam-style escalation. From various things I've read, it looks like "success" in Afghanistan can only be achieved through diplomacy, strong economic investment, and acute, targeted military actions. A broader strategy, according to many experts, risks a quagmire in which hundreds of American troops die and the country continues to move toward outright civil war and complete collapse. We risk doing something similar to what we did in the late 80s and 90s. On Iraq, the continued presence of American troops for the next year is probably wise, but the idea of keeping 50,000 there after 2010 is scary. Such an action will continue to hurt us in the Arab world ("American colonialism") and will likely do little to improve the state of the country. Right now, economic investment and bringing in other countries are the keys. If we could manage to balance Iran, Saudi Arabia, Syria, the French, and the UN, we could probably establish some kind of broader coalition for peace. What we really need is other people to start pumping money into the country (construction, infrastructure, and bribes) to get this going. And we also need to get the Iraqi government to fully integrate the Sunnis back into the power structure. (Kicking out al-Maliki would go a long way, but that cannot happen democratically.) Having 50,000 soldiers there is unnecessary and counter-productive. Obama should declare that the US will not take any permanent bases in Iraq and also that all but a few thousand soldiers will leave by the end of his first term, the vacuum to be replaced by international forces. But I don't see either of these changes happening.
On the economy, some positive measures have been passed or advanced. The "recovery" plan is a good start, as is the housing program presented last week. They need to be improved upon over the next six months, or the general effectiveness of these measures will be greatly reduced. (GDP dropped by an annualized rate of 6.2% in the fourth quarter of 2008. That's really bad* and bodes poorly for the remainder of 2009.) The main impediment is a lack of boldness on the part of Obama's economic officials. A big mistake was the twin appointment of Larry Summers as head of the National Economic Council and Tim Geitner as the Secretary of Treasury. They are both (mostly) unreformed Rubinites (acolytes of Clinton's pro-business Treasury secretary), who make too many paeans to the private sector. Right now, we have a crisis that was caused by the idiocy, unnecessary complexity, wishful thinking, and greed of the private sector -- in particular, the banking industry -- and we need to take steps to clean up their mess. Geitner and Summers are trying to keep the banking industry on life support (or in zombie-dom) when they are better off recreating the whole industry. (The US banking/financial model of the last twenty years has, to put it simply, failed. We need to get rid of adjustable loans, crap securities, credit default swaps (CDS), structured investment vehicles (SIV), the rating agencies, and credit cards. Yes, credit cards.) The process of recreation would be slow, but right now it's not happening at all. The failure to revamp the banks through government takeover is an inability to take the needed medicine. Instead, the economic officials are just praying that positive estimates of future growth will come true and be the panacea. It's more wishful thinking. By not solving the banking crisis, the government is precipitating a future cataclysm, in which banks still fail despite all of the government money shoved at them. Better to fix this now then let it send the economy downward again a year from now. Instead of one 27-month recession, we may end up with a 20-month one followed by another 15-month one. We might as well suffer all the pain at once. Obama needs to limit the influence of Summers and give more power to former Federal Reserve Chairman and current Economic Recovery Advisory Board Chairman, Paul Volcker. We need an additional recovery package of $300bn and a more comprehensive housing plan. Most importantly, we need to declare the biggest banks insolvent, take them over, and reform them in smaller, private pieces. This has to be done, some way or another, starting in the next two months.
Nevertheless, despite some missteps so far, it's definitely been a five week sea change in American politics. I still find it amazing that Barack Obama is the president, but all of these concrete actions are diminishing my sense of positive disbelief. It's becoming a reality.
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*The third worst quarterly drop in GDP since 1947; only 1958 (Q1, -10.6%) and 1982 (Q1, -6.4%) were worse.
